and ays to SCENARIO 6 INTIMATE CONFLICTS er it. Now what do you do? Yow we seen it. that The Situation Ralph Johnson is a CPA.. about 5500 million in outskirts of town at crowded-a face ca his bank, Nancy Dran is a CPA who is the head of internal audit of a mid-sized bank with illion in loans. One evening he just happens to walk into a bar on the town at 10 pm to meet someone, and, as he walks in the bar is very face catches his eye, and it is the face of a female senior loan officer in Nancy Draper. He sees that she is having a fairly intimate drink with a borrower, one of the largest developers in town. ohnson freezes; he moves out of eyesight and is not quite sure what to do. more he looks on at the scene, the more it seems obvious that this is not an ended business meeting.' He decides to go out to the parking lot, because he knows what Draper's car looks like. His plan is to learn more by observing what happens next. Draper's car is parked in a poorly lit back section of the parking lot. Judson therefore moves his car into position among the shadows, where he can have a good view. Not fifteen minutes later, Draper and the major borrower come out, and, walking to her car, even before they put the key in the door, the developer acts in such a way that there can be no doubt as to the intimate relationship that exists between them. They next get into the car, steam up the windows, and he gets out and leaves half an hour later. Judson stays and observes until Draper drives off. Question The next day Judson sees Draper at work and is not sure what to do. Draper's relationship with the major borrower/developer is a serious violation of bank policy. However, Judson is very concerned because he has heard rumors that Draper has also been intimate with the bank President-and Draper reports to the bank President. As head of internal audit, Judson has the authority to initiate a review of the loan relationship, but this would look suspicious and strange. He could of course contrive to review "certain lending relationships that the bank has" -- which would just 'happen' to include this particular loan relationship, picked accidentally for extensive review. However, that path is effectively closed to him, since a fairly comprehensive review of that sort was just completed, and for him to date a new review at this time would be regarded as inappropriate and perhaps even as a kind of harassment. 102 s possible courses of action that are permissible, which What should Judson do? What follows are various possi Are there any that should be excluded? Of those that are best? How would you rank them? with the bank President. He mend that the bank relationship with that audit, or by whatever Looking for an Answer First possibility: Judson should make an appointment with the bank Pres should explain what he has seen, and he should recommend that undertake a serious, objective review of its lending relationship borrower/developer-to be carried out by internal audit, or by w independent means the President decides (such as an outside consultanta loan officer; or the president himself). Judson recognizes that by taking this action he might precipitate his own dismissal, since the President might conclude that his observations of Draper constituted 'spying and were inappropriate. Also, if the President still had affection for Draper, he might be more willing to believe that udson was the problem than that Draper acted badly. cond possibility: Judson should do nothing, on the grounds that he really should have observed the loan officer in the way that he did, and that his doing so arguably, created in his own mind a certain loul SO comnu UNDERSTANDI 162 as possible courses of action that are permissible, which is SCE LIFE What should Judson do? What follows are various pe Are there any that should be excluded? Of those that a best? How would you rank them? th the bank President. He Looking for an Answer that the bank and he should recommend that the w of its lending relationship with the First possibility Judson should make an appointment with the should explain what he has seen, and he should undertake a serious, objective review of its lend horrower/developer-to be carried out by internal audit. independent means the President decides (such as an loan officer, or the president himself). Judson recognizes that by taking he might precipitate his own dismissal, since the President might concl. observations of Draper constituted 'spying and were inappropriate. Also President still had affection for Draper, he might be more willing to believe Judson was the problem than that Draper acted badly. audit, or by whatever outside consultant; another by taking this action might conclude that his inappropriate. Also, if the be more willing to believe that Second possibility: Judson should do nothing, on the grounds that he really sh not have 'observed the loan officer in the way that he did, and that his doing has, arguably, created in his own mind a certain level of bias, and even paranoia. H. has so compromised any objectivity he might have had, that he is no longer in a position to deal with this issue as head of internal audit. Third possibility: Judson should go to the Chairman of the Board and explain the problem. Because the Chairman and the bank President have been good friends in the past, Draper regards this as a risky course-he might need to explain why he is going over the head of the President. Fourth possibility: Judson should deal with this directly and personally. He should approach the senior loan officer directly and say something like: "At the Bar last night, I saw what seemed to be a serious violation of company policy, as regards your relationship with one of the bank's major borrowers. As head of internal audit, I must insist that you either break off this relationship, or resign from your position at the bank, or both." (See page 178 below for a suggested resolution and discussion.)