While auditing a bank in Brazil, I discovered some unexpected interest accruals (totaling $283,000) in a savings account that belonged to the wife of a computer programmer. I confronted him, but he initially denied any knowledge of the funds. Upon further questioning, the employee confessed that he falsified instructions in the software and embezzled money for several months. The programmer was fired, but he agreed to reimburse the money within two years Three months later, a local company requested a reference for the terminated employee. Our Human Resources Manager wanted to give him a positive reference, so we could recover the money. I disagreed, arguing that we should tell the truth. Ultimately, the General Manager agreed with my position. The bank's attorney drafted a letter stating that the programmer's performance was "less than satisfactory" without giving specific details. After one year, the programmer stopped making restitution to us. He moved to a limit country (Argentina), joined a local bank and committed the same fraud there.
My decision was correct one under the unusual circumstances. If we had been totally honest in our letter (by revealing the fraud), the fired employee could have sued us for character defamation, which would have been a PR debacle for the bank. On the other hand, if we lied in his reference letter (to recover the lost money), my bank could have been liable for future problems at the employee's new place of business. Only by exemplifying our own highest principles could we ensure employee awareness and adherence to a corporate code of ethics.