Questionable hiring practices in Asia causes Conflict of Interest for banks

The UK based Barclays Bank PLC has become the latest international bank to reveal that U.S. authorities are investigating some of their hiring practices in Asia – suggesting a conflict of interest. Sources indicate that Barclays Bank is alleged to have improperly recruited friends and family members of Asian government officials as well as top executives in the region with which the bank had previous dealings.

The Securities and Exchange Commission [SEC] is known to be already making inquiries into around a dozen banks in the U.S. and Europe regarding similar aspects of their foreign personnel recruiting. HSBC Holdings PLC has also recently disclosed that it had received information requests from the SEC as to their hiring practices around potential hires with ties to Asian government officials. Such inquiries by the SEC have been active since August 2013, when J.P. Morgan Chase & Co. disclosed that the SEC was likewise reviewing its hiring processes in Asia.

One recent report in the WSJ stated that J.P. Morgan Chase & Co. had hired friends and family members of executives at seventy-five percent of the major Chinese companies it helped take public in Hong Kong during the decade long boom in Chinese IPOs of major firms. The numbers reportedly came from a document compiled by the bank as part of a federal bribery investigation into the behaviour.

Other US Banks with operations in Hong Kong are rumoured to have hired friends and family members of senior executives at major Chinese companies, which were taken public in Hong Kong between 2005 and 2013. There are questions as to whether such hiring activity would breach current U.S. foreign-bribery laws.

“Sons and Daughters” China personnel hiring program

A 2015 inquiry by US Authorities further revealed the leading US bank J.P. Morgan had hired over 200 candidates said to be part of China’s business and political elite under a system supposedly known internally as “Sons and Daughters”. U.S. authorities are still investigating the program to determine whether this activity may have constituted bribery under the U.S. Foreign Corrupt Practices Act. The FCPA makes it illegal for US companies to give anything of value to a foreign official with the intention of improperly influencing their decisions.

Such conflict of interests can occur when departments within an organisation take actions with disclosing sensitive issues to legal or compliance officers. Some of the Banks currently under investigation by the US Authorities may have pursued an advantage by recruiting personnel with insight to possible deals, without fully disclosing these personal connections to legal counsel within the banks. Failure to develop, or enforce, suitable Standard Operations Procedures [SOPs] regarding the method for hiring personnel, coupled with poor oversight by senior management and reporting structures probably contributed to this situation.

Tips for Avoiding a Conflict of Interest

  1. Have a system to check for conflicts of interest – make sure such checks are documented and all levels of managements are aware of the requirement for such checks
  2.  Even if there is no conflict at the start of a relationship, keep your radar on as the matter proceeds – and even after it ends. Some conflicts appear over time. Others may arise after the matter is concluded.
  3. Take action at the slightest hint of a conflict arising – Talk to any clients and management overseeing the matter at the first instance
  4. Don’t just keep silent and look the other way – encourage all levels of management to speak up once a problem arises
  5. Full disclosure and client briefings can often defuse a sticky situation and prevent a bad situation getting far worse

Do you need to know more about our services and how Regents can assist you with investigations? Simply go to our Contact Us page for our phone numbers or else send an email to with your contact details and we will respond at once.



Yahoo CEO Scott Thompson resigns amid controversy over his resume

The spotlight has been brought to shine on the issue of executives lying in their resumes after allegations were levelled against Yahoo CEO Scott Thompson that he lied about his college degree. Research showed that in a series of published biographical statements going back some year, Scott Thompson claimed that he “holds a Bachelor’s degree in accounting and computer science” from Stonehill College, Boston.

However, it has come to light that Scott Thompson only holds a Degree in accounting. Following the disclosure, Yahoo issued a statement saying references to Thompson earning a computer science Degree were an “inadvertent error.”  If so, it’s an error that Thompson made repeatedly forsome years without being called out on. Yahoo took action to quickly strip all references to Thompson’s degree out of his official bio on Yahoo’s website.

Yahoo’s board responded by forming a special three-person committee to review Thompson’s academic credentials “as well as the facts and circumstances related to the review and disclosure of those credentials” in connection with his appointment as chief executive of Yahoo. Days later, Thompson stepped down as part of a shakeup at the top of the troubled Internet company.

All this has seriously hurt the reputation of Yahoo and diverted the board from rebuilding the company. The brand has been damaged and morale within Yahoo has most certainly suffered. Had a modicum of Pre Employment Screening been applied, this error would have been spotted and rectified before it managed to topple the Yahoo CEO.

This most recent incident of resume padding by an executive underlines the importance of conducting full and robust pre employment screening for all significant hires within a corporation or organisation. At best, this has damaged Yahoo in the short term, but the threat for derailing a business due to unqualified personnel undertaking crucial tasks is self evident.

Government run Queensland Health in Australia managed to hire a surgeon from the USA who had already been reprimanded by USA health authorities and barred from certain surgeries.  Dr Patel was convicted by a Queensland Court of manslaughter and sentenced to seven years in gaol for the deaths of patients under his care. Some basic pre employment checking could have avoided the deaths and millions of dollars lost due to compensation, inquires and legal costs. A very painful lesson to learn.

To reduce the threat of resume padding and false claims made by candidates, it is strongly advised that all organisations should utilise Pre Employment Screening procedures.

PES is the abbreviation commonly used for `Pre Employment Screening’. PES generally refers to the process whereby a prospective employer arranges for information relating to a potential candidate to be checked and verified to confirm the suitability of the candidate for employment or as a contractor.

PES provides an objective assessment as to the potential candidate’s capacity and capability to undertake the duties & responsibilities as per their experience and qualifications. The prospective employer has the ability to assess whether the candidate has fully disclosed their attributes and or any negative incidents such as a bankruptcy record or having being terminated by a previous employer. Any false claims by the candidate as to education qualifications, previous employment or experience will be exposed.

Resume padding is also known as résumé fraud. A recent survey found that over 55 percent of hiring managers claim that they have caught a lie on a candidate’s application. Ninety-three percent of those hiring managers who spotted the lie did not hire the candidate because of it.

The top five ways candidates lie on their résumés are as follows:

1.    Lying about getting an education qualification

2.    Falsely claiming membership of a professional association

3.    Altering dates of employment to cover up periods of unemployment

4.    Lying about technical abilities

5.    Inflating job titles and position responsibilities

Below are some of the résumé padding adventures of top executives:

Ronald Zarrella, Bausch & Lomb chief executive officer
Zarrella falsely claimed an MBA from New York University’s Stern School of Business. He attended the program from 1972 to 1976, but never earned his MBA. His claim was never checked by his prior employers.

Richard Li Tzar Kai [younger son of Li Ka Shing] and Chairman of  Pacific Century CyberWorks Ltd.
The Pacific Century CyberWorks website claimed that Li “graduated from Stanford University with a degree in computer engineering.” Li actually left after three years without graduating.

Kenneth Lonchar, chief financial officer of Veritas software
Lonchar invented his education, claiming he earned an accounting degree from Arizona State University and was a Stanford MBA graduate — in fact, he simply held an undergraduate degree from Idaho State University.

The fallout was Lonchar resigned and Veritas stock price fell about 16 percent.

Are you seeking assistance with Pre Employment Screening of employees or contractors? If so, we at Regents can help you – just visit our Pre Employment Screening Webpage for further information

Benefits of Pre Employment Screening

Pre Employment Screening is a term often talked about among management without the full benefits and controls that it can bring to bear on a business being appreciated and understood. The following is a Q & A format to explain the issues that Pre Employment Screening can treat.

What is PES?
PES is the abbreviation commonly used for `Pre Employment Screening’. PES generally refers to the process whereby a prospective employer arranges for information relating to a potential candidate to be checked and verified to confirm the suitability of the candidate for employment or as a contractor.

Why do companies use PES?
PES provides an objective assessment as to the potential candidate’s capacity and capability to undertake the duties & responsibilities as per their experience and qualifications. The prospective employer has the ability to assess whether the candidate has fully disclosed their attributes and or any negative incidents such as a bankruptcy record or having being terminated by a previous employer.

Which companies use PES?
Some companies are required to undertake mandatory PES by the government, such as banks and insurance companies. Others choose to do as a risk mitigation and management planning tool and cover a wide spectrum of industries from retail, transport, manufacturing to mining. Many not for profit agencies and other volunteer organisations also conduct PES on prospective employees to screen out unsuitable or undesirable candidates.

Isn’t PES a method used to `catch people out?’
This is a common misconception among some potential candidates. PES is directed at verifying the potential candidates claimed attributes and highlighting any inconsistencies between what is stated and what is found during the PES process. It is for the employer to assess the suitability of the candidate for the position based on a host of considerations.

So how does PES work?
The general approach is to have potential candidate supply personal information in writing which relates directly to their employment such as education attainment, working history, job experience, references from previous employers etc. This information is usually supplied by submitting a standard form and supplying copies of any qualifications such as a Degrees or membership of a professional society.

Next is the verification process. Armed with a consent release from the candidate, contact is made with the relevant education intuitions [universities, colleges, TAFE, high schools etc], former employers and references provided by the candidate to ascertain whether the claims made by the candidate are accurate and valid. A report is compiled detailing these findings and submitted to the requesting potential employer or organisation. Any discrepancies between what the candidate has submitted and what was discovered during the verification process are given a `red flag’ for the client to consider.

Is consent from the potential candidate required?
Many countries have some form of Data Privacy law that requires that the candidate must first provide written consent before these PES checks can be undertaken. Most institutions will require viewing a copy of the consent release signed by the candidate before disclosing any information.

What other kinds of things can be checks can be performed?
There are a variety of background checks which can be undertaken for a prospective candidate depending on the country where the candidate is located and to what the prospective employer wishes to check the background. These checks include the following:

  • Record of directorships or shareholdings in private companies
  • Bankruptcy record
  • Previous residential addresses
  • Civil litigation history
  • Media profile
  • Criminal record
  • Record of any regulatory agency actions

How focused is PES?
PES is as focused as the requesting company or organisation wants it to be. For example, a transportation company would think it crucial to confirm that a potential candidate for a driver position should have a clean driving licence, whilst a different firm engaging someone as a financial assistant may consider this check unnecessary. A qualified PES firm should be able to advice as to which checks are germane to the position which the candidate has applied for.

How many years does a PES check go?
Generally a PES check goes back between 5 and 10 years for previous employment whereas records such as bankruptcy and civil litigation can go back 20 years or more. With employee turnover increasing in most industries and companies merging or being bought out, employment records are difficult to obtain longer than 10 years back

How many days does PES check take?
The actual time will vary depending on the number of attributes to be verified, the location and the type of checks involved. Generally, a PES report can be completed within five days but some component checks can take longer to complete [e.g. criminal history checks].

But I heard that recruitment agencies do PES?
Not really, no. Some recruitment agencies do undertake some basic background checks to corroborate the candidate’s history but few recruitment agencies conduct what can be considered a thorough PES. Unlike a PES firm, recruitment agencies are looking to fill a vacancy and focus on selecting a candidate.

What are the downsides to PES?
Very little. Other than having to pay a small fees for the PES check and a slight delay between choosing a candidate and having them confirmed as being suitable.

Compare with this the risks and damage caused when hiring the wrong or inappropriate candidate. The direct costs can include the waste spent on the recruitment and training of the person, costs and difficulties with terminating their employment and possible damages claims.

However, the risks can be even more severe than this including damage to the company’s brand or share price plus the machinations of deposing of an unsuitable employee when they hold a more senior role. Compensation paid to wronged parties can quickly escalate and there are multiple examples of how much harm a rogue employee can cause an organisation – examples include Dr Jayant Patel hired by Queensland Health as surgeon despite being restricted from certain operations by the State of Oregon, USA and New Zealand chief scientist Stephen Wilce having falsified his resume. A standard PES check should have raised these red flags prior to them being hired and causing harm and damage to the reputation of the organisations involved.

PES is recognised as an integral first step for anti fraud measures protecting an organisation. By screening any prospective employee or contractor the organisation can save itself some serious grief in the future. On occasions this first step of PES will ward off potential fraudsters / under achievers simply by demonstrating that the organisation takes PES serious. We have had instances whereby applicants have declined to submit their details and walk away – possibly an indication that they will move on and try to join an organisation that isn’t so particular.

Are you seeking assistance with Pre Employment Screening of employees or contractors? If so, we at Regents can help you – just visit our Pre Employment Screening Webpage for further information

Police Department background checks delve into Facebook history

Just how far should background screening delve into the private lives of candidates? If you want to be a Police officer candidate for some Police Departments in the US, you may have to undergo some deep digging into your background.

The International Association of Chiefs of Police (IACP), the largest group of Police executives, recently released a report on the practice of those Police Departments background screening their recruits. The report outlined that over a third of association member Police Departments actively review applicants’ social media activity during background checks.

These background checks include reviewing Facebook, MySpace, Twitter and YouTube for any unreasonable, objectionable or criminal behaviour. The Police Departments regard such online activity as being in the public domain and thus reasonable to be check upon.

For more sensitive positions that require a positive vetting level of background checking, some Police Departments are demanding that applicants provide private passwords, screen names, details of text messages and even email logs. To enable these checks, the Departments either request waivers from candidates or full disclosure of their internet activity. However, some data privacy advocates say such background investigations may be going too far.

One reason for this approach by Police Departments has been the development of Criminal defense lawyers trawling Police officers’ posts to social network sites to undercut their credibility as witnesses in court. Any indication that a Police Officer has a bias against certain racial or ethnic groups will be seized upon by a defense lawyer. One such incident involved a Police Officer who became a member of a Facebook group called `Wanting to hit people in the back of the head who get in your way’. The defense attorney claimed this showed that the Officer was prone to violence and breaking rules.

As new candidates have been raised connecting on the internet and are prone to post photographs, images, musings and comments on the web, the incidence of inappropriate material linked to Police Officers and others in positions of authority will only grow. Matters are likely to progress to a stage whereby prospective employers will check social networking profiles they way they have previously scanned their high school performance.

Here are a few tips for likely candidates for law enforcement positions as they engage in social networking:

  1. Once something has been posted and indexed, it is nigh on indelible
  2. The ownership of posts on some sites become the property of the site
  3. What may seem hilarious on a Saturday night may not look so amusing on a Tuesday morning
  4. If you wouldn’t want your mum to see it or read about it in the newspaper, best not post
  5. If in doubt, leave it out

Are you seeking assistance with Pre Employment Screening of employees or contractors? If so, we at Regents can help you – just visit our Pre Employment Screening Webpage for further information

New Zealand military embarrassed by scientist’s fake background

The New Zealand military were left with egg on their face after it was revealed that British-born Stephen Wilce, the head of the New Zealand Defence Technology Agency, embellished his resume and made a string of bogus claims about his past.

Stephen Wilce had initially falsely claimed he was an ex-Royal Marine combat veteran and a member of an Olympic bobsleigh team that had raced against Jamaica’s “Cool Runnings” team in Calgary.

Details of an inquiry released yesterday revealed the extent of Mr Wilce’s claims to incredulous colleagues, saying the Defence force’s top scientist had admitted to telling tall stories about himself since childhood.

Over time, Wilce claimed to have been a helicopter pilot who served with Prince Andrew, a spy with British intelligence agencies and a Special Forces soldier who was now on an IRA death list. Colleagues began to grow suspicious when his boasts grew to include having been a member of the Welsh rugby union team and a captain of the Royal Navy swimming team.

However, Wilce’s claims were uncovered by local New Zealand Television station TV3. Upon their checking, journalists found that no record existed of Wilce serving in Britain’s Royal Marines or of him having combat experience and that no one on the 1988 British bobsleigh team knew of him. A TV3 reporter had secretly recorded Wilce boasting that he was an Olympian bobsleigher and knew the members of the Jamaican team.

Following the TV3 news report, Wilce resigned his position and put officials within New Zealand’s military in a difficult position. The embarrassment was compounded when it was highlighted that Wilce had been given top security clearances as part of his position and would have been privy to national security information.

The TV3 investigation included contacting Wilce’s former employers which revealed that Wilce had a tendency to spruik fanciful stories about himself. One employer recalled that Wilce had claimed credit for designing the guidance systems for Britain’s Polaris nuclear missiles. Had the New Zealand military made similar checks, they would have found out that some of Wilce’s resume were not true.

A New Zealand government inquiry into the matter found the recruiting process for Wilce was “flawed in significant respects”. Though the report didn’t specify the issues regarding Wilce, it did say that certain information had not been rigorously checked and suggested that steps be taken to tighten procedures and follow set guidelines.

The report noted that Wilce had polished his resume when he was recruited in 2005 and his appointment was made without proper checks being carried out. Wilce had made certain claims which were noted by the recruiters but not thoroughly pursued, had they been then Wilce would probably not have been hired.

Are you seeking assistance with Pre Employment Screening of employees or contractors? If so, we at Regents can help you – just visit our Pre Employment Screening Webpage for further information.