INTRODUCTION
He had a reputation to be outspoken (which was as often construed as brash and arrogant by some) – something of a rarity in a highly regulated business like banking and finance, and more so in his country where speaking out is considered to be a taboo. His employer had benefitted from his blunt demeanour, as he had been one of the most frequently quoted Islamic bankers in the world. He was often the lone voice to speak out his mind even against financial regulators if he deemed a new regulation or guidelines issued would have adverse implications for the industry’s growth. Although many colleagues and peers showed indifference to his views publically, they supported him silently.
Badlisyah Abdul Ghani became the youngest CEO of an Islamic bank in Malaysia when he was appointed to the post in 2006. His career as a prominent Islamic banker was remarkably successful. Badlisyah Abdul Ghani’s relentless pursuit in developing the Islamic finance industry soon gained him recognition as one of the most influential Islamic bankers. Again, many of his peers respected him in silence.
STRETCHING HIS INFLUENCE VIA SOCIAL MEDIA
As with many young executives, Badlisyah Abdul Ghani took to social media to share and express his personal views on things that mattered to him. He wanted to make a difference and he was aware that he could exert his growing influence to support a cause he believed in. Social media became a powerful tool for him to reach out in a way that is immediate, informal and direct.
He was certainly no stranger to Facebook or Twitter; regularly posting, tweeting and retweeting things he is interested in. Sometimes on trivialities but often on controversial issues that would garner hundreds of comments.
On July 8, 2015; Badlisyah Abdul Ghani yet again courted controversy when he posted on his personal Facebook account comments relating to the financial woes of the state investment fund 1MDB. Although this was not the first post he had written on this ensuing 1MDB saga, this particular post landed him on hot water. The post drew the attention of his boss who quickly announced that an internal inquiry would be conducted into Badlisyah Abdul Ghani’s Facebook post saying that he should not have commented on technical matters. Within a week of the incident, the bank released a press statement announcing the resignation of Badlisyah Abdul Ghani as the CEO effective on August 15, 2015.
BACKGROUND – WHAT HAD ACTUALLY HAPPENED
1MDB (1 Malaysian Development Berhad) is a state investment fund set up by Prime Minister Najib Razak during his tenure as
the Deputy Prime Minister of Malaysia. Its primary role (as stated on its website) is to “lead market-driven initiatives to assist the Government in propelling Malaysia towards becoming a developed nation that is highly competitive, sustainable and inclusive”. As a strategic development company wholly owned by the Government of Malaysia, 1MDB is to drive strategic initiatives for long-term economic development for the country by forging global partnerships and promoting foreign direct investment.
Six years after its establishment, 1MDB became a household name and generated international attention. But for all the wrong reasons. A tangle web of debt, money trails and allegations dominated the economic and political scene of the country. After brewing for several months, the saga took on a new twist on July 2 when the Wall Street Journal (WSJ) published a story on the financial irregularities in 1MDB. WSJ also alleged that some RM2.6 billion (US$696 million) funds were transferred to the Prime Minister’s personal bank account, thus implicating Najib Razak to the 1MDB scandal.
Badlisyah Abdul Ghnai – a compulsive social media user – rebutted claims of any financial embezzlement on part of the Prime Minister on technical grounds. In his personal Facebook post of July 8, he questioned the authenticity of the WSJ story by suggesting that the SWIFT codes mentioned therein were inconsistent. He argued that that the story by WSJ was highly likely based on falsified documents rather than real facts. Later the same day, he admitted to have made an error in his analysis, stressing that the views were strictly his personal opinions. Within one week of the erroneous Facebook post, Badlisyah Abdul Ghani surprised the Islamic banking and finance industry by announcing his resignation as the CEO of CIMB Islamic and relinquishing his position as a board member. This was considered an admission of wrongdoing by a very widely respected Islamic banker, which many saw as a possible end to his career as a professional banker.
WHAT WENT WRONG?
Badlisyah Abdul Ghani wrote the following on his Facebook page (see next page).
His analysis, however, was challenged by an online news portal that disputed his claim and proved that there were errors in his interpretation of the documents, in particular of the SWIFT codes.
SHOULD HE HAVE RESIGNED FOR THAT FACEBOOK POST?
Social media has become the forefront of a radical workplace shift. There are increasing stories of employees being fired because they posted something inappropriate or against the company’s policy on their personal social media pages.
However, in the case of Badlisyah Abdul Ghani, there was nothing indecent, inappropriate, racist or politically incorrect about his Facebook post. He was merely exercising his freedom of speech.
First, since he was expressing his opinion, which he is entitled to on his personal Facebook page, it could have been ignored altogether.
Second, because he arguably damaged the bank’s reputation by producing a technically wrong analysis in a public forum, some sort of disciplinary action – making a note in his personnel file, or suspending him from work with or without pay – could have been sufficient.
Third, his employer could have fired him, which is what many perceived to be the case when he “resigned” from his post.
There are a number of questions that one must ask to understand the issue at hand:
- Should have Badlisyah Abdul Ghani commented on the WSJ story?
- After posting an erroneous comment on his personal Facebook page, should he have resigned?
- Was there a case against him by his employer to fire him for making such a comment?
- What would have happened if he had decided to stay on his job?
ISSUE 1
To answer the first question, one must first answer an even more fundamental question. Is it appropriate for a high-profile person the likes of a CEO to register a heavy personal presence on social media? While an increasing number of businesses are using social media to get closer to their customers, it is unusual for a CEO of a bank to comment on social and political matters, especially in Malaysia. In this regards, Badlisyah Abdul Ghani was certainly an exceptional case! But he is not a lone ranger in regards to posting political opinions on social networks. Nazir Razak, the Group Chairman of CIMB and the brother of the Malaysian Prime Minister, is known for being critical of his brother’s administration.
Although banks in Malaysia have no specific policies or guidelines on activities conducted via social media by their top management, their CEOs and Chairmen however have in general been more cautious in the use of social networks. Ignoring Badlisyah Abdul Ghani’s other comments, his technical analysis of SWIFT transactions with reference to 1MDB, albeit wrong, seems innocuous. As there seems to be no clear guidelines by CIMB or even the central bank, Bank Negara Malaysia (BNM), Badlisyah Abdul Ghani’s comment itself could have been ignored, even if it was difficult to justify.
ISSUE 2
Following the above argument, it seems as if Badlisyah Abdul Ghani acted in haste in resigning. He should have taken more time to clarify his viewpoint. His resignation was too gentlemanly – something that goes against the assertive personality that many have acquainted with during his illustrious Islamic banking career.
Unlike Badlisyah Abdul Ghani, Dr Zeti Akhtar Aziz – Governor of BNM – withstood the pressure by refuting any rumours of
her resignation ahead of her contract’s official expiration in April 20161. She was reportedly to be under enormous pressure to resign in wake of the 1MDB scandal as the central bank came under the spotlight with many questioning its lack of oversight over the movement of such large funds. Her “respectable” departure in April 2016 may end up with an even more lucrative international engagement, if she desires so.
According to one Board Member of CIMB Islamic, Badlisyah Abdul Ghani had been thinking of leaving the bank for a while, and he took this incidence as a reason to make his move. This was also confirmed by Badlisyah Abdul Ghani himself.
ISSUE 3
There are at least three relevant points:
- There are no formal guidelines from BNM on social media;
- Given the above, most banks in Malaysia do not have such guidelines beyond restrictions on the use of social media during office hours; and
- CIMB Group and its subsidiary, CIMB Islamic, did not have such guidelines prior to the case at hand.
Given the lack of a clear-cut policy in the CIMB Group on the use of social media, there was no unambiguous legal case against Badlisyah Abdul Ghani for making his Facebook statement. His defence is even stronger as Chairman of CIMB’s Board of Directors, Nazir Razak, had been even more vocal on Twitter. According to a Malaysian banker who spoke on the condition of anonymity, “[He] just went against his boss’s opinion.”
Furthermore, making a statement on Facebook, which was later proved to be wrong, is not a criminal offence. It was, however, certainly an error of judgement on two counts. Firstly, it was a technical mistake. Secondly, and more importantly, the failure to anticipate the consequences of going against his Chairman’s views that were clearly critical of the 1MDB handling by the government.
Was it just going against the publically known opinions of his boss or was there something more to it? A prominent Islamic finance lawyer in Malaysia took a more legalistic view on the matter. She commented, “There might have been certain terms of his employment agreement with the CIMB Group, as well as internal disciplinary policies that the bank could have used to justify terminating him if he had refused to resign at the time.”
In the absence of written guidelines, Badlisyah Abdul Ghani would have to go through an internal enquiry, which obviously did not take place due to his departure. Had there been a policy and he breached it, then it would have been a justifiable dismissal without an inquiry.
Whether there was a legal cushion available for Badlisyah Abdul Ghani to stay on his job, is subject to certain scrutiny. However, those who are familiar with the Malay culture are not surprised by Badlisyah Abdul Ghani’s departure in this manner. Malays are known for their tolerance and non-confrontational nature. Badlisyah Abdul Ghani’s decision
is certainly consistent with it. The best explanation perhaps is cultural, if not a personal decision to quit at a wrong time.
ISSUE 4
Ignoring the cultural dimension of the case, probably the best course of action on the part of Badlisyah Abdul Ghani was to stay on his job and remove himself (at least temporarily) from the social media to work on his next move in preparing for a more respectable departure. As he recognised as an Islamic banker of international repute, it would have been easier for him to negotiate his next job either in Malaysia or overseas, while still working at CIMB.
Off late, the Malaysian Islamic banking sector has been experiencing a leadership crisis. For example, RHB Group has for some time been looking for a suitable Islamic banker to head its Islamic operations. Similarly, Asian Finance Bank is also looking for a new CEO. Other banks such as Al Rajhi Bank Malaysia and KFH-Malaysia and would have found greater value in Badlisyah Abdul Ghani had he was still with CIMB when negotiating with prospective new employers.
MORE QUESTIONS
The above discussion raises some further questions that must be answered to gain insight into the issue at hand.
- Is it acceptable for the CEO of a private bank to go public against the stated position of another influential personality (e.g., Chairman of Board of Directors) within an organisation on issues of that are political in nature?
- Should an influential member of the board or top manager of a private sector organisation force his subordinate to resign or even fire them if they happen to hold different political views and share these in the public domain?
- What should be the role of the regulators if an employee is forced to resign or is fired following such an incident?
CEOs of any organisation should be able to take diagonal positions to their Chairman or any other influential personalities within the organisation on matters not related with business. In the West, it would not have been possible for a Chairman or any other member of the Board of Directors to force their CEO to step down for taking a political view different than their own.
In fact, the stated case against Badlisyah Abdul Ghani was never political. His decision to step down may have been based on a technically wrong analysis on his part. But was this error of judgement a reputational risk for the bank?
One may argue that such a technically wrong analysis shared by Badlisyah Abdul Ghani was not a gross reputational risk given that CIMB was neither involved nor implicated in the 1MDB case at all. In fact, it is widely known that Badlisyah Abdul Ghani is a strong supporter of the incumbent government in Malaysia. “The top management of CIMB did not like his [political] remark,” said a Board Member at CIMB Islamic on condition of anonymity, and because of this he decided to leave the bank. According to a mutual friend of Tengku Zafrul Aziz, Group CEO of CIMB, and of Badlisyah Abdul Ghani, “Badlisyah’s FB post that got him in trouble was the final straw rather than a singular offense. The history goes rather way back when it comes to him offending the powers that be in CIMB.”
As to the question on the role of the regulator in this particular case, Bank Negara Malaysia had very little to intervene in the matter as Badlisyah Abdul Ghani voluntarily resigned.
CONCLUSION
It appears as if there was not a sufficient legal case against Badlisyah Abdul Ghani for CIMB to terminate his employment contract, following his over-indulgence in the social media with respect to the 1MDB scandal. The decision on part of Badlisyah Abdul Ghani was at best hasty and wrongly timed.
The other credible explanation is cultural. Once the Chairman and other influential members at the group level showed their displeasure on the matter, it may be the case that Badlisyah Abdul Ghani could not withstand the pressure and agreed to resign.
At the industry level, one must expect that most banks would have developed internal policies and guidelines on social media beyond simple restrictions on the use of social media during office hours. BNM is also expected to formalise guidelines on the matter.
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