CONCERNING CONDUCT: QUARTERLY CASES Recent cases concerning culture and conduct ISSUE 7 • Q2 2021 Volkswagen’s April Fool’s joke sees ADRs up failings. Larry Fink said, “a high-performance Super League (ESL) with $6bn of debt funding. sixteen per cent. culture also requires diversity, empathy, equity, After the announcement of the new league Volkswagen was forced to apologise after its respect and inclusion”. involving a selected number of Europe’s April Fool’s joke that its US arm was to be re- biggest football teams, the founding clubs branded “Voltswagen” led to its US-listed ADRs faced universal backlash from fans and the rising sixteen per cent. Procurement civil servant held second role media that saw nine of the clubs withdrawing with Greensill Capital. their involvement within days. JPMorgan It was revealed that a senior UK Civil Servant subsequently owned up to its “misjudgement” Firms try to address burnout with bonuses and that had held the role of Chief Procurement stating that it will “learn from this”. luxury gifts for staff. Officer had worked at failed supply chain Firms including lawyers and banks are finance company Greensill Capital whilst still attempting to head off a staff retention crisis in Whitehall. Bill Crothers joined Greensill as a Barclays pulls out of underwriting the debt for amongst junior staff suffering burnout by part-time adviser two months before he left the Alabama prisons. handing out luxuries and generous bonuses. civil service. Barclays pulled out of underwriting an $840m Elite US law firms have announced that one-off debt deal for CoreCivic to fund the building payments between $12,000 and $64,000 will of two prisons in Alabama. It appears that the be paid in tranches to keep workers in post. UK Takeover Panel addresses male domination. deal was not deemed to be acceptable on ESG Investment bank Jefferies has offered staff a The UK’s Takeover Code has been updated to grounds. choice of perks including a Peloton bike and replace the multiple references to “chairman” Apple products. with “chair”, and “his”, “he” and “him” to variations of “person”. The changes take effect Multi-billion losses spotlight Credit Suisse’s on 5th July 2021. risk management failings. Fink addresses BlackRock behavioural failings. Credit Suisse’s recent losses, particularly the CEO of asset management giant BlackRock $3bn loss from its involvement with collapsed says the firm aims to reset “behavioural JPMorgan scores own goal by backing ESL. supply chain finance firm Greensill and the expectations” in response to a series of JPMorgan suffered the embarrassment and $5.4bn loss from exposure to family office disclosures about diversity and inclusiveness reputational damage of backing the European Archegos, have highlighted risk management +44 20 7638 9830 [email protected] www.cclacademy.co.uk CONCERNING CONDUCT: QUARTERLY CASES Recent cases concerning culture and conduct ISSUE 7 • Q2 2021 errors. Credit Suisse appointed Lara Warner Grant Thornton facing accusations of conflicts $85bn in 2018. The acquisition has delivered as Chief Risk and Compliance Officer in 2015 over Greensill. negligible returns and is now being unpicked in despite her having no prior experience in Professional services firm Grant Thornton, the a spin-off that will combine Warner Media (the the role. She led the function for five years administrator for collapsed supply-chain finance renamed Time Warner) with rival Discovery. and pushed risk and compliance to be “more group Greensill Capital, is facing accusations commercial” and “aligned” with the front office of conflicts. Grant Thornton had previously traders and dealmakers. Lara Warner has since examined the relationship between asset Former Apollo Global Management Chief been removed from the role and the head manager GAM’s relationship with Greensill, and accused of rape. of the Credit Suisse risk committee, Andreas also worked with Greensill’s largest customer Leon Black, the former Chief Executive of Gottschling, has stepped down. GFG Alliance. Apollo Global Management, is facing a lawsuit alleging he raped and harassed a young Russian model. Subsequently, the lawsuit alleges, he BlackRock double standards over palm oil. Proposals for powers to block UK listings over manipulated her with promises of cash and Asset management giant BlackRock was security risks. sham job interviews at Goldman Sachs. Mr accused of inconsistency over its approach UK Chancellor Rishi Sunak is planning to launch Black claims he had a “consensual affair” and to investing in companies involved in palm a consultation on powers to block UK listings the woman later extorted him. oil. Extolling its ESG credentials, BlackRock on national security grounds. The proposed is pushing Procter and Gamble to clean up powers will enable the UK government to block its supply chain in relation to palm oil. At listings that would give a foreign state access Leak of private tax records of US billionaires. the same time, BlackRock holds a direct to state or commercial secrets and companies A leak from the US Internal Revenue Service stake in the Indonesian conglomerate Astra who could harm UK interests. revealed that the twenty-one richest Americans International that supplies the oil. Astra is used legal tax avoidance techniques to enable accused of destroying rainforest to produce them to pay just $13.6bn in Federal income palm oil. Oil companies hit by court and investor taxes in the five years to 2018. Their collective pressures. wealth is estimated to have grown by $401bn in Shell was told by a Netherlands court that it the same period. Cameron deluged Whitehall on behalf of must accelerate its planned move away from Greensill. fossil fuels and US giant Exxon faced an investor Former British Prime Minister David Cameron revolt that saw two new directors join the board EU bars ten banks from bond sales due to was revealed to have lobbied fifty-six times to with similar aims – to more rapidly move way previous digressions. change the rules around Covid 19 debt support from fossil fuels and into alternative, greener The European Union excluded ten banks, schemes to benefit his employer Greensill energy sources. including many big hitters, from a €20bn Capital, including texts to Treasury officials and bond sale for its new €800bn recovery fund chancellor Rishi Sunak. Mr Cameron said he because of involvement in previous scandals knew nothing of the difficulties at Greensill and Regulatory filing shows the reward for failure such as bond-trading cartels and manipulation his lobbying was for the benefit of the British at AT&T. of currency markets. The ten were JPMorgan, economy. US telecoms giant AT&T paid its executives $9m Citigroup, Bank of America, Barclays, Natixis, for completing its purchase of Time Warner for Nomura, NatWest, Unicredit, Deutsche Bank +44 20 7638 9830 [email protected] www.cclacademy.co.uk CONCERNING CONDUCT: QUARTERLY CASES Recent cases concerning culture and conduct ISSUE 7 • Q2 2021 and Credit Agricole. Within a week, eight of the to have extended £400m to eight Gupta-linked to be adopting a more flexible approach with banks were cleared for future transactions after companies, on the basis that they were not part UBS planning to allow up to two-thirds of its promising “integrity” and evidencing “remedial of a consolidated legal entity. staff to mix home working and the office on a measures”. permanent basis. Similar approaches have been adopted by HSBC and Standard Chartered. Contrasting approaches to working from home Greensill’s Covid loans funnelled to Gupta post-pandemic. companies. Banks in the US appear to be much less flexible PR boss resigns after allegations of drunken The FT reported that every taxpayer-backed on post-pandemic working practices than misconduct. loan provided by Greensill Capital went to their European equivalents. JPMorgan Chase, The former head of communications firm Teneo, companies linked to metals magnate Sanjeev Goldman Sachs and Morgan Stanley have all Declan Kelly, resigned following revelations that Gupta. Greensill accessed the UK government’s ordered their staff back to the office – with he had inappropriately touched a number of Coronavirus Large Business Interruption Loan Morgan Stanley’s CEO James Gorman saying, women without their consent after having had scheme (CLBILS) and was authorised to “if you can go to a restaurant in NYC, you can too much to drink at a public event in California. provide £50m to a single company. It appears come into the office”. European banks appear eLearning modules Virtual training Train the trainer Your conduct Case study driven Conduct Conduct Rules Training We can train your internal training covered eLearning modules Senior Management Briefings trainers and provide all of the materials you will need. +44 20 7638 9830 [email protected] www.cclacademy.co.uk.