In the world with high corruption, I’d have expected more individuals to be scared of what an investigation would turn up.
If the investigation found major issues which weren’t publicly reported on, it would increase the fragility of EV’s position, since anyone who had seen the investigation could become a whistleblower with a relatively incontrovertible case.
These don’t totally exclude “there’s a big collusion not to share the issues”, but “major internal collusion” without also “was colluding with SBF” is getting to be a narrower target, and I think it would still feel fragile (such that the colluders might rationally prefer to avoid an investigation).
(Not commenting on the comparison with the OpenAI investigation because I haven’t understood it thoroughly enough to feel I have good takes.)
Mintz found no evidence that anyone at EV (including employees, leaders of EV-sponsored projects, and trustees) was aware of the criminal fraud of which Sam Bankman-Fried has now been convicted.
While we are not publishing any additional details regarding the investigation because doing so could reveal information from people who have not consented to their confidences being publicized and could waive important legal privileges that we do not intend to waive, we recognize that knowledge of criminal activity isn’t the only concern. I plan to share other non-privileged information on lessons learned in the aftermath of FTX and encourage others to share their reflections as well.
The information released from the investigation in this statement is exceedingly narrow—we didn’t have actual knowledge of SBF’s criminal fraud. That’s an exceedingly low bar to meet! That EVF won’t be joining SBF on his Club Fed vacation is an awfully slender reed to talk about “justified trust.”
General Reaction to Scope of Disclosure (and Likelihood of Possible Inferences)
Is there anything else that has been “credibly signal[ed]” through the investigation process? (quoting Owen’s earlier comment). Although I am aware of the reasons to maintain legal privileges, the choice to do so does little to persuade that this is a world in which EVF has “nothing to hide compared to [one in which it] wanted to hide something” (quoting same comment). Indeed, worlds in which the investigation sponsor chooses to hide behind privilege as to all but one (or a few) of the report’s ultimate conclusions seem very likely to be worlds in which there the sponsor “wanted to hide something.” And the choice to exclude certain important questions from the investigation’s scope would update me toward the view that the investigation sponsor didn’t want to find out the answers or strongly suspected they would be unflattering.
If Mintz had concluded that there was no negligence or recklessness in relation to EVF’s interactions with SBF, I am guessing that conclusion would have been disclosed! Likewise, if I wanted to convey to the CC that I was a trustworthy public charity, I would release a whole lot more than “no actual knowledge of a massive fraud” if I could do so.
Reacting to the Positive View of the Investigation
In the world with high corruption, I’d have expected more individuals to be scared of what an investigation would turn up.
But fear based on what an investigation would turn up only makes sense if you were concerned that the negative results would get out. So I think this is only correct insofar as those conducting the investigation were confident that it would find no actual knowledge of the criminal fraud.
If the investigation found major issues which weren’t publicly reported on, it would increase the fragility of EV’s position, since anyone who had seen the investigation could become a whistleblower with a relatively incontrovertible case.
But the number of people who would see the investigation report could be extremely limited. Presumably access to the report itself is extremely limited, given the rationale about not waiving privileges and protecting sources who spoke to the investigative firm. Outside counsel can’t leak without counsel surrendering his law license, incurring massive liability, and watching his business crumble. It’s plausible to me that no more than 10-15 people at EVF have seen the full report, and that these people are almost all insiders who are rather unlikely to leak.
How The Investigation Could Have Actually Rebuilt Lost Trust and Confidence
There was a more transparent / credible way to do this. EVF could have released, in advance, an appropriate range of specific questions upon which the external investigator was being asked to make findings of fact—as well as a set of possible responses (on a scale of “investigation rules this out with very high confidence” to “investigation shows this is almost certain”). For example—and these would probably have several subquestions each—one could announce in advance that the following questions were in scope and that the investigator had committed to providing specific answers:
Did anyone associated with EVF ever raise concerns about SBF being engaged in fraudulent activity? Did they ever receive any such concerns?
Did anyone associated with EVF discourage, threaten, or seek to silence any person who had concerns about illegal, unethical, or fraudulent conduct by SBF? (cf. the “Will basically threatened Tara” report).
When viewed against the generally-accepted norms for donor vetting in nonprofits, was anyone associated with EVF negligent, grossly negligent, or reckless in evaluating SBF’s suitability as a donor, failing to raise concerns about his suitability, or choosing not to conduct further investigation?
That kind of pre-commitment would have updated my faith in the process, and my confidence that the investigation reached all important topics. If EVF chose not to release the answers to those questions, it would have known that we could easily draw the appropriate inferences. Under those circumstances—but not the actual circumstances—I would view willingness to investigate as a valuable signal.
Thanks, this makes sense. I hadn’t thought about the possibility of committing to have the external investigation provide public answers on specific questions. (And the fact that I hadn’t thought of it gives me something to reflect on about how to ideally act during crises.)
In the world with high corruption, I’d have expected more individuals to be scared of what an investigation would turn up.
If the investigation found major issues which weren’t publicly reported on, it would increase the fragility of EV’s position, since anyone who had seen the investigation could become a whistleblower with a relatively incontrovertible case.
These don’t totally exclude “there’s a big collusion not to share the issues”, but “major internal collusion” without also “was colluding with SBF” is getting to be a narrower target, and I think it would still feel fragile (such that the colluders might rationally prefer to avoid an investigation).
(Not commenting on the comparison with the OpenAI investigation because I haven’t understood it thoroughly enough to feel I have good takes.)
I have the opposite reaction.
Background
To recap, Zach wrote about four months ago:
The information released from the investigation in this statement is exceedingly narrow—we didn’t have actual knowledge of SBF’s criminal fraud. That’s an exceedingly low bar to meet! That EVF won’t be joining SBF on his Club Fed vacation is an awfully slender reed to talk about “justified trust.”
General Reaction to Scope of Disclosure (and Likelihood of Possible Inferences)
Is there anything else that has been “credibly signal[ed]” through the investigation process? (quoting Owen’s earlier comment). Although I am aware of the reasons to maintain legal privileges, the choice to do so does little to persuade that this is a world in which EVF has “nothing to hide compared to [one in which it] wanted to hide something” (quoting same comment). Indeed, worlds in which the investigation sponsor chooses to hide behind privilege as to all but one (or a few) of the report’s ultimate conclusions seem very likely to be worlds in which there the sponsor “wanted to hide something.” And the choice to exclude certain important questions from the investigation’s scope would update me toward the view that the investigation sponsor didn’t want to find out the answers or strongly suspected they would be unflattering.
If Mintz had concluded that there was no negligence or recklessness in relation to EVF’s interactions with SBF, I am guessing that conclusion would have been disclosed! Likewise, if I wanted to convey to the CC that I was a trustworthy public charity, I would release a whole lot more than “no actual knowledge of a massive fraud” if I could do so.
Reacting to the Positive View of the Investigation
But fear based on what an investigation would turn up only makes sense if you were concerned that the negative results would get out. So I think this is only correct insofar as those conducting the investigation were confident that it would find no actual knowledge of the criminal fraud.
But the number of people who would see the investigation report could be extremely limited. Presumably access to the report itself is extremely limited, given the rationale about not waiving privileges and protecting sources who spoke to the investigative firm. Outside counsel can’t leak without counsel surrendering his law license, incurring massive liability, and watching his business crumble. It’s plausible to me that no more than 10-15 people at EVF have seen the full report, and that these people are almost all insiders who are rather unlikely to leak.
How The Investigation Could Have Actually Rebuilt Lost Trust and Confidence
There was a more transparent / credible way to do this. EVF could have released, in advance, an appropriate range of specific questions upon which the external investigator was being asked to make findings of fact—as well as a set of possible responses (on a scale of “investigation rules this out with very high confidence” to “investigation shows this is almost certain”). For example—and these would probably have several subquestions each—one could announce in advance that the following questions were in scope and that the investigator had committed to providing specific answers:
Did anyone associated with EVF ever raise concerns about SBF being engaged in fraudulent activity? Did they ever receive any such concerns?
Did anyone associated with EVF discourage, threaten, or seek to silence any person who had concerns about illegal, unethical, or fraudulent conduct by SBF? (cf. the “Will basically threatened Tara” report).
When viewed against the generally-accepted norms for donor vetting in nonprofits, was anyone associated with EVF negligent, grossly negligent, or reckless in evaluating SBF’s suitability as a donor, failing to raise concerns about his suitability, or choosing not to conduct further investigation?
That kind of pre-commitment would have updated my faith in the process, and my confidence that the investigation reached all important topics. If EVF chose not to release the answers to those questions, it would have known that we could easily draw the appropriate inferences. Under those circumstances—but not the actual circumstances—I would view willingness to investigate as a valuable signal.
Thanks, this makes sense. I hadn’t thought about the possibility of committing to have the external investigation provide public answers on specific questions. (And the fact that I hadn’t thought of it gives me something to reflect on about how to ideally act during crises.)