Bharat Bhagani informed the Financial Conduct Authority (FCA) in 2022 that his company had asked him to secure a visa for an employee that the British authorities later deported for being a “Chinese espionage agent”.
He also claimed that the company, a regulated foreign exchange brokerage firm called Goldenway Global Investments, made two appointments of Hong Kong residents as company directors that were unauthorised by the FCA. Additionally, Bhagani alleged that the business' representatives had laundered money, after identifying suspect payments on the company accounts.
Bhagani was subsequently accused of committing gross misconduct for failing to obey directors' instructions. He was dismissed, which the tribunal ruled was unfair as it was a result of his whistleblowing.
“This case highlights the importance of companies implementing strict anti-retaliation policies to ensure that whistleblowers are protected from all forms of retaliation, including demotion, dismissal and harassment,” said Lorna Ferrie, legal and compliance director at compliance firm Mauve, speaking to HR magazine.
Neil Donovan, dispute resolution partner at law firm Ashurst explained that regulated firms face increased scrutiny for their treatment of whistleblowers.
He told HR magazine: “Regulated firms have additional obligations to establish, implement and maintain effective arrangements for the disclosure of reportable concerns by whistleblowers.”
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Bhagani was employed as compliance officer, which meant he was responsible for ensuring that the company adhered with FCA rules and dealt with money-laundering risks.
In July 2020, he froze a multimillion-sum payment in the company accounts that he recognised as an illegal third-party payment, as the payment was not connected to a bank account. He told the tribunal that he believed the payment was to an account owned “by parties connected to Goldenway PM”.
The tribunal heard that Goldenway's director, Bayern Wong, had received advice that the payment was not illegal, and he requested that the money be unfrozen. However, Bhagani told the FCA that he had received no evidence of legal advice.
In February 2022, Bhagani became the sole UK director for the company, after two directors resigned.
Andrew Luen, a project manager based in Hong Kong, emailed Bhagani to say he would be taking over his duties as director and requested the company bank card and password. Bhagani told Luen it was not appropriate for him to take over his duties, as his application had been rejected by the FCA.
Another incident occurred in June 2022 when Bhagani was asked to sign an appointment letter for a new employee; he raised concerns with the process and refused to sign.
Bhagani later received a warning letter because he had not been “cooperative in assisting the company to enrol appropriate staff”. The letter stated that a further breach could result in suspension and termination of his employment.
He told the tribunal that he was concerned about recruitment at the company as a person he was previously asked to sponsor by the group turned out to be a Chinese agent.
Luen emailed Bhagani to say that another Hong-Kong based manager, Tim Liu Feng, had been appointed as director. Liu claimed that the HR department for Goldenway PM in Hong Kong had invited him to be a non-executive director. Bhagani again challenged the move.
In July, Bhagani was informed that his directorship had been removed. He contacted the FCA to make a whistleblowing disclosure about the attempted unauthorised appointments of two directors, money laundering and the Chinese espionage incident.
Shortly afterwards, he was dismissed for gross misconduct. Judge Emery ruled that “the main significant issue in the respondent’s mind when it decided to dismiss the claimant was their knowledge that he had made a complaint to the FSA”.
The tribunal report read: “The respondent had no genuine belief he had committed gross misconduct, ... the reason for dismissal was his public interest disclosures.”
Judge Emery also accepted that Bhagani made the disclosures as he believed Goldenway PM had acted unlawfully. The respondent claimed it had no knowledge that Bhagani made the disclosures to the FCA, but the tribunal rejected this.
Bhagani also told the tribunal he had missed out on a job offer because his reference letter claimed he was dismissed for gross misconduct. The tribunal awarded Bhagani £564,672.46 in damages.
The FCA subsequently banned Goldenway from operating in the UK.
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Regulated firms have a responsibility to facilitate an effective whistleblowing process, Donovan explained.
“Firms must have effective procedures for handling disclosures and safeguarding employees who make a report, and are required to report to the FCA annually on the effectiveness of these systems and controls," he noted.
"The FCA rules make clear that the fitness and propriety of the firm, or relevant members of staff, will be called into question where there is evidence that a firm has acted to the detriment of a whistleblower."
Firms should also ensure that the confidentiality of whistleblowers is protected following a disclosure so they are not subjected to detriment, he added.
Donovan continued: "Regulated firms should ensure that there are protections in place to protect the confidentiality of the whistleblower while the issues are investigated. It is also important to document investigation findings, particularly where it is determined that whistleblowing disclosures are not substantiated.
"This will ensure that there is an audit trail to support a firm's justification for continuing activity that formed the basis of a whistleblowing disclosure.”
