I’ve long had considerable admiration and respect for Royal Bank of Canada, Canada’s biggest bank and arguably the country’s most respected corporation. My fascination with the bank began in elementary school where the bank distributed its signature blue wall calendars with cards that needed to be manually changed every day. I hated grade school, and spent considerable time mindlessly gazing at the bank’s once iconic lion mascot, which was destroyed when the bank rebranded itself RBC as it expanded in the U.S.
When I was a reporter at the Toronto Star and The (Montreal) Gazette, I had considerable dealings with Royal Bank’s PR people. Without exception, they were all first-rate, among the best I’ve ever encountered. When I went into PR years later in Manhattan, Royal Bank became my client, which for me was akin to a die-hard New York baseball fan getting hired by the Yankees. Royal Bank later became one of my two founding clients when I went out on my own.
What I especially admired about Royal Bank was the company’s unrelenting concern about its public image. Lots of companies pay lip service to adhering “unrivaled” standards of ethics and integrity, and when I worked with Royal Bank, I witnessed first hand the bank’s genuine commitment to its declared values. Underscoring the bank’s commitment, David Moorcroft, the bank’s former head of public affairs, initiated a survey to make certain that employees understood and embraced the bank’s values.
The project was called “Say/Do” and employees were given a list of Royal Bank’s values and asked if they believed the bank lived up to them. Turned out, employees identified certain business practices they felt were inconsistent with the stated values. Royal Bank took the internal criticisms seriously and addressed them. The changes led to more profitable activities.
Reading Bloomberg last week, I was taken aback by this story about a lawsuit filed against the bank by Nadine Ahn, the bank’s former CFO. Ahn is suing for wrongful dismissal, arguing the bank made a “devastating” error when it fired her over a personal relationship with a co-worker — and denying that the two were romantic partners. Ahn says she suffered “palpable reputational harm” and “public humiliation” when the bank sacked her in April. She’s asking for nearly C$50 million ($36 million) in pay and damages.
Royal Bank also is being sued by Ken Mason, who worked in the bank’s corporate treasury group and was fired because of his relationship with Ahn, who allegedly spearheaded his promotion to vice president last November. Mason, who is seeking C$20 million in pay and damages, asserts that if he and Ahn were of the same gender, Royal Bank wouldn’t have investigated their relationship.
“RBC opted to make an example of Ken and Ahn by wrongly publicly shaming them in order to project moral righteousness, appearing to swiftly investigate and punish perceived corruption,” Mason’s court filing claims. “The clear insinuation of the RBC Statement was that Ken and Ahn had had an extramarital affair and that Ken received career advancement and financial benefits as a result. This insinuation was false and defamatory.”
Reading that Ahn and Mason were suing Royal Bank for wrongful dismissals and denying they had more than a friendship made me instinctively believe them. I figured Ahn and Mason wouldn’t dare call attention to their alleged relationship if it were anything more than a simple friendship that Ahn says began in 2013 and was never hidden. It would be damning and embarrassing if Royal Bank produced some steamy correspondence between them, so I figured for sure none existed.
Bloomberg reported that Ahn and Mason are both married, another reason I believed they wouldn’t file lawsuits unless they were confident that Royal Bank had no damaging or embarrassing information about their relationship.
Compounding my belief in Ahn’s and Mason’s claims they had just an innocent friendship was the statement Royal Bank spokeswoman Gillian McArdle sent Bloomberg in an email.
“These claims are without merit, and we will vigorously defend against them in court,” McArdle said. “We conducted a thorough review with an investigation by outside legal counsel and the facts are very clear that there was a significant breach of our Code of Conduct based on the irrefutable evidence collected during the investigation.”
If I received a dollar for every time a company thundered it would “vigorously defend” against a damning lawsuit and then settled, I’d be a very wealthy man.
In a follow-up story, Bloomberg reported that Ahn, 53, worked for Royal Bank for 25 years and claims in her lawsuit that she “was identified by RBC as a possible successor for the CEO position.” The Globe and Mail said Ahn was promoted to CFO from a senior vice-president role, bypassing the executive-vice-president level.
“Over 25 years of employment with RBC, Ms. Ahn proved herself as a loyal, trustworthy, and an extraordinarily talented leader, who overcame many gender-based hurdles during her employment,” Ahn states her lawsuit.
Ahn claims in her lawsuit that CEO Dave McKay texted her to meet with him the following morning, but he wasn’t there. Instead, Ahn says she was blindsided by questions from a lawyer about her relationship with Mason and her laptop and cell phones were seized. If McKay was indeed grooming Ahn as a possible successor, I thought it reflected poorly on him that he didn’t attend.
McArdle, the Royal Bank spokeswoman, wasn’t bluffing when she said Royal Bank would “vigorously” defend against her allegations. The bank last week dropped a shoe that landed with a deafening thud.
As first reported by the Globe and Mail, Royal Bank filed a blistering 29-page statement of defense and a counterclaim seeking damages for “the excess compensation the bank says Ahn caused it to pay to Mr. Mason in breach of her fiduciary duties,” and to claw back bonus pay to Ahn totaling $3.3 million.
What kind of evidence does Royal Bank have to back up its assertions? I recommend you be seated while reading the rest of this post.
Royal Bank’s court filing cites text messages, instant messages and e-mails between Ahn and Mason. In those communications, they used pet names for each other – “Prickly Pear” for Ms. Ahn and “KD” for Mr. Mason – and celebrated their “anniversary date,” exchanged love poems and expressed strong feelings for each other. In one exchange in March 2019, Ahn messaged Mason to say, “I love you,” and Mr. Mason replied 15 seconds later: “I love you too.”
RBC says there were text messages that “fantasized about a life together, such as reading in bed together.” Mason, a seemingly renaissance man, allegedly drafted a poem that made references to Ahn.
As reported by Bloomberg, Royal Bank alleges that Ahn and Mason used calendar invites to schedule “liquidity meetings,” which the bank said was code for going for cocktails. At one such meeting, the two scribbled notes about their drink orders and other topics such as “concert, night out, winery” on a coaster from Canoe, an upscale restaurant in Toronto’s financial district. Mason had the coaster encased in plexiglass and kept it in his office, RBC claims.
Ahn and Mason apparently appreciate very good food. Canoe, which celebrates Canadian-inspired cuisine and has breathtaking views from the 54th floor of Toronto Dominion’s headquarters building, is a Starkman Approved restaurant and long my favorite Toronto eatery.
On March 11, Royal Bank says it received an anonymous whistle-blower complaint alleging that Ahn and Mason were in an intimate relationship. The whistle-blower alleged that the two executives “had been seen hugging and kissing and exiting the elevators at the Fairmont Royal York hotel in downtown Toronto together,” and questioned why Mason had been promoted.
The Royal York hotel is next door to Royal Bank’s headquarters, and when I lived in Toronto, the hotel’s Library Bar was a popular watering hole for the bank’s traders. As I’ve previously written, the Library Bar is where I sampled my first and still best martini, rivaled only by the one served by Leona at the former Saffers Restaurant and Bar on the ground floor of Royal Bank’s headquarters. (Working with Royal Bank had many fringe benefits).
RBC alleges that Ahn and Mason exchanged increasingly “intimate communications” over a period of years, sometimes through RBC’s corporate messaging systems. Mason also allegedly ordered two copies of a 43-page “LoveBook” online, which were delivered to his RBC office, and which the bank alleges celebrated their 10th anniversary. “Prickly Pear and KD lived happily ever after!” the book said, according to Royal Bank.
Royal Bank also cites instances when Ahn taught Mason how to hide text-message notifications, and allegedly instructed him not to meet her when she was with her husband, evidence the bank say they carried out their relationship “in a clandestine manner.”
RBC alleges that on the same day in 2021 that Ms. Ahn was made CFO, she began advocating for a large pay raise for Mason. Over a two-year span, Mason’s compensation rose by 58 per cent, from C$695,000 to $1.1-million, before he was promoted the following year.
Ahn “overrode” objections from senior bank officers to whom Mr. Mason reported, who are not named in the filing, and ultimately secured his promotion to vice-president role last November, Royal Bank alleges. The bank says that achieving that role was “a centrepiece goal” of a 2017 plan that Mason drafted to expand the scope of this duties and secure higher pay, called “Project Ken,” and that “Ms. Ahn supported him in realizing that plan.”
“The decision to promote Mr. Mason was effectively made by Ms. Ahn,” Royal alleges.
Royal Bank claims that it had no choice to fire Ahn because she “abused the power of her office as CFO,” repeatedly breached her fiduciary duties to RBC, and later “failed to be forthright and honest when questioned about her conduct.” Given that Ahn was a high-ranking officer, the bank was legally required to disclose her departure and provide some explanation. When a CFO of a publicly traded company inexplicably leaves, it causes jitters on Wall Street because of concerns about possible financial wrongdoing.
Royal Bank’s stock is listed on Canadian and U.S. exchanges. Full disclosure: I’ve owned Royal Bank stock for decades and have profited handsomely from my holdings.
What I find particularly bothersome is Royal Bank’s allegation that Ahn two years ago fired a colleague a “substantially identical” offense for which she was fired. As well, as reported by Bloomberg, Royal Bank states that when another employee raised concerns about Mason’s pay, Ahn terminated that person’s employment without cause. Royal Bank says that former employee “has demanded compensation from RBC for bad faith termination of his employment, because of Ms. Ahn’s conduct.”
Lawyers representing Ahn and Mason didn’t respond to requests for comment from the Globe and Mail and Bloomberg, and Royal Bank’s allegations haven’t been proved in court. Perhaps there’s some “context” that can explain Ahn’s and Mason’s allegedly salacious behavior, and I anxiously await their responses if they continue with their lawsuits.
I now understand why Royal Bank CEO Dave McKay chose to let Royal Bank’s lawyers handle the matter rather than confront Ahn himself. If McKay was indeed grooming Ahn to be his successor, I imagine he feels betrayed.
Kudos to Royal Bank spokeswoman Gillian McArdle for her deft crisis management, an indication that McCardle’s promotion to vice president three months ago was well deserved. I’m delighted to see that the communications folks at Royal Bank of Canada are still among the best in the business.