Summary: Charlie cares about Olivia but the rules always get in the way
Disclaimer: no copyright infringement is intended.
Charlie remembers the exact moment he knew Olivia and John were having an affair. It was a Friday morning and, he guesses, in anticipation of the weekend, Olivia paused at John's desk and bestowed upon her co-worker a special, secret, smile.
He wouldn't be a good agent if he couldn't read people, couldn't interpret body language and facial expressions. For that moment he wished he wasn't so good at it, that he didn't have to recognise the affair between the two agents. Yet he couldn't help seeing it, watching them from his own desk, while they were blissfully unaware of his attention. That smile wasn't a friendly acknowledgment; that smile said "I can't wait until tonight."
There were a limited number of options open to him. He ran through the various scenarios, something else agents tend to be good at; the ability to quickly assess a situation is vital when lives are on the line.
He confronts them. They deny it. John makes a joke, Olivia gets angry. He has no proof, just his observations, so he has to let it go. They get more secretive and the trust between all three of them becomes strained. Even if Olivia breaks if off with John, she'll be unavailable ever afterwards to Charlie, who clearly cared more about the rules than her happiness.
A] He confronts them. They admit it. He has to reassign one of them and while John is good at his job, Olivia, as liaison agent, is more valuable to him. So John leaves and Olivia is furious. She'll be professionally courteous but personally cold to him and he'll have lost one agent and two friends. He can never risk being involved with Olivia because he's already proven he cares more about the rules than her feelings.
B] He confronts them. They admit it. They ask him to keep it a secret. He agrees, reluctantly. Every day he's on edge in case it becomes public knowledge and he has to take the fall for letting the affair go on. It strains their friendships and their working relationships.
He ignores it. He pretends he didn't see it. He fools himself into thinking he was mistaken. Everything goes on as before. Maybe he is wrong. Maybe the affair will fizzle out. Maybe the affair will become more serious and they'll come to him to acknowledge it officially, taking responsibility for it themselves. Maybe if they break up, he'll be able to comfort Olivia and then tell her that he cares about her.
It's cowardly but scenario three was the only win-win option.
Of course the whole thing was against the rules. Rules put in place for what were arguably good reasons. Charlie has bent, and even broken the odd rule; every agent has. Overall though he tries to respect the regulations, even the ones he doesn't agree with; as an officer of the law, a representative of the federal government, he feels he ought to set a good example.
The thing is, he's known Olivia a while now. He considers her a friend and she seems to feel the same way. Only he wants more than that and yet he's never acted upon his desire.
Because it's against the rules.
Because if she refused him, however gently, it would more than he could bear.
Because if she turns him down, the knowledge of his desire for her will affect their working relationship despite their best efforts.
Because if she accepts he'll have to leave, or send her away, and what hope for the relationship then, if they're in different cities?
Because if she accepts, it might come down to a choice between love and career and he can't let her sacrifice that for him nor can he risk losing the only constant in his life.
Because if she accepts, and they decide to keep it a secret so as to avoid either of them quitting or being reassigned, they'll be breaking the rules and he'll feel guilty about it until his work or the relationship - or both - suffers.
So he kept quiet, every time he wanted to tell her about his feelings for her, how her smile makes his heart sing, how her laugh sends shivers of delight down his spine. He couldn't tell her because of all those reasons, the ones that mostly come to the damn rules.
Then in walked John, who didn't give a damn about the rules. Who swept Olivia off her feet right under Charlie's nose and thought he could get away with it. John, who put Charlie in the difficult position of deciding whether to follow the rules or hold his silence.
John and Olivia became closer and all he could do was watch. Hiding his anger at their deception, hiding his hurt that they didn't trust him enough to ask him to keep their secret, hiding his anguish that the woman he cares about was involved with someone else.
The worse thing is, John made Olivia happy. Right until the moment she found out he was a traitor. It makes Charlie angry that he didn't step in sooner and break it up; it might have spared Olivia some of the pain she now feels, and her anger at Charlie for interfering would have been worth dealing with. Yet seeing Olivia happy made it easier to ignore the rules.
What could he say to her about the tragedy? She was always professional, closed-off, unavailable to anyone in a romantic fashion, one more reason he didn't tell her how he feels, one more reason he was astonished how easily John broke through her defences. Should he tell her not to give up on love? Would that lead to him confessing his own desire for her? It might be a good time, while she's vulnerable and open to being comforted; then again, it might be the worst time in the world.
Before he could make a decision though it started happening all over again. He's not sure Olivia even knows it yet, but she's falling for Peter Bishop. Peter is flirting with her, not overtly, but he's giving out all the signs that he finds her attractive. Charlie sees it and sees how Olivia responds. Maybe she isn't as damaged as he fears; she's hurting over John's betrayal but having opened her heart once, perhaps she's finding it easier to trust a second time. Maybe she needs to trust, to love, to help her through her grief and confusion.
Charlie wonders if Peter might be a rebound fling. That could work in his favour. The chances of Peter sticking around long term aren't good, given his past history. So let Peter be the comfort Olivia needs and when he's moved on, he, Charlie, will still be there for Olivia.
Only nothing has changed, nothing that matters.
There's still the damn rules.