Unethical banking practices and trading loss cover-ups led former National Australia Bank employee, Dennis Gentilin to become a whistleblower. Christopher Niesche reports.

    The Australian Governance Summit 201602.09

    Dennis Gentilin MAICD was a 29-year-old foreign exchange trader working in the National Australia Bank’s (NAB) London dealing room when he learned his colleagues were racking up hundreds of millions in trading losses and covering them up. What he chose to do about this would have profound ramifications for the traders, for NAB and ultimately for himself.

    Working at NAB was Gentilin’s first job. He studied banking and finance at Monash University before joining the bank as a graduate. When he started working in the Melbourne dealing room in 2001, he found an environment where unethical behaviour had become normalised; there was a culture where money and money-making took priority, and a highly hierarchical dynamic made it difficult for a junior employee to voice their own values or opinions.

    He struggled with this culture and responded by trying to turn a blind eye. “It’s difficult to admit but you could say that, in some ways, I was complicit for an extended period of time because the way that I chose to deal with it was to try and ignore the poor conduct,” he says.

    “We fail to recognise, as people, how the environments which we operate and work in can actually shape our character.” Gentilin continued to struggle with his colleagues’ behaviour to the point where he questioned his own values, wondering if it was actually he who had the problem.

    Even though I consider myself to be a person of high moral character, I too behaved in ways where I compromised my standards.

    “When you’re a young person and you enter the workforce, you really haven’t gone through that exercise where you think about what is important to you and what your values are; they tend to be dictated by your workplace, especially by the senior people in your workplace,” he says.

    What transformed Gentilin from a bystander to a whistleblower after he moved to London was a heated exchange with a colleague, who revealed the full extent of the losses that the foreign exchange team was hiding. His wife urged him to do something about it, as did a trusted colleague, who told him: “You’ve got no choice.”

    “It was like a lightbulb moment where I thought: ‘What the hell am I thinking?’” he says. “From that point on, I just went into auto-pilot and did what I had to do. I reported what I found to my boss’ boss and as they say, the rest is history.”

    That history ultimately led to four NAB traders being jailed for unauthorised trading, which cost the bank $326 million in 2003–04.

    In sentencing one of the traders, David Bullen, Judge Geoff Chettle of the Victorian County Court said: “In the corporate culture that existed, you forgot your legal responsibilities to the bank, its management and its shareholders.”

    He told another, Vince Ficarra: “You became enmeshed in the culture that saw you seeing yourselves as invincible and somewhat arrogant.” The scandal also ultimately led to the resignation of NAB chief executive office (CEO) Frank Cicutto and chairman Charles Allen.

    Organisational behaviour

    For Gentilin, it led to a deep interest in human and organisational behaviour. “I’m especially fascinated about the why – why do things like this happen? Despite the presence of stringent regulations and compliance frameworks, why do people continually behave in unethical ways?” he says.

    The experience led him to complete a psychology degree and after leaving NAB in January this year, Gentilin is now doing public speaking and consulting to help leaders create the conditions within their organisations that promote ethical conduct.

    He has also written a book, The Origins of Ethical Failures, which captures the lessons that come from his experience and subsequent research.

    To this day, Gentilin still isn’t sure what it was about his background or makeup that made him blow the whistle while others round him participated in the fraud.

    “Even though I consider myself to be a person of high moral character, I too behaved in ways where I compromised my standards. I learned that when you’re in an environment where unethical conduct is so normalised and it’s just the way things are done, it is so easy to become involved, especially when you’re young,” he says.

    Gentilin says he didn’t think too much about the personal consequences and unlike many whistleblowers, they were not severe. Many whistleblowers, however honourable and well-meaning their actions, are shunned by their colleagues, left unsupported by management and eventually forced out of their jobs.

    Unusually, Gentilin was able to stay on at NAB for another 12 years – seven years spent in financial markets, mostly in sales roles and running an institutional foreign exchange desk, then into corporate strategy.

    He says he was fortunate to be surrounded by people who instead of regarding him as “used goods”, continued to see potential in him and provide him with career opportunities. He suspects there were conversations at senior levels of the bank where it was decided whistleblowers need to be protected.

    Gentilin says one of the key lessons from his experience was the realisation of how we, as individuals, fail to recognise how susceptible we are.

    “We like to think that our characters are fixed and that if we’re placed in an environment where we might be tempted, as long as we’re moral people, we’ll be able to make the right decisions,” he says.

    “But there were some really good people who became involved in the incident that came from good families, had great upbringings, were well educated, but just behaved in very uncharacteristic ways.”

    The conclusion is that we are all susceptible to unethical behaviour, says Gentilin, and it is therefore up to the leaders of organisations to shape workplace environments that foster and promote ethical conduct. In part, this can be done through formal mechanisms: codes of conduct, formal communications handed down from leaders, training programs, and appropriately aligned reward and performance frameworks.

    These are all important, but Gentilin says he has learned that the informal mechanisms – the decisions and choices and actions of leaders – send very powerful messages about what’s really important in an organisation and what staff need to do to get ahead.

    “You can have stated values in your organisation but, when leaders start turning a blind eye to poor behaviour, or rewarding and promoting people who are behaving in ways that are at odds with the organisation’s values, the message this sends is so powerful that it shapes the organisation’s culture,” he says.

    Moral stance

    Gentilin took what many would consider to be a brave and moral stand when he blew the whistle on the NAB currency traders, but he is careful not to dictate to others who witness unethical or illegal behaviour in their own organisations, saying no two situations are ever the same.

    His one piece of advice for those people is to talk about the issue with their “council of advisers” – the people they go to for advice, including family and trusted colleagues. “My experience showed me that when I opened up to someone outside of my immediate team, I got clarity as to what I needed to do,” he says.

    Once a decision has been made about what to do, they need to think about the approach they take. We tend to view people behaving in an unethical way as “really bad people”, but sometimes these people aren’t comfortable with their own behaviour either. “In some cases, if these so called ‘bad people’ are in an environment where the context condones poor behaviour, then they too might be struggling with that situation and need some help,” he says.

    Whistleblowers also need to think about who they approach and how they approach them. The should try to put themselves in the other person’s position and consider what is at stake for them as well. They need to gather their evidence, think about what they’re going to say and the response they want. It is also important to consider what the next step will be if they don’t get that response.

    Sometimes potential whistleblowers will decide that any action would be futile and will walk away instead. “The two main reasons people don’t say anything in organisations is fear and futility – fear that there will be consequences associated with speaking up and futility, that even if they do speak up, nothing is going to get done,” he says.

    “If someone does walk away, I’m not going to judge them as an individual and think that they’re a coward. It’s such an extraordinarily difficult thing to do and unfortunately history does show that it doesn’t end up well for a lot of people.”

    Gentilin says he hopes there are many instances where people have raised concerns within organisations and they’ve been dealt with internally but haven’t hit the public spotlight because the story is not newsworthy.

    Speaking out

    He cites a research project at Queensland’s Griffith University, Whistling While They Work, which among other things, aims to collect stories of whistleblowing in the public and private sectors where there was a positive outcome and the reasons for this.

    “I think we need more of those stories because unfortunately, the perception of whistleblowers at the moment is someone who has lifted the lid on a big scandal and paid high costs. I’d like to think there are a lot of examples where people have raised concerns internally and they haven’t suffered,” says Gentilin.

    He says that when a whistleblower exposes a big scandal, it usually means the organisation hasn’t made the most of whistleblowing opportunities up to that point. Had there been an environment where people felt comfortable about raising concerns earlier, then it is likely the situation would have been dealt with prior to it degrading into a major scandal.

    Creating a “speak-up culture” is the key to addressing organisational wrongdoings, says Gentilin, and is the best way to supplement an organisation’s “formal” compliance mechanisms. Such cultures typically exist in organisations which value transparency and have nothing to hide – and if there is something being hidden, they want to know about it.

    As with all aspects of culture, it starts at the top, says Gentilin. Directors and executives have to set an example that demonstrates that they value openness and transparency, and when things are uncovered, they need to respond in a way that deals with the situation and doesn’t result in those who speak up suffering from their actions.

    But, of course, it can’t just be directors and executives who set the tone, particularly in organisations with thousands of employees. “You need to ensure you have programs in place where leaders across the organisation develop the skills that enable them to create environments in which people feel comfortable challenging and voicing opinions and, when they do so, that they’re listened to,” he says.

    Setting the tone

    In small organisations, it is comparatively easy for a director to set the tone from the top, but in large ones, their influence can dilute quickly. Hence, boards and executives need to have a good understanding of what Gentilin calls the “the centres of influence” in their organisation; the leaders who, through their own behaviour and choices, can send a powerful message about what is important.

    “Are these leaders, like the directors and the executives, just as committed to the organisation’s purpose and values? And do these leaders also create environments where people feel comfortable speaking up and challenging when they see conduct that’s not aligned to the organisation’s values?”

    The reality is, that in some cases it is against a leader’s interests to have a problem brought to their attention, which they will then have to acknowledge and deal with. Gentilin says this is the leader’s problem.

    When people perceive hypocrisy in their leaders they disengage and become cynical, and this creates fertile ground for unethical behaviour.

    “If you’re a leader who struggles with hearing the truth, then you’ve really got to think about what is it that’s causing that – why are you uncomfortable hearing about what’s really going on? This type of attitude is going to be detrimental to your leadership, and to the ethics and performance of the organisation,” he says.

    A recent study into ethical behaviour within Australian society found consumers view big business, banks and politicians as unethical. At the same time, they rated CEOs and directors as the most important “gatekeepers” influencing ethics in organisations. The index also highlighted whistleblowers as having an important role to play in corporate Australia, with 80 per cent of respondents believing they are an essential element in driving ethical behaviour.

    Social purpose

    Gentilin says business only has itself to blame for the current lack of trust and goodwill. The key challenge for Australian businesses is to articulate their social purpose: how are they making a contribution to the greater good?

    “They need to demonstrate, in both their actions and words, that they take their broader social obligations seriously. Over time, this is what will slowly regain the trust of the public.

    “When the public begins to see that in addition to generating an appropriate commercial return, business is there to make a contribution to the greater good and to give back to customer and community, then this will rebuild trust,” he says.

    This can only happen, however, if leaders, and especially directors and executives, are deeply committed to a social purpose. It means taking on roles not for prestige or financial reward, but for the contribution it enables them to make to the greater good.

    “When leaders begin placing their privileges ahead of their principles, the message they send, whether they realise it or not, is one of hypocrisy – people see, through their actions and choices, that they’re not there to make a contribution to the greater good but they’re there to make a contribution to themselves. When people perceive hypocrisy in their leaders they disengage and become cynical, and this creates fertile ground for unethical conduct,” says Gentilin.

    It is also important to ensure that formal mechanisms such as recruitment, training, compliance frameworks and incentive schemes are fit for purpose. In some cases, previous managers, with the best of intentions, might have put these mechanisms in place, and for a variety of reasons they are no longer aligned to the organisation’s values.

    In terms of directors’ roles in setting an organisation’s culture, Gentilin says they have a very important role to play. “Even directors need to ensure that they are heavily invested and committed to the organisation’s purpose.

    “As much as we like to think that what goes on in the boardroom remains secret, people hear stories,” he says. “And if the stories they’re hearing paint a picture of a boardroom in which directors lack personal integrity, then people will naturally become cynical.”

    To promote an ethical culture, directors need to have regular conversations with people outside of the boardroom and the C-suite and listen to them and hear the stories they’re telling to learn what’s actually happening in the organisation.

    Fixing an unethical culture is hard work, but not impossible. At its core, it involves reconnecting people to the organisation’s purpose. This can result in staff turnover as management tries to rid the organisation of people who are not committed to its purpose.

    “At times, this is absolutely crucial, especially when the people who are responsible are not role models for the organisation’s values, yet are the centres of influence,” says Gentilin.

    Dennis Gentilin MAICD, author of The Origins of Ethical Failures will be speaking about how to make ethical decisions in the boardroom at the 2017 Australian Governance Summit. 

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