CORPORATE CRIME REPORTER
GE Attorney Koeck Says She Was Fired for Reporting Fraud
22 Corporate Crime Reporter 31, July 28, 2008
Adriana Koeck says she was fired from General Electric for reporting fraud to her superiors.
That’s according to her Sarbanes Oxley (SOX) whistleblower complaint filed with the Department of Labor, a copy of which was obtained today by Corporate Crime Reporter.
Koeck is being sued by GE in federal court in Alexandria, Virginia for taking confidential and privileged information from GE and feeding it to former New York Times reporter David Cay Johnston, among others.
Corporate Crime Reporter has learned that the information was also given to the Department of Justice Fraud Section, which is conducting an initial review of the case.
“At this point in time, the Department can neither confirm nor deny an investigation,” said Department spokesperson Laura Sweeney.
GE’s Jeffrey DeMarrais said that GE was confident that Koeck’s claims are “without merit.”
“We will respond in court,” DeMarrais said.
Johnston based his reporting on hundreds of pages of internal GE e-mails, memos, and legal opinions.
“A lawyer for a participant in some of the events provided the documents on the condition that the source not be identified,” Johnston wrote.
Johnston detailed an alleged tax fraud perpetrated by a GE subsidiary in Brazil.
The article was published in Tax Notes International.
GE has been trying to get a federal judge and the Department of Labor to keep a lid on the judicial proceedings.
Last month, the Department of Labor’s Administrative Review Board rejected GE’s plea to keep Koeck’s SOX complaint under wraps.
Last Friday, attorneys for GE were in federal court in Alexandria, Virginia pleading that the papers filed GE’s lawsuit against Koeck – including Koeck’s answer to GE’s complaint filed against her – remain under seal.
A magistrate judge today ordered a hearing on the matter in late August.
The SOX complaint was thrown out last month by a Department of Labor administrative law judge on a technicality – that the complaint wasn’t filed in a timely manner.
But Koeck’s SOX complaint opens a window on the underlying facts that GE has been trying to keep under seal across the river in federal court in Alexandria.
In her SOX complaint, Koeck anticipates one of the key issues in GE’s lawsuit against her.
She says that the documents she allegedly took from GE and that prove her retaliation case against GE are not covered by the attorney-client privilege because of the crime-fraud exception.
The attorney-client privilege does not apply, she argues, “since the documents reveal (GE’s) corporate counsel’s complicity with others in corporate management. . .in commission of both fraud and crime.”
“A number of the documents also evidence corporate use of counsel to engage in ongoing violation of Brazilian tax laws and other fraud,” Koeck argues.
Koeck was the lead attorney for Latin America for GE’s Consumer and Industrial (GE C&I) Division in Louisville, Kentucky.
She was hired in January 2006 and let go one year later.
In her SOX complaint, Koeck names as defendants – GE, GE C&I, Raymond Burse, GE C&I’s general counsel, and Earl Jones, GECI’s compliance counsel.
Koeck alleges that soon after signing on with GE C&I, she discovered that the company was engaged in “a variety of irregular practices.”
“But when she tried to address the problems, both Mr. Burse and Mr. Jones interfered with her efforts, took certain matters away from her, repeatedly became enraged with her when she insisted that failing to address the problems would harm GE, and eventually had her terminated.”
The most significant of the “irregular practices” was an alleged value added tax fraud scheme – that was detailed in David Cay Johnston’s Tax Notes International article.
In addition, Koeck alleges “an independent contractor subterfuge that exposed GE to substantial liability under Brazilian employment law and appeared designed to facilitate payment of bribes to make sales.”
In March 2006, Koeck says she was sent an article from a Brazilian newspaper that alleged that GE and GEVISA (a GE/Brazilian joint venture) were among a number of major corporations involved in a Brazilian “bribing club.”
The corporate participants allegedly met regularly to agree on which of them would be awarded which orders from the public sector throughout Brazil as well as the amounts that the corporations would pay as bribes.
Brazilian news reports indicated that more than $20 million in bribes had been paid to more than 150 Brazilian politcians.
According to the SOX complaint, “Ms. Koeck immediately took the matter up with Mr. Burse.”
told her that he was aware of the matter, that GE corporate was handling it,
and that she should focus on other things. She received further reports about
the matter, and relayed them to Mr. Burse. He told her to stay out.”
Koeck raised the obvious Foreign Corrupt Practices Act exposure to the company, wrote two memos, and general tried to raise red flags.
But things kept getting worse for her, she says.
“As 2006 progressed and Ms. Koeck kept running into issues that Mr. Burse wanted her to ignore, he became increasingly belligerent, frequently yelling at her,” the complaint alleges.
Koeck sought to resolve her dispute with her superiors internally within the company. She filed a complaint with the company’s ombudsman.
Her internal GE complaint alleged that she was being retaliated against because she had reported illegal activity by GE personnel.
She recounted how Mr. Burse allegedly had refused to let her pursue the matter, described a conference call in which Earl Jones had threatened her job, and asked that GE investigate the matter.
At the beginning of December 2006, Mark Nordstrom, GE’s senior counsel for labor and and employment law, contacted Koeck and told her he would be investigating her complaint.
According to her SOX complaint, Nordstrom and Jeff Eglash met with Koeck for more than an hour and a half, “after which she experienced chest pains and was found (at GE’s medical clinic) to be experiencing sinus arrhythmia.”
She was placed on medical leave.
When she was released, a second interview took place, this time in New York City. That interview lasted six hours.
On January 18, 2007, Nordstrom sent Koeck a letter advising her that GE had rejected her claim of retaliation, stating “you have not shown that you raised any new compliance issues, nor have you shown that you experienced any materially adverse changes to your employment that resulted from efforts to report out on such matters.”
GE let her go the following week.
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