Former FX Trader Says Boss Offered `Bribe' to Cover Up Error

(Bloomberg) -- A former Royal Bank of Canada currency trader sued the lender for 13 million pounds ($18 million) for unfair dismissal, alleging that a senior manager had offered him a "bribe" to cover up a trading error.

John Banerjee said in a witness statement at an employment tribunal in London this week that six months after joining RBC in June 2015 as an emerging market foreign-currency director, he lost $880,000 overnight because a colleague failed to carry out an order to abandon a trading position when the South African rand suddenly appreciated.

When Banerjee’s colleague denied making an error, he said he asked RBC’s global head of foreign currency trading, Ed Monaghan, to investigate. Monaghan stalled and, when Banerjee insisted on a proper investigation, flew into a "rage."

“An investigation will make the department look bad, and that means you will look bad,” Banerjee cited Monaghan as saying. “Is it the loss that bothers you? I’ll cut you a check for the loss -- just drop it." Banerjee, who is suing for unfair dismissal and failure to protect a whistle-blower, described the offer as a “bribe."

RBC believes “this claim to be without merit and are vigorously defending our position," the Toronto-based bank said in a statement.

Monaghan attended the proceedings Thursday, but declined to comment while the case is ongoing. In a statement cited by Jane Mulcahy, a lawyer for RBC, Monaghan said that he did refer the incident to the operational risk team to be investigated and that he didn’t offer a bribe.

Transfer Losses

According to Mulcahy, he doesn’t recall using the exact phrase "I’ll cut you a check," but said he meant he was willing to notionally transfer the losses from Banerjee’s trading book as he was overseeing a global business.

Banerjee, who turned 50 earlier this month, said he previously had a successful trading career that included stints at Citigroup Inc., Barclays Plc and Standard Chartered Plc. In August 2016, RBC dismissed him for repeatedly coming late to work and “exited” three other people on the spot foreign-currency trading team, while Monaghan took early retirement in October 2017, Banerjee said.

Tribunal Caps

Whistle-blowing claims are frequently added to U.K. employment tribunal lawsuits to overcome an 83,700-pound cap on damages. Awards are normally limited to that amount unless a former employee can prove they were the victim of discrimination or had made a public-interest disclosure. Charity Whistleblowers UK is supporting Banerjee’s case.

The run-in with Monaghan hadn’t been his first issue at RBC, Banerjee said.

The former trader said RBC’s FX policy was incoherent, inconsistent and impossible to comply with, because traders needed to be able to trade freely to make money, but were barred from trading in the same direction as clients. He complained that employees merely said they were aware of compliance policies, without having read them.

Banerjee said that all staff were unnecessarily required adhere to some rules related to the U.S. Securities and Exchange Commission, even if they didn’t deal in American securities.

In questioning Banerjee, Mulcahy portrayed him as someone who exaggerated his claims and, at times, needlessly aggravated issues in the business. Mulcahy identified an example of Banerjee instigating a grievance procedure against a more-junior employee who was slow to apologize for unfairly calling him aggressive. She also said Banerjee was more interested in personal-trading losses than in any ethical considerations.

Banerjee said he realized over time that RBC’s compliance culture didn’t go beyond "box-ticking," something he raised in an email to fixed income, currencies and commodities head Jonathan Hunter. Because Monaghan, who had been copied in the e-mail, forwarded the message to the head of employee relations, Banerjee said he felt "something tremendously sinister" was going on.

Banerjee said when he was called into a meeting to discuss his concerns, a colleague warned him to remember how Joe Peschi’s character in “Good Fellas” was treated by his friends in the Mafia.

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