Harry Potter, Whistleblowers and Compliance

This article was republished with permission from Tom Fox’s FCPA Compliance and Ethics Blog.

One of the things I have enjoyed for years is listening to some of America’s top professors and academics through lectures from the Teaching Company. I just completed the 24-episode series entitled “Heroes and Legends: The Most Influential Characters of Literature” by Professor Thomas A. Shippey. I was interested in his episode on Harry Potter, whom he identified as a “whistleblower.” I have to admit, I had never thought of Potter in this manner.

In his show notes, Professor Shippey articulates that Harry’s role is largely to prepare the magic world for the return of the Dark Lord, whose name, Lord Voldemort, is not to be mentioned. If Voldemort returns, he will not only take over the world of magic but also lead its rule over the rest of us, the world of muggles.

Shippey believes this war is being fought on several fronts, which is a contemporary situation. Shippey writes, “Just like Harry, we face serious threats to our security: terrorism, financial instability, climate change and more. We have to trust the state to protect us from those threats, but do we trust the institutions of the state? Skepticism about politicians, lobbyists and bureaucrats is very much a part of the modern mindset. For this reason, ever since Watergate, we’ve had a word for another new kind of hero: the whistleblower. As a whistleblower, Harry tries to alert his community to one threat, but he also faces the other threat of the forces that are trying to hush him up.”

I thought about the struggles of Potter as a whistleblower when I read a piece by Michael Skapinker in the Business and Society column in the Financial Times (FT), entitled “The Libor trial and how to deal with a bullying dishonest boss.” One of the defendants, who was convicted this week in a trial in London, is Jonathan Mathew. According to Skapinker, “He told the court that he had no idea he was behaving dishonestly and only did what Peter Johnson, his manager, told him to do. Mr. Mathew said he dealt mainly with Canadian dollar Libor matters and other currencies and only set U.S. dollar rates when Mr. Johnson was out of the office or on holiday.”

But more than following his boss’s dictate (I should note that Johnson has pleaded guilty to the Libor rate-fixing charges and is awaiting sentencing), Mathew was mercilessly bullied by Johnson. Skapinker wrote, “Early on, when another banker asked him to set a particular U.S. dollar rate, he ignored the email, which earned him a rebuke from Mr. Johnson when he returned. In future, Mr. Johnson told him, he should take a ‘firm-first approach’ and ‘help these guys out.’ He also told the court that Mr. Johnson used to hit him on the back of the head with a miniature baseball bat. This was to humiliate, not hurt him. Mr. Johnson also made him stand on a chair on the trading floor when he could not name the capital of the Philippines.”

Not surprisingly, the bullying was not only physical, but verbal as well. In testimony it came out that Johnson had called Mathew, “a ‘deaf git’ (Mr. Mathew has hearing difficulties) and once sent him an email headed ‘brick dain’ because the bank’s compliance department would have picked up an email headed ‘dick brain’.” If this was not evidence of a completely toxic workplace, I have not seen a much greater example.

However, it is more than simply a failure of corporate culture; it is a failure of compliance. Roy Snell has been one of the most forceful in articulating the proposition that a Chief Compliance Officer (CCO) and compliance practitioner has to stand up for employees like Mathew and against corporate bullies like Johnson. One of the things every compliance function has to create is a safe place for such bullying conduct to be reported. Skapinker noted that he has “interviewed several whistleblowers over the years. Most have been driven half-crazy by the persecution, law suits and vituperation that followed their act of public service.” He further noted, “You could call the ethics hotline. This is clearly the right thing to do, but it will almost certainly spell the end of your career and you and your family’s happiness.”

Every compliance department must make it clear that any such employee who comes forward with such tales will not face retaliation. Moreover, such a whistleblower should be actively rewarded for bringing such antithetical conduct to the attention of someone at the company who can do something about it. For if such a culture is allowed to not only exist, but flourish, there will always be repercussions in the form of some legal violations.

Harry Potter was willing to be a whistleblower and suffer the consequences. Not all of us have the wherewithal to do so. That is where compliance has to make a stand for what is right. Business is not the Marine Corps, where actions can literally be life and death. These are white-collar businesses and there is no place for the type of bullying that Johnson engaged in. Mathew Skapinker ended his piece saying, “There have been many villains in the financial crises of the past few years. Mr. Mathew does not strike me as the worst.” I would add that every compliance practitioner needs to commit to preventing such conduct at his or her company. There should be some type of detection system in place to pick up such conduct if it does occur. Finally, there should be a remedy immediately brought to bear if such conduct does appear.

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business advice, legal advice or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The author gives his permission to link, post, distribute or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.