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Bio-Rad CFO Says Fired Lawyer’s Outburst Scared Her

Testifying in a retaliation trial pitting a fired attorney against his former employer Bio-Rad Laboratories, the company’s CFO said Tuesday the attorney’s erratic behavior included an incident that left her frightened for her safety.

SAN FRANCISCO (CN) – As the chief financial officer for a Fortune 1000 company, Christine Tsingos isn’t one to scare easily. But when former Bio-Rad general counsel Sanford Wadler became inexplicably incensed during a meeting and pounded his fists on the table, Tsingos was genuinely afraid.

Tsingos testified Tuesday in a trial aimed at Bio-Rad’s sudden firing of Wadler in June 2013. Wadler, who was the company’s head lawyer for some two decades, says he was fired in retaliation for reporting possible bribery of public officials in China. Bio-Rad CEO Norman Schwartz claims the company was fed up with Wadler’s incompetence and obstructive behavior.

“He was out of control, shaking, and pounded his fists on the table at me,” Tsingos said. “It was very upsetting. I am not a person who is easily rattled, but Sandy’s behavior was so erratic and out of control and so directed at me that I was very frightened.”

The meetings had become a daily morning ritual at Bio-Rad in February 2013, after it became clear that the life sciences company was going to miss the deadline to file its annual financial report with the Securities and Exchange Commission.

Tsingos said Wadler was to blame for the delay, as he suddenly objected to the amount Bio-Rad had set aside to settle a legal dispute with Life-Tech, a biotech from which Bio-Rad leased products, over the amount of royalties Bio-Rad owed them for licensing their intellectual property.

The day after the company released its earnings for the year, Wadler said he didn’t think the accrual amount was high enough. Tsingos said Wadler raised the issue while they were meeting on another matter with Bio-Rad’s auditors from Ernst & Young.

“Of course, it was stunning. We had just gone out and told the world what our numbers were. To change those numbers after the fact is highly unusual,” Tsingos said.

Bio-Rad had to seek an extension on its form 10-k, Tsingos said. As a result, Tsingos and Wadler were required to meet daily with Schwartz.

“We created an activity list of all the things that needed to be done before we could file and I was reviewing those, and Sandy just started screaming. Something set him off and he just started screaming at me,” Tsingos said.

The incident left her badly shaken, and she talked about it later with Schwartz.

“I related that Sandy’s behavior had gotten to the point where it was scaring me. I told Norman I had become scared of Sandy. I was afraid he was going to hurt me and I needed to install an alarm on my house.”

Tsingos said Schwartz convinced her an alarm wasn’t necessary.

“He said, ‘Christine I don’t think Sandy would hurt you. I’ve known him for a long time. And besides, it’s not you he hates, it’s me.’”

After that, Tsingos said her relationship with Wadler became even “more terse and tense.” Wadler and Tsingos also butted heads over Wadler’s suspicion that Bio-Rad’s Hong Kong managers were bribing government officials in China, in violation of the Foreign Corrupt Practices Act.

The anti-bribery law had been a major concern for Bio-Rad since 2009, when violations in Russia, Thailand and Vietnam led to the company agreeing to a $55 million settlement with the Justice Department in 2014.

Tsingos said Wadler questioned invoices showing that more products were delivered to certain Chinese state-run hospitals and universities than had been ordered. She explained the items were “bundled products,” so while the Bio-Rad invoice would show one product, the customs form would break it down into parts, making it appear like extra items were delivered.

“The analogy I used with Sandy was it was like buying a three-piece suit. The catalogue number says one suit but as it goes through customs it comes up as a jacket, the vest and the pants,” Tsingos said.

She added, “It looked like a legitimate business transaction. I didn’t see signs of potential bribery; it looked like a common invoice with a bundled product, and I was able to confirm that with the controller in Hong Kong.”

This didn’t seem to satisfy Wadler, as he ultimately took his concerns to Bio-Rad’s audit committee, an independent body comprising members of its board of directors. Wadler presented his memo to the audit committee on Feb. 8, 2013.

Lou Drapeau, who sits on the audit committee, testified earlier Tuesday that he and other committee members took Wadler’s allegations seriously and authorized him to hire outside law firm Davis Polk to look into it.

Bio-Rad had already employed Foreign Corrupt Practices Act specialist Patrick Norton with Steptoe and Johnson to investigate Bio-Rad’s issues in 2010, and Norton assisted Davis Polk with the second investigation.

Neither Norton nor Davis Polk could find anything substantial, Drapeau said. Under direct questioning from Bio-Rad lawyer James Asperger, Drapeau read part of the Davis Polk report regarding Wadler’s concern that the withholding of documents by Bio-Rad China’s agents suggested bribery.

“This concern appears to arise primarily out of a misunderstanding of the sales process for imports of this nature into China,” the report said.

Drapeau said he was disappointed in Wadler for not sufficiently vetting his concerns before raising them with the board.

“I felt he was not fit to be general counsel of the company and he didn’t do the due diligence a general counsel would have performed before bringing this to the audit committee,” Drapeau said.

At its meeting on April 11, 2013, the board of directors decided to recommend that Wadler be terminated. In a letter to Schwartz, the board members even threatened to resign to send a strong message that they wanted Wadler out.

“This was very important. We felt if there wasn’t any movement on this we were going to consider resigning. It was going to provide some leverage with Norman Schwartz to make the decisions we thought were necessary,” Drapeau said.

Under cross-examination, Wadler’s attorney James Wagstaffe asked Drapeau why he never told Wadler what he thought of his performance.

“You made no effort to make sure Mr. Wadler knew about the concerns so he could improve his job,” Wagstaffe said.

“I made no effort myself,” Drapeau answered. He also acknowledged that he never told Wadler he wanted him fired.

Wadler received a glowing performance review at the end of December 2012, and testified at the start of the trial that he was completely blindsided when Schwartz fired him less than six months later.

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