Bank of Montreal analyst wrongly fired after questioning project’s financial reports (Legal View)

Bank claimed his function was discontinued but he still had plenty of work to do
By Jeffrey R. Smith
|Canadian HR Reporter|Last Updated: 04/10/2012

A Bank of Montreal employee lost his job because of his refusal to follow his superiors’ wishes to falsify financial reports, not because of legitimate business reasons, an arbitrator has ruled.

Sandeep Bhushan was a financial analyst for a project called enterprise information provisioning (EIP) at the Bank of Montreal (BMO). He was originally hired in 1999 to perform various finance roles before becoming the financial analyst for the EIP project in 2007.

The project was designed to simplify the processes by which departments send information to BMO’s information management department and decrease associated costs by centralizing various data sources into one large warehousing computer.

Each year, those in charge of the EIP project had to submit a business case to secure funding in order to continue the project. Bhushan was involved in preparing the business case, as well as auditing, verifying and reporting the costs associated with the project, which had to compete with other BMO projects for funding.

Senior management then decided on whether to approve funding by comparing the return on investment against other projects.

In early 2008, the manager of the EIP project resigned and the director of information management assumed responsibility. She implemented changes to the project’s reporting structure and certain positions were eliminated.

Bhushan was the only financial analyst in the EIP project, which in itself was the only project that focused on a “dedicated finance role.” However, the director anticipated the finance work on the project would decrease, Bhushan’s position could be cut and the central finance group for the department could assume finance responsibilities for the EIP project.

Bhushan was advised to reduce the time he spent on the EIP project to 50 per cent and charge for that much of his time. However, the analyst’s responsibilities didn’t change and he continued to spend most of his time on the project.

In January 2008, he was asked to defer the start of a scheduled vacation to complete some important work. In June 2008, Bhushan was asked to further reduce his EIP time to 15 per cent of his hours, but there was still no reduction in his responsibilities.

Analyst took issue with inaccurate financial reporting

In the first few months of his work on the EIP project, Bhushan realized its benefits had been overstated and its costs understated. He discussed these issues with the project manager at the time, who told him it was “imperative” the project succeed because a senior executive had sponsored it.

Bhushan discovered management had reported cost savings related to the dismissal of a contractor, but the contractor had not left. The manager also asked him to show a cost saving relating to four employees who had previously been dismissed.

Bhushan was concerned about other questionable reporting elements he was asked to do, including reporting a planned cost instead of an actual cost, a benefit that didn’t exist and not reporting a cost of taking on more contractors.

Bhushan initially followed his orders but later refused because he thought it would be violating BMO’s financial governance policies.

Bhushan continued to face pressure from his director to tailor the EIP business case through 2008, but he continued to resist.

He raised concerns to his managers about the pressure to breach BMO’s financial governance rules, as BMO’s policy on whistleblowing required him to do so.

During this time period, Bhushan’s managers started discussing issues they had with his job performance. He had received favourable performance reviews in 2007 but in March 2008, Bhushan was asked to prepare an action plan outlining a strategy on how to raise his performance level.

In September 2008, Bhushan expressed concerns to the director that certain hardware costs totalling more than $1 million were not being reported. He was told to focus on other things and management would handle costs.

But there was further disagreement and on Sept. 22, 2008, Bhushan was called into a meeting that he thought would be to discuss the cost reporting.

Instead, he was told his position was being eliminated and if he failed to find another job at BMO, his employment would be terminated effective Oct. 17.

The reason given for his termination was there wasn’t enough financial analyst work for him within the project and other departments could take over his duties.

Bhushan suspected the conflict over the project reporting played a role in his firing, so he contacted BMO’s ombudsman to investigate. He asked the director to extend his termination date until the investigation was completed, but the director declined.

BMO not acting in good faith

The arbitrator found BMO did not act in good faith when it decided to eliminate Bhushan’s job, and his function was not really discontinued. Though the director expected finance work on the EIP project to decrease, the reality was it did not.

Although Bhushan was asked to decrease the amount of time spent on the project, he was unable to do so and his role in preparing analysis for the project’s finances and strategies remained prominent.

In addition, Bhushan was dismissed shortly before the final business case was submitted in late October, which was the largest one ever submitted for the project. Bhushan’s workload had remained high right up until his termination.

Although the director indicated she had given some thought over who would take over Bhushan’s duties, she didn’t actually discuss it with anyone before she decided to eliminate his role, said the arbitrator, which would be important in planning to discontinue a function.

“I find it surprising that (the director) would not have discussed how his duties would be disbursed given the magnitude of the project and the financial work and reporting responsibilities that the position entailed,” said the arbitrator.

Although there was no “multi-level conspiracy” to remove Bhushan, BMO management decided to eliminate his role in the project so it wouldn’t have to worry about him questioning and challenging their decisions on what to report, determined the arbitrator.

As a result, BMO failed to prove Bhushan was dismissed because of discontinuance of his function and it unjustly dismissed him under the Canada Labour Code.

See Bhushan v. Bank of Montreal, 2012 CarswellNat 189 (Can. Arb. Bd.).

Jeffrey R. Smith is the editor of Canadian Employment Law Today, a publication that looks at workplace law from a business perspective. He can be reached at jeffrey.r.smith@thomsonreuters.com or visit www.employmentlawtoday.com for more information.

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