Royal Bank of Canada last week filed a counterclaim against its former CFO, Nadine Ahn, seeking C$4.4 million ($3.2 million) for “excess compensation” it paid to both Ahn and Ken Mason, a former treasury executive at the bank.

The bank fired Ahn and Mason in April, claiming they’d breached the bank’s code of conduct for not disclosing their “close personal” relationship.

Ahn and Mason each sued RBC this month for wrongful termination, claiming the bank mischaracterized their relationship and caused reputational harm to both by inferring they had an affair.

In its countersuit last week, RBC reiterated that it has evidence that the relationship between Ahn and Mason was more than friendly and that they shared increasingly “intimate communications” over several years.

RBC’s filing with the Ontario Superior Court of Justice, seen by The Globe and Mail and other sources, cites text messages, instant messages and emails between Ahn and Mason, along with mementos they made indicating they had pet names for one another.

Mason ordered two copies of a 43-page “LoveBook” online — delivered to his work office — to celebrate their 10th anniversary, RBC alleged.

“Prickly Pear and KD lived happily ever after!” the book’s text reads, according to the bank.

Ahn and Mason scheduled “liquidity meetings” — allegedly code for getting cocktails — on their work calendars, RBC said. At one such meeting in May 2016 at a Toronto restaurant, the two scribbled on a coaster their drink orders, along with notes such as “concert, night out, winery,” the bank alleged. Mason kept the coaster, encased in plexiglass, in his work office, RBC said. 

“Ms. Ahn forwarded romantic poetry to Mr. Mason, expressing that she had fallen in love with Mr. Mason when she first saw him,” the bank wrote in the filing, according to Bloomberg. “Ms. Ahn and Mr. Mason continued to regularly see each other outside of the office during this time period, arranging a lunch on August 18, 2017, to celebrate their ‘fourth anniversary.’”

Their text messages “fantasized about a life together, such as reading in bed together,” the bank said in its filing. Mason allegedly drafted a poem that referred to Ahn, “a kiss, lingering physical contact, and an encounter in an elevator,” the bank said.

’Clandestine’

RBC also noted instances when Ahn taught Mason how to hide text-message notifications and told him not to meet her when she was with her husband, according to the filing. The bank cited that as evidence the relationship was meant to stay “clandestine,” The Globe and Mail reported.

“On March 11, 2019, Ms. Ahn messaged Mr. Mason to say, ‘I love you.’ Mr. Mason responded 15 seconds later, ‘I love you too,’” the bank said.

The bank said it doesn’t have access to their messages, “except to the extent that Ms. Ahn and Mr. Mason copied personal communications to RBC systems,” Bloomberg reported.

Lawyers for Ahn and Mason didn’t reply to requests for comment Friday from The Globe and Mail or Bloomberg.

“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,” RBC spokesperson Gillian McArdle said in a statement to The Globe and Mail. “As she was a Named Executive Officer, we had an obligation to disclose.”

‘Project Ken’

The C$4.4 million in damages RBC seeks to collect breaks down to a clawback of C$3.3 million in bonuses from Ahn and another C$1.14 million in “excess compensation Ms. Ahn caused RBC to pay to Mr. Mason in breach of her fiduciary duties.”

RBC alleges Ahn used her position to get Mason “preferential treatment.” When Mason was named vice president and head of capital and term funding at the bank in November, Ahn “overrode” objections from senior bank officers to whom Mason reported, the bank alleged.

“The decision to promote Mr. Mason was effectively made by Ms. Ahn,” the bank said.

The promotion was “a centrepiece goal” of a plan Mason drafted in 2017, dubbed “Project Ken,” according to the bank’s filing. “Ms. Ahn supported him in realizing that plan,” the bank said.

RBC alleges on the day Ahn became CFO in 2021, she began advocating for a big pay raise for Mason. In the two years ahead of his move to vice president, Mason’s compensation jumped 58%, from $695,000 to $1.1 million, the bank said in its filing.

Further, when another employee raised concerns about Mason’s pay, Ahn fired that person without cause, the bank alleged, adding that the ex-employee “has demanded compensation from RBC for bad faith termination of his employment, because of Ms. Ahn’s conduct.”

‘Identical conflict of interest’

Incidentally, RBC alleged that in 2022, Ahn fired an employee 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 last week’s filing.

RBC received an anonymous whistleblower complaint in March, from an employee who saw Ahn and Mason “hugging and kissing and exiting the elevators at the Fairmont Royal York hotel in downtown Toronto together,” and questioned why Mason had been promoted, the bank said in its filing.

When lawyers asked Ahn about her relationship with Mason on what would be her last day at RBC, Ahn initially said they were friends and “that was the extent of it,” according to the bank, adding that her communications with Mason were about “pure work info.”

“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 said in last week’s filing. “Ms. Ahn’s misconduct, coupled with her dishonesty during the interview, made her continuing employment as a senior officer of RBC untenable.”

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,” McArdle said. “We were disappointed to learn the allegations were true.”