VP Says He Was Fired for Reporting Bribes

     SAN FRANCISCO (CN) – Bio-Rad Laboratories fired a vice president for telling auditors the clinical diagnostics company was bribing foreign governments for contracts, the attorney-executive claims in court.
     Bio-Rad, based in Hercules, Calif., reported more than $2 billion in revenue in 2011. Its shares are traded on the New York Stock Exchange and it has more than 7,500 employees, according to publicly available information.
     Sanford Wadler, an executive vice president and former general counsel, claims that Bio-Rad’s corporate officers learned in 2009 that overseas employees and agents were bribing government officials in Russia, Thailand and Vietnam to win public contracts to sell medical diagnostic equipment.
     Bio-Rad admitted the bribery schemes in an SEC filing that detailed its attempts to conceal the payments as “commissions,” “advertising fees” and “training fees,” Wadler says in the complaint.
     He claims that in 2011 he grew concerned about potential bribery in China, though Bio-Rad had hired the Steptoe and Johnson law firm to investigate. He says Steptoe and Johnson found no evidence of improper payments.
     But an audit by Life Technologies, from which Bio-Rad licensed products, revealed that Bio-Rad had practically no documentation regarding its China operations, Wadler says.
     “Wadler was shocked that, with sales in the hundreds of millions of dollars over a number of years, Bio-Rad could not come up with virtually any documents evidencing such sales,” he says in the complaint. “Wadler repeatedly tried to obtain documents from Bio-Rad’s CEO, CFO, and other key executives, but despite indicating that they would assist in tracking down such documents, these executives repeatedly failed to do so.
     “Wadler was concerned that the failure to maintain documents that would accurately reflect Bio-Rad’s transactions in China was itself a books and records violation of the Foreign Corrupt Practices Act. More importantly, he was worried that the lack of documentation suggested efforts to conceal violations of the FCPA’s anti-bribery provisions. The sheer dearth of documents in relation to Bio-Rad’s extensive China operations suggested that such bribery might be rampant.”
     In 2012, Wadler says, he found documents showing potential kickbacks that Bio-Rad paid to Chinese government entities, such as public universities. By 2013, he says, he felt compelled to report his suspicions to Bio-Rad’s outside auditors, Ernst & Young.
     “He specifically relayed his concerns that he had uncovered evidence of bribery, books-and-records violations, and that language had been altered in documents in Chinese in order to circumvent Bio-Rad’s internal controls to prevent such violations of the law,” the complaint states.
     Steptoe and Johnson were brought in again, and Wadler says he was shut out of the investigation despite his vehement objections.
     He was fired on June 7, 2013 by vote of the entire board – Wadler claims it was because he raised hell about the company’s bribery and misconduct.
     Bio-Rad entered into a nonprosecution agreement with the SEC and the Department of Justice in 2014, under which it promised to pay $55.1 million for FCPA violations, according to the complaint.
     Wadler demands two years of back pay with interest, and punitive damages for emotional distress. He also seeks reinstatement to his former position.
     He is represented by Michael von Loewenfeldt with Kerr and Wagstaffe.
     Neither Bio-Rad nor Wadler’s attorneys responded to requests for comment.

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