Royal Bank of Canada fired back against a wrongful termination lawsuit launched by former chief financial officer Nadine Ahn, describing detailed evidence it collected before abruptly ousting her in April.
RBC has alleged that she did not disclose a close personal relationship with a colleague for whom she intervened to secure pay raises and promotions.
A 29-page statement of defence and counterclaim that RBC filed with the Ontario Superior Court of Justice alleges that Ms. Ahn “abused the power of her office as CFO,” repeatedly breached her fiduciary duties to RBC, and later “failed to be forthright and honest when questioned about her conduct.” It also claims that she fired a colleague in 2022 for a “substantially identical” offence.
The court filing cites text messages, instant messages and e-mails between Ms. Ahn and Ken Mason, a vice-president and head of capital and term funding in the bank’s treasury division.
In those communications, they used pet names for each other – “Prickly Pear” for Ms. Ahn and “KD” for Mr. Mason – and celebrated their “anniversary date,” exchanged love poems and expressed strong feelings for each other. In one exchange in March, 2019, Ms. Ahn messaged Mr. Mason to say, “I love you,” and Mr. Mason replied 15 seconds later: “I love you too,” according to the court filing.
RBC alleges that the relationship started in 2013 and continued through April of this year. The bank abruptly terminated Ms. Ahn and Mr. Mason on April 5.
Ms. Ahn and Mr. Mason have denied RBC’s allegations and said they were wrongfully fired, asserting that they were only friends and did not breach RBC’s code of conduct. In lawsuits, they say the bank did devastating harm to their careers and reputations by terminating them and publishing the reasons in a news release. Ms. Ahn has sued RBC for nearly $50-million in damages, and Mr. Mason is seeking nearly $22-million.
Lawyers representing Ms. Ahn and Mr. Mason did not respond to requests for comment on Friday.
RBC is making a counterclaim against Ms. Ahn seeking damages for “the excess compensation Ms. Ahn caused RBC to pay to Mr. Mason in breach of her fiduciary duties,” estimated to be $1.14-million, and to claw back bonus pay to Ms. Ahn totalling $3.3-million.
None of the allegations in the court filings have been proved in court.
Nadine AhnSupplied
The details outlined in the court filings escalate a rare and messy feud at Canada’s largest bank, but also give a glimpse into the backstory behind the surprising firing of one of the most senior executives in Canadian banking.
Ms. Ahn’s termination stunned peers in the financial sector and ended the impressive rise of one of banking’s most prominent women, who was positioned to be a candidate to succeed chief executive officer Dave McKay. The bank had bet heavily on Ms. Ahn’s potential: She was promoted to CFO from a senior vice-president role, bypassing the executive-vice-president level.
RBC alleges that on the same day in 2021 that Ms. Ahn was made CFO, she began advocating for a large pay raise for Mr. Mason. Over a two-year span, Mr. Mason’s compensation rose by 58 per cent, from $695,000 to $1.1-million, before he was promoted the following year.
Ms. Ahn “overrode” objections from senior bank officers to whom Mr. Mason reported, who are not named in the filing, and ultimately secured his promotion to a vice-president role on Nov. 1, 2023, RBC alleges. The bank says that achieving that role was “a centrepiece goal” of a 2017 plan that Mr. Mason drafted to expand the scope of his duties and secure higher pay, called “Project Ken,” and that “Ms. Ahn supported him in realizing that plan.”
“The decision to promote Mr. Mason was effectively made by Ms. Ahn,” the bank alleges.
In 2022, RBC alleges that Ms. Ahn fired an unnamed employee for just cause because that employee had an undisclosed personal relationship with a subordinate. “Ms. Ahn was aware at the time that she made that termination decision that she was in a substantively identical conflict of interest, which she had concealed from RBC,” the bank said in its filing.
On March 11, the bank received an anonymous whistle-blower complaint alleging that Ms. Ahn and Mr. Mason were in an intimate relationship. The whistle-blower alleged that the two executives “had been seen hugging and kissing and exiting the elevators at the Fairmont Royal York hotel in downtown Toronto together,” and questioned why Mr. Mason had been promoted.
The bank launched an investigation led by external lawyers at Norton Rose Fulbright LLP.
“Ms. Ahn was a highly respected member of the executive team and a senior leader with fiduciary responsibilities. We supported her career growth and had great confidence in her abilities,” RBC spokesperson Gillian McArdle said in a statement on Friday. “We were disappointed to learn the allegations were true.”
“Senior executives have a duty to follow our Code of Conduct to ensure all employees can pursue their careers in a fair and equitable environment without fear of bias or other forms of abuse of power. There are no exceptions, even for senior executives, and we are all expected to do the right thing. It is important for the organization to stand up for its employees when the policies that protect them are breached,” Ms. McArdle said.
“Contrary to the statements of claim from Ms. Ahn and Mr. Mason, the investigation showed there was an undisclosed close personal relationship, and that Ms. Ahn misused her authority as CFO to directly benefit Mr. Mason,” the statement continued. “As she was a Named Executive Officer, we had an obligation to disclose.”
RBC alleges that Ms. Ahn and Mr. Mason exchanged increasingly “intimate communications” over a period of years, sometimes through RBC’s corporate messaging systems. There were text messages that “fantasized about a life together, such as reading in bed together,” according to the court filing. Mr. Mason allegedly drafted a poem that made references to Ms. Ahn, as well as “a kiss, lingering physical contact, and an encounter in an elevator.”
In the court filing, RBC also cites instances when Ms. Ahn taught Mr. Mason how to hide text-message notifications, and allegedly instructed him not to meet her when she was with her husband, as evidence that they carried out their relationship “in a clandestine manner.”
The two executives also created mementos together, the filing said. In May of 2016, Ms. Ahn and Mr. Mason met alone for drinks at upscale Toronto restaurant Canoe, and made notes on a coaster. According to RBC, Mr. Mason had the coaster encased in plexiglass and kept it in his RBC office.
Mr. Mason also allegedly ordered two copies of a 43-page “LoveBook” online, which were delivered to his RBC office, and which the bank alleges celebrated their 10th anniversary. “Prickly Pear and KD lived happily ever after!” the book said, according to RBC.
When lawyers questioned Ms. Ahn about her relationship with Mr. Mason in an April 5 meeting, before she was terminated, she replied that they were friends and “that was the extent of it,” RBC alleges. She said that all her communications with Mr. Mason were about “pure work info,” and similar to those with other employees who reported to her.
“Later in the interview, after being presented with several communications between herself and Mr. Mason of an intimate nature, Ms. Ahn changed her story,” RBC alleges. She said they “had a connection,” but denied again that the relationship was inappropriate.
With a report from Tim Kiladze