Ethicsof the Gambling Industry

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Professor Anette Mikes prepared this case with the assistance of Research Associate Roxanna Myhrum. The identities of the companies and

individuals concerned in this case have been disguised. HBS cases are developed solely as the basis for class discussion. Cases are not intended to

serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.

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ANETTE MIKES

Risk Management at Wellfleet Bank: All That Glitters Is Not Gold

In late October 2008, Alastair Dawes, CEO of Wellfleet Bank, a London-based global bank, was confronted by two major issues. First, should Wellfleet underwrite a $1 billion loan to Gatwick Gold Corporation (GGC), a South African gold producer that accounted for 7% of global gold production? Second, were Wellfleet’s risk-management practices adequate in the global financial crisis?

To date, Wellfleet had weathered the financial crisis relatively well. It was one of the few European banks that did not expect to report losses to its shareholders in 2008. Dawes attributed this resilience in part to the bank’s good risk-management practices. However, this was not a time for complacency. Wellfleet’s flagship corporate lending business, the Corporate Banking Group, had been aggressively pursuing large-scale transformational deals in line with the bank’s strategic intent. The flow of business proposals that reached the highest decision-making forum...