David Mytton

Book Review (4/5) – Billion Dollar Whale (Tom Wright)

Published in Book Reviews.

Originally published on Goodreads.

Incentives are the essence of the fraud detailed in this book. At the heart of everything from sales commissions to enacting national legislation, if you don’t think deeply about both direct and indirect incentives, you are risking unintended consequences.

In hindsight, of course it is absurd for bank compliance departments to exist within the bank itself. The incentives mean it is in their interest to approve transactions with minimal oversight – their profit is at stake. Of course it is absurd for control over sovereign wealth funds to be entirely at the hands of political appointees – funnelling funds to support their campaigns when their re-election is at stake. Of course it is absurd to ask questions about where the funding for your new venture (film, company, etc) is coming from – you need the funds and can just assume compliance has happened elsewhere. But at the time, it is easy to feel satisfied with surface level questions.

The lessons for those with oversight – directors, regulators, board members – is simple. Ask probing questions and don’t stop asking until you have clear answers backed with evidence. It can be uncomfortable challenging people with overt power, especially if they have been in position for a long time. It’s better to feel stupid asking what seems like an obvious question now rather than wish you had pressed further when something comes to light in the future.