We are back with fan favorite Sherlock Holmes week. In this week’s blog posts, I will focus on the first five 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 offer, I consider The Adventure of the Three Gable sand how institutional justice in any best practices compliance program.

Mrs. Maberley is an elderly woman whose son has recently died in Rome. She lives in a home named “The Three Gables where some peculiar things have happened at Three Gables. Out of the blue a man came to her recently and offered to buy her house and all the furniture in it. She was not really willing to do it, as the sales agreement drawn up by this prospective buyer would forbid her to remove any possessions from the house when she moved out.

As she is telling Holmes this story, he becomes aware that someone is eavesdropping on the conversation. Holmes opens a door and drags in Susan, a wheezing maid. Holmes also finds out that a rich woman hired Barney Stockdale and his thugs to do her dirty work and that this woman wants something that has come into the house quite recently. Holmes realizes that her late son Douglas’s belongings must hold the key.

The next day, Holmes and Watson go back to Three Gables to investigate a burglary that has happened overnight when burglars chloroformed Mrs. Maberley and stole a manuscript from her son’s belongings. She managed to retain one part of one sheet of paper from it. The police inspector at the scene treats the matter as an ordinary burglary, but Holmes knows better. He examines the bit of manuscript retained by Mrs. Maberley, and it appears to be the end of a lurid novel. Holmes is struck by the peculiar wording; the story abruptly changes from third-person narration to first-person narration. It is in Douglas’s handwriting; so it would seem that he was putting himself in a story that he was writing.

Holmes and Watson go to see Isadora Klein, a wealthy woman who is used to getting what she wants. The happenings at Three Gables and the information have all added up to something. It turns out that Douglas Maberley was involved with Isadora Klein at one time. She broke the relationship off and he almost wrought his revenge by writing a thinly veiled account of their affair, to be published as a novel. Everyone in London would know who the characters truly were, were the novel ever published. Isadora established that no copy had ever been sent to Douglas’s publisher but realized that he must have a copy. She hired Barney Stockdale and his confederates to secure the manuscript. She tried legal means at first, and when that did not work, she resorted to crime. She has burnt the manuscript.

Holmes forces Isadora Klein to write a cheque for £5000 to furnish Mrs. Maberley with a first-class trip round the world in return for his silence about Isadora’s nefarious dealings. In the blog post The Adventures of the Three Gable-Sherlock as Atticus Finch?, the author raised the issue of whether justice was actually done here. He stated, “a tough call on the feeble powers of justice here. Certainly Mrs. Maberley wouldn’t have been too happy with a lurid scandal involving her dead son, either. And she does get to travel around the world the substantial check from Klein, AND she gets to keep her house and furniture! And perhaps becoming a Duchess will encourage Klein to end her questionable associations and illegal activities. So, justice?!?”

Institutional justice is a primary factor as to whether an employee will come forward with a concern. Management might try a quick-fix reaction to a messy investigation with more reporting mechanisms, posters or asking a Chief Executive Officer (CEO) to use compliance training to generally get the word out. Employees view it as a trust issue, and you must garner that trust through providing institutional justice. If an employee chooses not to report and an outside source later discovers misconduct, the organization will certainly be subject to potential financial losses and reputational damage that could have been avoided. If the employee does report, but the culture of trust is lacking or they face retaliation, up to and including termination, then you have a disgruntled employee who is most likely going to go to the Securities and Exchange Commission (SEC) under both Sarbanes-Oxley (SOX) and Dodd-Frank.

The concept of institutional justice is basic to any compliance regime. Companies that seem to get into the most trouble are those that lack this basic concept. It means more than simply fair and equitable treatment; it requires employees concerns, once raised, be listened to and addressed, all without the fear of retaliation. Wells Fargo is but one example. At the company many former whistleblowers allege they were terminated for raising concerns internally that the fraudulent account-opening scheme was a violation of the company’s Code of Conduct or even illegal. Such whistleblowers allege they were singled out for unfair and discriminatory treatment for speaking up or even trying to speak up. Others allege they were told to meet their sales quotas by any means necessary, with a wink and a nod to how they might do so. Finally, employees who failed to meet the unreasonable quotas were sanctioned through wage loss or discipline up to termination.

Companies must have an absolute prohibition against retaliation. If not, any sense of institutional justice will be destroyed. When an employee is mistreated for following the organization’s reporting policy, it will sustain severe damage to its credibility and viability as a safe and secure mechanism. The damage from mismanagement and reprisals is memorialized on the internet and court records or public documents can create a devastating silent, do-not-report culture. Companies must communicate they have a zero tolerance for retaliation and deal with any retaliation swiftly and publicly.

A final problem of inconsistent outcomes is that companies must demonstrate that consistent and fair outcomes are routine, regardless of people, relationships or scenarios. Employees will learn through the grapevine if the organization delivers fair, consistent discipline, regardless of how confidentially an organization hides such outcomes. Of course, if employees view outcomes as fair, they will be more compelled to report concerns. Employees know that inconsistency equals personal risk.

The concept of institutional justice is central to the modern compliance profession. The compliance profession must remind companies that even if they can engage in an action, they should not always do so. Sometimes the reputational damage, even if an action is legal, is so great that the risk cannot be managed. The compliance discipline within every company is the one corporate function most well suited to bringing institutional justice into the fabric of a company.

Join us tomorrow where we conclude our week of stories from The Casebook of Sherlock Holmes by looking at the The Adventures of the Sussex Vampire and how it informs root cause analysis.

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

0 comments