News
Bankers Behaving Badly
Don't do your dirty laundry in public.
The first time that I heard that expression I was on a bus with a sporting team from my school. An altercation arose between two of my schoolmates, and our teacher came to intervene.
As in all school yard disputes, it was obvious to all of us that there was a wrongdoer and a victim. The teacher didn't care about that, however. He told both boys to stop misbehaving - and when the innocent party protested the unfairness of this outcome, he uttered the phrase quoted above.
The point can be simply stated: even if you are completely right about something, arguing about it in public can have an effect upon you (or your school, company or even your country) that is overall more detrimental to you than curing the dispute itself.
As a recent case in England illustrates, it is an important lesson that is evidently lost on some parties drawn into employment disputes.
Stephen Horkulak was employed as an interest rate derivatives broker at the London firm Cantor Fitzgerald, the world's biggest broker of US government bonds. Horkulak's job involved significant responsibility - he was in charge of 15 brokers, and an annual revenue of US$24 million - and he operated in a high-stress, high-octane environment.
Horkulak was paid well for his efforts - taking home an annual salary of £750,000, in addition to receiving share options with a considerable value of their own.
Horkulak's boss was the firm's CEO, Lee Amaitis - a man whose nickname was the "Brooklyn Bruiser". Amaitis was well-known as a man who liked to pound his desk with his fist, shout, demand instant responses and criticise perceived failings or faults. Foul language was a hallmark of his managerial style.
For his part, Horkulak had a history of stress-related problems, and had previously taken medication for anxiety.
It seems that Horkulak and Amaitis had personalities which were destined to collide - which they did in the most unfortunate way.
After a series of incidents involving the two men, Horkulak could take no more: after a dispute over the improper use of punctuation marks (of all things) Horkulak went home, sought stress management therapy, and sued his firm for constructive dismissal.
There is apparently an unwritten rule within the banking industry in the United Kingdom that employment disputes of this type are settled privately and never allowed to proceed to a public hearing. This case was an exception. The parties could not agree to a negotiated resolution and, three years after Horkulak left his job, the case was called in the High Court of Justice in London.
On the face of it, the dispute was simple. On the one hand, Horkulak claimed that he had been subjected to an unacceptable workplace, and had been treated abusively by his boss. On the other hand, Amaitis sought to portray Horkulak as a stressed-out, drug-using alcoholic whose job performance had spiralled downward. Put simply, Amaitis maintained that Horkulak was the author of his own misfortune - and that this management style should be free from criticism.
Naturally, each side spent a good deal of time introducing evidence about the nature of the workplace at Cantor Fitzgerald. Irrespective of one's views of the merits of the case, a person of ordinary sensibility cannot help but be intrigued by this remarkable opportunity to obtain some insight into the lifestyles of such high-rolling bankers. For example:
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a story was told about a senior manager who kicked down a lavatory door in a wine bar when a co-worker refused to share his cocaine;
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Amaitis had demanded what he called a "blood oath" from Horkulak in a ceremony which was described as "a scene out of The Godfather". The oath involved an undertaking by Horkulak that he would forgo certain share option rights if he defected to a competitor;
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the Court was told that Amaitis had once berated an interior designer for choosing "homosexual f------ wallpaper";
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Horkulak talked about a trip to New York during which Amaitis had referred to a rival banker as a "f------ fat, greasy f---" and that he had spoken to a colleague who had offered to call somebody to "take care of him once and for all"
- Horkulak recounted a story about a discussion with Amaitis over a bonus issue, in the course of which Amaitis had threatened to "f------ break him two" and sack him.
Amaitis took issue with the truth of some of these stories. In respect of others, he did not deny the incidents had occurred, but had a different version of particular events. Irrespective of these things, however, anybody listening to the evidence (including what appears to be a significant number of journalists) was able to form their own view about Amaitis, the company, and more generally the culture that appeared to existing within the banking fraternity.
Perhaps somewhat unsurprisingly, the Court took a dim view of Amaitis and his general management style. It characterised him as dictatorial and foul-mouthed. It found that Horkulak deserved proper treatment in accordance with his employment contract - which he had been denied by Amaitis. It ruled in favour of Horkulak and ordered Cantor Fitzgerald to pay him £1,000,000 in damages.
This case illustrates that the cost of litigating in public may be greater than a loss in a particular claim. Although one cannot eliminate the possibility that the foul-mouthed, aggressive, cocaine-fuelled style attributed to Cantor Fitzgerald might be appealing to some investors, to most ordinary members of the public its workplace is likely to be regarded as reprehensible. Further, one can imagine that for a Judge whose normal work would see him deciding a variety of different claims brought by people on or about the average wage - or perhaps by unions on behalf of groups of industrial workers - a case of this type would be likely to invite an expression of distaste and condemnation.
It serves as a reminder that if we have dirty washing to do, we should probably avoid doing it in public.
