You really do have to appreciate Wells Fargo & Co. Perhaps solely of the most recent spate of US corporate ethics scandals, it is the company that keeps giving and giving and giving. On the other hand, it may simply be that Wells Fargo has found a way to actually make money from its ethics and compliance function, albeit in a very roundabout way. Then again, maybe Marie Antoinette really did transport herself to the modern-day banking industry with her “let them eat cake” admonition to Parisians who simply wanted cheap and plentiful bread.
I refer of course to Wells Fargo recently announced initiative to require outside consultants who worked to help remediate the company out of its fraudulent accounts scandal. As Rachel Louise Ensign reported in a Wall Street Journal (WSJ) article, entitled “Wells Fargo to Tech Vendors: Please Send Us a Check”, the bank which has stumbled from one crisis to another is now mandating that those same vendors who helped them get out of their own squalidness are now being asked to compensate the bank for doing so. Ensign wrote the bank “recently asked outside technology consultants to refund some of the money the bank has spent with them in the past year. The request for rebates came from Saul Van Beurden, the bank’s new head of technology, at a July meeting with vendors, according to people familiar with the matter and emails reviewed by The Wall Street Journal. The bank told the vendors, who in many cases supply the bank with contract tech employees, that this was because they had benefited from increased business due to Wells Fargo’s regulatory woes.”
So, let’s be clear here. Wells Fargo got itself into such a regulatory mess that the Federal Reserve Bank set a growth limit on the bank until it cleaned up its house; now Wells Fargo wants to make money from those same vendors who helped them clean up that mess. One can only marvel at the brilliance of this approach. Looking for a way to pay for your Foreign Corrupt Practices Act (FCPA) multi-million dollar fine and penalty. Wells Fargo leads the way with its new financing option – charge those who helped get you out of the problem.
We should, at this point, note the Wells Fargo Team Member Code of Ethics and Business Conductstates “Wells Fargo expects its team members to adhere to the highest possible standards of ethics and business conduct with customers, team members, vendors, stockholders, and the communities it serves, and to comply with all applicable laws, rules, and regulations that govern our businesses. This Code of Ethics and Business Conduct (the “Code”) sets forth Wells Fargo’s policy and standards concerning ethical conduct for all team members. Our aim is to promote an atmosphere in which ethical behavior is well recognized as a priority and practiced on a day-to-day basis.” [emphasis supplied]
Just reading this section of the Code of Conduct inspires me to want to do business with such an ethical organization. I wonder if the vendors being told to rebate these monies were told what precisely a contractual relationship where one company delivers products and services and another company pays for those products and services means to Wells Fargo. Apparently at Wells Fargo, a contract is not even an opening offer from which to renegotiate but a strategy to actually make money. Sometimes one should remember that it is Ethicsand Compliance for a reason.
While specifying that all vendors must have made a decision on whether or not to join this ‘voluntary program’; there were no immediate mechanisms made available to pay this tribute money back to Wells Fargo. Ensign reported, “The bank will provide instructions for sending the “rebate checks” at a later date”. A quick hint here, if wire transfer instructions to an offshore bank account magically appears, run, do not walk, to the nearest enforcement office.
It could be that I have simply misinterpreted Wells Fargo’s actions. As noted by Thorton McEnery, Wells Fargo is simply sick and tired of being taken of by unscrupulous vendors. In a piece, entitled “Wells Fargo Does Not Appreciate Being Taken Advantage Of, Would Like Its Money Back Now”, he wrote, “It never feels good to enter into a business relationship with someone and then come to learn that your trust in your counterparty has been leveraged against you as a tool to take more money from you than had been previously agreed…right, Wells Fargo?…How dare these vendors take advantage of Wells Fargo like this. The chutzpah required to make unseemly extra revenue from a distracted client is galling. We totally understand why Wells Fargo is so upset. It must feel like a gut punch to realize that this has happened to you…” He concluded by noting that vendors should “do the right thing… pay back the bank you ripped off by being unclear how much money you were taking from it over a long period of time without being caught. It’s the right thing to do.”
Wells Fargo has been unable to recruit a new Chief Executive Officer (CEO) since the most recent person to hold that job, Timothy Sloan, resigned in March after being skewered by both parties at a Congressional hearing. I wonder why that could be? What about all those ads Wells Fargo has been running the WSJ that it has turned a new leaf and is now the ethical banking institution? It seemed for some time that Wells Fargo was unearthing more scandals where it abused customer trust. I guess they have run out of customers to abuse and now are moving on to vendors.
It just goes to show that if you do business with Wells Fargo, as a customer or a vendor, you had best do so with your hand on your wallet or purse.