Lawyer Hammers CEO in Whistleblower Retaliation Trial

SAN FRANCISCO (CN) — On the second full day of a whistleblower retaliation trial, the CEO of a biotech company was asked why he typed up and backdated a negative job review for the general counsel he had fired the month before.

“Is it true that you manufactured this review after firing Mr. Wadler?” attorney James Wagstaffe asked BioRad Laboratories CEO Norman Schwartz on Thursday. “You backdated the review to make it look like it was written before he was fired.”

Sanford “Sandy” Wadler, who served as the firm’s highest-ranking lawyer for 26 years, claims he was fired for blowing the whistle on potential bribery of Chinese public officials, in violation of the Foreign Corrupt Practices Act.

The negative performance review at issue was dated April 15, 2013, nearly two months before Wadler was fired on June 7. But the document’s metadata show it was created on July 9, more than a month after the termination.

Schwartz said he probably wrote the earlier date because he started the review in handwritten notes months before, and created the digital file afterward, “to memorialize it.”

The CEO submitted a statement to the Department of Labor, referring to the document as a “true and correct copy of the 2012 performance evaluation.”

Wagstaffe called that representation false, saying it was “not a true and correct copy, because it was created after the fact.”

He called the negative review “a complete 180” from the glowing performance evaluation, promotion and raise Wadler had received a few months before, in December 2012.

Wagstaffe repeatedly asked Schwartz why he’d sent a letter to Human Resources on Feb. 22, 2013, recommending that Wadler be placed on administrative leave.

The email was sent two days after Schwartz learned that Wadler had submitted a memo to the firm’s auditor urging an investigation into possible Chinese bribery that might involve senior management.

Schwartz wrote in the email that Wadler had been “acting a little bizarre lately,” but neither he nor any other employee documented incidences in which Wadler had behaved inappropriately.

In opening statements, Bio-Rad attorney John Potter told the nine-member jury that Wadler had screaming fits, pounded his table and shook his fist at colleagues.

On Thursday, Wagstaffe showed the jury Schwartz’s HR-approved script notes that he used in firing Wadler. He cited the notes as evidence the CEO was trying to cover his tracks and block potential whistleblower litigation.

The script notes specifically state, “this has nothing to do with the recent Davis Polk investigation,” referring to the law firm hired to investigate the bribery allegations.

That investigation concluded there were several “red flags” in China, including lack of proper records for royalties paid, but no evidence of kickbacks to public officials.

After relentless questioning and recitation of his deposition testimony, Schwartz acknowledged the investigation was “somewhat related” to the decision to fire Wadler, but insisted, “It was about the long-term performance, not any one issue.”

The script notes state that Wadler was being fired partly because of his “continuing dysfunctional relationships” with his “peers, department and others, including the board and audit committee.”

Schwartz sought permission to fire Wadler at an April 11 board meeting and had a settlement offer, release and consultant agreement drafted to present the former general counsel on June 7, 2013.

When asked if he told board member Louis Drapeau in early March that he was “entirely frustrated with Sandy but felt he had to stay in place until the FCPA investigation was complete,” Schwartz acknowledged he said words “to that effect.”

Three days after the investigation of Chinese bribery allegations wrapped up, on June 4, Wadler was fired. The former general counsel was offered $400,000, about his annual salary, minus stock options and a $10,000 a month consulting gig if he agreed not to sue or speak out about the firm. Wadler did not take the deal.

Schwartz is expected to continue testifying Monday.

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