Since the 2008 financial crisis, banks and other financial institutions have made a big show about cracking down on illegal activity, unethical behavior, and other sorts of mischief-making that had the potential to force them to pay hundreds of millions of dollars in fines, get their asses hauled in front of Congress, or simply embarrass them in public. They've stated internally and externally that they have a no tolerance policy for insider trading, for screwing over clients in plain sight, for manipulating Libor, for inviting interns to a bar with a lax policy on underage drinking and a penchant for accepting fake IDs. They've instituted clawbacks, and disincentivized people from placing a trade that'll be good for them today and bad for the bank tomorrow. They probably think they've done a lot in an effort to put the fear of god into people. If you ask Michael Eggleton, though, they haven't done shit.
...in 2009, the former Merrill Lynch & Co. and Credit Suisse Group AG banker, who had been appointed chief executive officer of Almaty-based Eurasian Bank JSC, flew a polygraph machine into the Central Asian country to bolster client trust. The bank, Kazakhstan’s 10th largest, was losing money, and Eggleton’s predecessor, Zhomart Yertayev, had been arrested on suspicion of embezzlement in connection with $1.1 billion in losses at Alliance Bank, which he led from 2002 to 2007. Yertayev, who denied wrongdoing, was convicted in 2011. “We had just come through one of the biggest economic crises in the world, and I had just arrived in a new country,” the 44-year-old, U.S.-born Eggleton said in an interview in Almaty in July. “There was no confidence in the banks. I was trying to address concerns of the market, and internally I saw it was going to be a war collecting money back from people.”
The polygraph -- a laptop computer with wires and sensors that connect to a subject’s hands, arms and chest -- has led to a drop in theft, including kickbacks for lending, Eggleton said, declining to provide figures. The bank was the third-least corrupt among 24 commercial lenders in the February 2012 Sange poll, which asked 500 Kazakh businessmen and mortgage borrowers whether bank employees had sought payments to facilitate credit. Eggleton started using the polygraph on a routine basis in January 2010, the same year he hired actor Gerard Depardieu to appear in advertisements for the bank. While the test is voluntary, employees who decline to take it aren’t eligible for bonuses or promotions, he said. “I have a problem with someone who has failed the test or who won’t take it and is making decisions worth millions and millions of dollars,” said the U.S.-born banker, who submits to a polygraph exam once a year. “If they are not taking it, that’s fine and I won’t be penalizing them, but I won’t be making them chairman of a credit committee.” More than 600 people left Eurasian Bank the first year the lie detector was in use, reducing the number of employees at the corporate and retail lender to 2,010, the company said. The workforce is now more than 5,700. “A polygraph is an extreme measure, but large global institutional investors that we talk to are increasingly concerned about the effects of bribery on businesses, especially in frontier markets like Kazakhstan where corruption is a serious problem,” said Hugh Wheelan, managing editor of Paris-based Responsible Investor magazine.