We are back with fan favorite Sherlock Holmes week. In this week’s blog posts, I will focus on the first five stories from The Casebook of Sherlock Holmes, mining each story for themes and lessons related to the compliance professional, leadership and business ethics. In today’s offering, I consider The Adventure of the Illustrious Client and its relationship to the humble reference check.

The story opens when Sir James Damery comes to see Holmes and Watson about his illustrious client’s problem. General de Merville’s young daughter Violet has fallen in love with the roguish and sadistic Austrian Baron Adelbert Gruner, who Damery and Holmes are convinced is a shameless philanderer and a murderer. The victim was his last wife, of whose murder he was acquitted owing to a legal technicality and a witness’s untimely death. She met her end in the Splügen Pass. Holmes also finds out that the Baron has expensive tastes and is a collector and a recognized authority on Chinese pottery.

Holmes’s first step is to see Gruner, who is amused to see Holmes trying to “play a hand with no cards in it”. The Baron will not be moved and claims that his charm is more potent than even a post-hypnotic suggestion in conditioning Violet’s mind to reject anything bad that might be said about him. Gruner tells the story of Le Brun, a French agent who was crippled for life after being beaten by thugs after making similar inquiries into the Baron’s personal business.

Holmes gets some help with his mission in the form of Shinwell Johnson, a former criminal who now acts as an informer for Holmes in London’s underworld. Johnson rakes up Miss Kitty Winter, the Baron’s last mistress, who got ruined because of it. She is bent on revenge and will do anything to help Holmes. Kitty tells Holmes that the Baron collects women and chronicles his conquests in a book. Holmes realizes that this book, written in Gruner’s own hand, is the key to curing Violet of her devotion to the scoundrel. Kitty tells Holmes that this book is kept in the Baron’s study.

Holmes goes to see Violet, bringing Kitty with him, but Violet is proof against Holmes’s words. Kitty then makes it clear that Violet might end up dead if she is foolish enough to marry Gruner. Then Holmes is attacked by two men, and the newspapers imply that he is near death. Watson goes to 221B Baker Street only to discover that Holmes’s injuries have been exaggerated to give the impression that he will be out of action for quite a while. The Baron is planning a trip abroad just before the wedding and will be leaving in three days. Holmes knows that Gruner will take his incriminating book with him, never daring to leave it behind in his study.

Watson is sent by Holmes to the Baron’s residence Gruner’s house to try to sell him a piece of Ming china. As Watson faces his murderous captor, a noise from another room alerts the Baron and he rushes into his study just in time to see Holmes jump out of the window as he has managed to steal the book. The Baron rushes to the window, but Kitty Winter, who has been hiding outside, throws acid in his face. The Baron is now hideously disfigured, but Holmes says this will not put Violet off him. They still need the book to cure her. When Violet sees the book of conquests, written in her fiancé’s handwriting, she realizes what a rogue he is and their marriage is off.

The Illustrious Client leads us into today’s topic of the reference check. Why is hiring so important for compliance? It is because hiring is important to any company’s health and reputation. Like most areas of compliance good hiring practices for those employees who will do business in compliance with anti-corruption laws are simply good business practice.

One tool that is often overlooked in the hiring process is the reference check. Many practitioners feel that a reference is not of value because prospective candidates will only list references that they believe will provide glowing recommendations of character. This leads to a pro forma reference check. However, in a 2012 Harvard Business Review article, entitled “Gilt Groupe’s CEO on Building a Team of A Players”, author Kevin Ryan explodes this misconception by detailing how he views the entire hiring process and specifically checking references. I would add thatit could be a valuable and useful tool for you and your compliance program.

In the hiring of personnel, Ryan details the three steps his company takes: (1) Resume review; (2) In-Person interview; and (3) Reference checks. Ryan believes that resumes are good for establishing “basic qualifications for the job, but not for much else.” He believes that the primary problem with in-person interviews is that they are skewed in favor of “persons who are well spoken [or] present well.” For Ryan, the key check is through references and he says, “References are really the only way to learn these things?”

Ryan recognizes that many people believe that reference checks are not of great value because companies cannot or will not give out much more information than confirming dates of employment. However, he also believes, “the way around it is to dig up people who will speak candidly.” He also recognizes that if you only speak to the references listed on a resume or other application, you may not receive the most robust appraisal. Ryan responds that the answer is to put in the work to check out references properly. Ryan believes this is one of the key strengths of search firms and that companies should emulate this practice when it comes to reference checks.

He notes that anyone who has worked in an industry for any significant length of time will have made many connections. Invariably, some of these connections will be acquainted with you or those in your current, and former, company. Ryan gave the following example: A longtime friend who was employed at another company called and said that he had been asked by his hiring partner to find out “the real story” on a hiring candidate by asking Ryan his candid opinion of the candidate. Ryan’s response was “Don’t hire him.” Lest you think that such refreshing honesty no longer exists when informal employment references are provided, you are mistaken. In my past corporate position, I was charged with performing compliance due diligence on senior executives and I spent time doing what Ryan suggested, calling acquaintances that I knew and asking such direct questions. More than 75% of the time, I got direct responses.

Ryan believes that you must invest your company in the hiring process to get the right people. The same is true in compliance. You do not want people with a propensity for engaging in corrupt acts working for, or leading, your company. Moreover, failure to prevent such hires can be evidence of a non-effective compliance program and lack of appropriate commitment to compliance at your company.

The hiring of someone who will perform business activities in compliance with anti-corruption laws such as the FCPA will continue to be as much art as science because the hiring of quality employees for senior management positions is similarly situated. But that does not mean a company cannot work to not hire those persons who might have a propensity to engage in bribery and corruption if the situation presented itself. The hiring process is just one more tool that can be utilized to build an effective and operationalized compliance program.

Join us tomorrow as we continue our week of stories from The Casebook of Sherlock Holmes by looking at the The Adventure of the Blanched Soldier and learning to ask for help.

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, 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.

© Thomas R. Fox, 2019

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