We are back to consider the next 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 this week’s first offering, I consider The Three Garridebs. From this story the need for objective discipline in a variety of areas in any best practices compliance program.
In this story, Holmes receives a letter from a Nathan Garrideb asking for help in a most peculiar quest. He is looking for another man with his unusual surname, for it will mean a $5 million inheritance for him. He has been approached by another man, John Garrideb of Kansas, who says that he needs to find others with the same last name.
The American Garrideb comes to see Holmes and Watson at 221B Baker Street and is apparently not very pleased that Nathan Garrideb has involved a detective. Garrideb, who claims to be a lawyer, spins a ridiculous story about Alexander Hamilton Garrideb, a millionaire land tycoon he met in Kansas. Hamilton Garrideb bequeathed his $15 million estate to John Garrideb on the provision that he find two more Garridebs to share it with equally. He came to England to seek out people with the name, having failed in his own country. So far, he has found only Nathan.
During the interview, Holmes detects many discrepancies in John Garrideb’s story, ranging from the time he has spent in London being obviously longer than he claims and his knowledge of a completely fictitious mayor of the town where Garrideb claims to have lived in before coming to England, but decides not to confront him. This piques Holmes’ interest, and he decides to contact Nathan Garrideb to investigate further.
It turns out that Nathan Garrideb is an elderly eccentric who collects everything from ancient coins to old bones. Garrideb’s rooms look like a small museum. He is obviously a serious collector but has nothing of great value in his collection. Holmes finds out that John Garrideb has never asked for any money, nor has he suggested any course of action. Nathan Garrideb has no reason, it seems, to be suspicious of John Garrideb. This puzzles Holmes.
During Holmes’s and Watson’s visit, John Garrideb arrives in a most jolly mood. He has apparently found a third Garrideb, as proof of which he shows a newspaper advertisement purportedly placed by a Howard Garrideb in the course of his everyday business. Holmes sees instantly that John Garrideb has placed the advertisement himself from various Americanisms in the spelling and wording.
John Garrideb insists that Nathan go to Birmingham and meet this Howard Garrideb. It has now become clear to Holmes what the “rigmarole of lies” is all about. John Garrideb wants Nathan Garrideb to be out of his rooms for a while. The next day brings fresh information. Holmes goes to see Inspector Lestrade at Scotland Yard and identifies John Garrideb as James Winter alias Morecroft alias “Killer” Evans, who escaped prison after shooting three men in the States. In London, he killed Rodger Prescott, a Chicago forger whose description matches the former occupant of Nathan Garrideb’s room.
Holmes and Watson go to Garrideb’s home armed with revolvers. They do not have to wait long before Winter shows up. From their hiding place, Holmes and Watson see the criminal use a “jemmy” to open a trapdoor revealing a little cellar. They capture Winter, but not before he manages to shoot twice, striking Watson in the leg. For once, Holmes shows his human side; he is distraught over Watson’s injury and strikes Winter on the head with the butt of a gun hard enough to draw blood, vowing that the villain would have never left the rooms alive if he had killed Watson. Fortunately, Watson’s wound is superficial. The little cellar contains a printing press and stacks of counterfeit banknotes, hidden there the man Winter killed.
While the discovery of the printing press and plates “caused several CID men to sleep the sounder” the English bench “took a less favorable view” of the crime and Winter was sent back to prison for a lengthy term. It informs today’s theme of using Human Resources (HR) to operationalize your compliance program through ensuring that discipline is handed out fairly across an organization and to reward those employees who integrate such ethical and compliant behavior into their individual work practices. In addition to providing a financial incentive for ethical behavior, it also provides a sense of institutional objectivity. Institutional objectivity comes from procedural fairness and is one of the things that will bring credibility to your compliance program. It is yet another way to more fully operationalize your compliance program.
That objectivity is called the Fair Process Doctrine, which recognizes that there are fair procedures, not arbitrary ones, in processes involving rights. Considerable research has shown that people are more willing to accept negative, unfavorable, and non-preferred outcomes when they are arrived at by processes and procedures that are perceived as fair. As you incorporate the Fair Process Doctrine in your compliance program, there are three key areas to focus on.
Administration of discipline.One area where the Fair Process Doctrine is paramount is in the administration of discipline after any compliance related incident. Discipline must not only be administered fairly but it must be administered uniformly across the company for the violation of any compliance policy. If you are going to fire employees in South America for lying on their expense reports, you have to fire them in North America for the same offense. It cannot matter that the North American employee is a friend or a so-called “high producer.” Failure to administer discipline uniformly will destroy any vestige of credibility that you may have developed.
Employee promotions.In addition to the area of discipline which may be administered after the completion of any compliance investigation, you must also place compliance firmly as a part of ongoing employee evaluations and promotions. If your company is seen to advance and only reward employees who achieve their numbers by whatever means necessary, other employees will certainly take note and it will be understood what management evaluates and rewards employees on. Consider the often heard (anecdotal) tale about a Region Manager who says, “If I violate the Code of Conduct I may or may not get caught. If I get caught I may or may not be disciplined. If I miss my numbers for two quarters, I will be fired.” If this is what other employees believe about how they are evaluated and the basis for promotion, you cannot win the compliance battle until this mindset is addressed.
Internal investigations.The third area the Fair Process Doctrine is around internal company investigations. If your employees do not believe that the investigation is fair and impartial, then it is not fair and impartial. Further, those involved must have confidence that any internal investigation is treated seriously and objectively. One of the key reasons that employees will go outside of a company’s internal hotline process is because they do not believe that the investigation process will be fair.
This fairness has several components. One would be the use of outside counsel, rather than in-house counsel to handle the investigation. Moreover, if the company regularly uses one firm, it may be that another should be brought in, particularly if regular outside counsel has created or implemented key components which are being investigated. Further, if the company’s regular outside counsel has a large amount of business with the company, then that law firm may have a very vested interest in maintaining the status quo. Lastly, the investigation may require a level of specialization which in-house or regular outside counsel does not possess.
An often-overlooked role of any Chief Compliance Officer (CCO) or compliance professional is to help provide employees with procedural fairness. If your compliance function is seen to be fair in the way it treats employees, in areas as varied as financial incentives, to promotions, to uniform discipline meted out across the globe; employees are more likely to inform the compliance department when something goes array. If employees believe they will be treated fairly, it will go a long way to more fully operationalizing your compliance program.
Join us tomorrow as we consider The Problem of Thor Bridge.
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© Thomas R. Fox, 2019