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General Counsel's Whistleblower Trial Proceeds Against Ex-Employer

Sun-tzu, a Chinese general and military strategist, is credited with coining the phrase about 2,400 years ago: "Keep your friends close, and your enemies closer." Sanford "Sandy" Wadler, formerly general counsel at Bio-Rad Laboratories Inc., might be feeling that about his former employer today.

Wadler, who worked for Bio-Rad for two decades, is suing the company for allegedly firing him after he blew the whistle on its conduct in China. He contends that he was forced out of his job after he advised the company about potential bribery in violation of the Foreign Corrupt Practices Act.

"If he had not made his report to the audit committee, he would have not been fired," plaintiff's attorney James Wagstaffe said in opening arguments last week.

Opening Arguments

Proceeding in federal court in San Francisco, Wadler alleges that he found documents in 2012 showing potential kickbacks that Bio-Rad paid to Chinese government entities, and that Bio-Rad was delivering products to Chinese customers without billing them. He engaged outside counsel to investigate, but did not uncover any wrongdoing before he was terminated in 2013.

Bio-Rad contends that Wadler used the alleged wrongdoing to make up for failures in his 26 years as Bio-Rad's highest-ranking lawyer. The company blamed him for failing to institute a Foreign Corrupt Practices Act compliance program, which resulted in a $55 million fine for alleged violations in Russia, Thailand, and Vietnam.

"Mr. Wadler decided to reinvent himself; to go from an FCPA slacker to an FCPA whistleblower," said defense attorney John Potter.

Wagstaffe said that he never had a chance to prove there was any bribery, wrongdoing or corruption.

"Bio-Rad decided to fire Mr. Wadler before the investigation was even over," he said.

Smoking Negative Review

The plaintiff's attorney had the company's CEO on the run during the second day of testimony. CEO Norman Schwartz admitted on the stand that he back-dated a negative review after he terminated Wadler.

"You back-dated the review to make it look like it was written before he was fired," Wagstaffe charged.

The negative performance review was dated April 15, 2013, but the computer file shows it was created on July 9, more than a month after Wadler's termination. Schwartz said he probably hand-wrote the review first and then created the digital file later.

The trial is scheduled to continue through February.

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