The story of David and Goliath is one most of us are familiar with. Goliath, the Bible character, as told in the Books of Samuel, is described as a giant Philistine warrior who was defeated by the young and small David, a shepherd and future king of the Israelites. No one would stand up to the giant Goliath, who terrorized the Israelites until David confronted him. As Goliath moved in for the kill, David reached into his bag, used his sling shot and slung one of his stones at Goliath’s head. The stone hit the giant’s forehead, and Goliath fell face down on the ground. David, using Goliath’s own sword, killed him and cut off his head.
The story is often used as a metaphor for giant problems or impossible situations. No surprise that is was used by Sherry Hunt about Citigroup, in “The Whistleblower,“ produced by WNET TV, PBS New York as the first in the three-part series, Playing by the Rules, Ethics at Work that begins this week in select PBS markets. WNET is the flagship public station of the New York City tri-state area and one of the most watched and respected public television channels in the country.
This first episode, highlighting Citi and Sherry Hunt that I participated in, includes interviews with Sherry, Professor Adam Waytz and Bob Ivry, the Bloomberg writer who wrote about Sherry Hunt, Citi and our ordeal for Bloomberg Markets Magazine. During the interview, I briefly described what happened at Citi. I talked about the culture of greed as a driving force and the constant push to increase profit at any cost and the significant incentive compensation management enjoyed, which also provided the motivation for management to ignore Sherry’s warnings and mine.
The story focuses on the egregious fraudulent mortgage activity Citigroup engaged in. Citigroup, the poster child for fraudulent mortgages, couldn’t make mortgage loans fast enough. Buying a home was and is the American dream and mortgage loans meant more fees for the banks that could be bundled up and passed along to investors. Subprime loans were attractive and cheap, yet very profitable for banks.
Sherry reported to me at Citigroup and “after I left” took my warnings very much to heart. Four years later she blew the whistle on Citigroup. On the surface, the company had a culture of doing the right thing. The bottom line though, what governed, was “what will it take to bring in the money?” Sales and profits trumped everything else.
Sherry consistently documented the fraud. And spoke up, often. She was ignored and belittled. She was told to cook the books. And finally, she couldn’t take another day and blew the whistle. This segment documents her journey as well what I went through while I was there. It shows how Sherry stood up to the Goliath, Citigroup. “You have to start in your own backyard,” she says.” When things get rough, you stand up and you do the right thing.”
Mary Ann Rotondi, the award-winning producer of this episode, contacted Adam Waytz, assistant professor of management at the Kellogg School of Management at Northwestern University, after reading an article summarizing the Kellogg business case about Sherry Hunt’s and my experience at Citigroup, “How Citibank’s Culture Allowed Corruption to Thrive.” The case won Waytz and Vasilia Kilibarda, also at Northwestern, an international award for the “Outstanding Case Study on Anti-Corruption,” given by the United Nations Compact Principles for Responsible Management Education (PRME) and Giving Voice to Values (GVV) presented at the North American Case Research Association (NACRA) conference. The Kellogg case, which is currently used in business schools around the world, was referenced in a prior post.
Ms Rotondi believes that many of us face and have faced situations similar to mine and Sherry’s at Citigroup. Part of her goal is to create a more ethical work environment in business and to encourage employees who may be faced with similar situations to ours to make the right choices and perhaps suffer less retaliation.
The producers of the remaining two episodes in this series will also utilize case studies to explore important and serious ethical questions that businesses are faced with today. They also plan to include commentaries from prominent ethics professors from some of our best business schools in an effort to help further the need for an ongoing conversation about ethics, responsibility, and character (or lack thereof) in the workplace.
Every person who learns more about the financial situation this country is faced with; every person who experiences the egregious lack of ethical behavior in their company that Sherry Hunt and I did; every voice that speaks up about this financial travesty is a step forward in assuring this travesty does not continue nor ever happens again.
The ordinary person is not a giant of industry. However, all we need are a few David’s willing to stand up and face down corrupt giants.
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Richard Bowen is widely known as the Citigroup whistleblower. As Business Chief Underwriter for Citigroup during the housing bubble financial crisis meltdown, he repeatedly warned Citi executive management and the board about fraudulent behavior within the organization. The company certified poor mortgages as quality mortgages and sold them to Fannie Mae, Freddie Mac and other investors.
