When should a whistleblower be held accountable?
Across the UK, whistleblowers are protected by law. This is crucial because their main role is to report anything, they deem illegal or unethical in the workplace.
However, while the motivations on their part can be well intended to protect their colleagues, some reasons for blowing the whistle can be very different.
While those who choose to do so are protected, should they be open to receive criticism? Should they be held accountable for their actions?
In May 2011, Daniel Sheard and Tim Hayward, who were co-portfolio managers at Swiss investment house GAM (which acquired Augustus Asset Managers Limited), launched GAM’s Unconstrained Bond Strategy. Its aim was to create positive absolute returns with a low correlation to global bond markets – known as the Absolute Return Bond Fund.
The fund was to prove very fruitful for both Sheard and Hayward, with Sheard purchasing several properties outright with the cash he profited.
Mr Hayward had joined Augustus (then Julius Baer Investments Limited) in 1998 from Orient Overseas International Limited in Hong Kong, where he was Chief Investment Officer. He had been CIO and CEO of Augustus.
Mr Sheard, a graduate of the University of Manchester Institute of Science and Technology, also joined Augustus in 2006 as Deputy Chief Investment Officer and became Chief Investment Officer two years later. He had worked previously as director of the institutional fixed income group at Prudential M&G. His career background did include a dismissal from his first job after graduation – HYPO Foreign & Colonial – when an overvaluation of an asset was discovered while he was on annual leave.
Along with a third man, Jack Flaherty, the trio was listed in corporate structure diagrams as three equal co-managers. But inevitably, things didn’t go so smoothly after being considered the dream team, by colleagues.
Sheard told reporters Katherina Bart and Tom Bergin, that Mr Hayward loved being in the spotlight. The duo had worked together for years but Mr Hayward got the praise and more money, while Mr Sheard dragged behind. It’s believed he had issues with an Australian investor, Lex Greensill. Mr Greensill introduced GAM to the industrialist Sanjeev Gupta’s group that had proved lucrative for GAM but Mr Sheard was angry at being left out of the negotiations and confronted Haywood in several meetings. At the end of 2017 he stopped going to work.
It is understood he even filed Freedom of Information Acts to the Scottish government in a bid to uncover what had been said about him.
After a formal complaint about Mr Hayward by Mr Sheard, an internal inquiry obligated Haywood to state the gifts he had received from Greensill.
An internal investigation revealed Hayward didn’t declare these gifts, including flights, and he had used his work email for his own personal use, however, there was no wrongdoing, according to GFG, as there was nothing wrong with any of the investments.
The funds exposure to GFG was only 12% of the overall fund. Haywood was given a warning in 2018.
Still disturbed, Mr Sheard, leaked details of these investigations to the press including a journalist at finnews.com who shared the story with a colleague from Reuters.
GAM was then forced to confirm reports and suspend Hayward, all the while protecting the whistleblower, once they found out press were involved.
Consequently the bond was liquidated and funds were returned. GAM took a drastic slide from a net profit of CHF123.2 m in 2017 to a net loss of CHF929.1 million in 2018. This was followed by redundancies – including Mr Sheard. But he shared this news too, with his existing journalist contacts.
It would seem that Sheard ruined the business he had spent years building, whilst causing his colleagues to lose their jobs and still does not face up to the consequences of his actions.
GAM claims that Hayward did not break any internal or external rules concerning investments.
So, it would seem in this instance, that the public interest may need to be protected from whistleblowers, rather than the other way around.