Onerous sales goals and failure to direct the organisation at the top level often leads to tumultuous times. Wells Fargo provides testimony to what aggressive sales policies without a clear direction can lead to. The board of directors of Wells Fargo were reportedly aware of the questionable ethical conduct of the employees but kept quiet. New investigations into the matter show that the top-level executives could have lead the company on to the ruckus.
The Office of the Comptroller of the Currency released a new report stating that Wells Fargo followed questionable sales tactics. As many as 700 cases are registered about the internal practices of the company up to 2010 alone. The number could be significantly higher if the current statistics are included. However, the spokesperson of the bank said that the board was ‘never informed of 700 whistleblower complaints’.
The OCC was not satisfied with the official statements of the company. It maintained that the board had to protect the ‘integrity and reputation’ of the bank. As the sales culture at Wells Fargo ran into hot waters, the board likely did not take any action.
Wells Fargo Shareholders to Decide the Fate
Wells Fargo shareholders will gather in Florida for the annual meeting to re-elect the bank’s directors. Watchdog groups and prominent shareholders are willing to sack the board members over their mismanagement. They believe that the board could not handle the scandal well. Many pension funds have already taken the advice. This includes the California State Teachers’ Retirement System and the New York City Comptroller Scott Stringer. He said that the directors are accountable for the scandal and the lack of oversight.
Is the Board to Blame?
As soon as the scandal broke out in September, the company’s board immediately sacked 5,300 workers who had created 2 million fake accounts. The company had to give away $180 million as compensation and launch an extensive investigation into the scandal. A new CEO has been hired to manage the bank’s operation in the meanwhile. The question is not whether the bank acted or not. The question is whether the board acted in time to stop the scam before it broke out. The board’s in-house investigation suggests that they could have prevented the sales team from wrecking havoc.
In a 110-page report, the investigation team has found that the directors could have worked faster. Though the blame was set on the senior management, the directors could have addressed the issue earlier.