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Q. I was advising a company on a deal to buy a series of smaller firms and then to take the whole group public. I asked and asked for the legal document the company was sending to the owners of the firms it was hoping to acquire, but they kept making excuses about why they couldn’t show it to me. When I finally got it, I understood why: it was full of flagrant misrepresentations. I resigned from the deal. What is my obligation now?

A. You suspected a rat, nagged until you figured out what was wrong, and refused to be a part of the wrongdoing. Corporate advisors are supposed to display ethics and a regard for the fairness of the system even when it isn’t to their advantage to do so. That’s what you did.

 You suspected a rat

“Congratulations on your persistence and for doing the right thing as soon as you learned the nature of your client,” said Joel Lefkowitz, an emeritus professor of psychology at Baruch College in New York City.

Having taken the right course of action and disentangled yourself from a dishonest client, you now have to consider what else you need to do.

Commiserating with the other victims of this fraud can help save your professional reputation.

In terms of your ongoing obligations to the target firms, those would depend on whether you’ve made them any promises — but it sounds as though you haven’t. In that case, “your only responsibility in that regard — out of courtesy, not to acknowledge any wrongdoing — is to express your understanding and regrets at the way they (and you, yourself) were treated,” Lefkowitz said by email. Not only will you be empathising with the ill-treated companies, but also you’ll be establishing that you’re not the guilty party here. (That’s your former client, the fraudster.) Commiserating with the other victims of this fraud can help save your professional reputation and “avoid guilt by association,” he said.

You also may have some responsibilities when it comes to notifying law enforcement, regulatory agencies, or the wider business community, Lefkowitz said. Those may vary by jurisdiction, so check with your lawyer.

 

Dishonesty at work: Jim Carrey stars with Justin Cooper as an inveterate liar compelled to tell the truth in 'Liar Liar' (Credit: MCA/ Universal Pictures)

There’s also the question of how you’ll stop this kind of problem from recurring. “I suspect that with the next client you won’t wait quite so long to receive the relevant documentation,” Lefkowitz said. Now that you have a better sense of the red flags, you can be quicker to eject yourself from the situation if need arises.

Work Ethic is a twice-monthly column on BBC Capital in which we consider the ethical and interpersonal dilemmas that workers face around the world.

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