60 Minutes Features Case of GAP Client

Courtesy of wikimedia user Jonathan McIntosh(Washington, DC) – Last Sunday night, the television news-magazine 60 Minutes featured a July 2011 interview of Eileen Foster, a former high-ranking official at Countrywide Financial Corp., the home loans behemoth, and then Bank of America (BofA) after its purchase of Countrywide in July 2008. Foster, now a GAP client, reported the corrupt activities of company officials, both pre- and post-purchase. In September 2008, BofA terminated Foster. Three months ago, the Occupational Safety and Health Administration (OSHA) found that BofA was wrong to terminate her, ordering her reinstatement and damages. However, BofA has appealed that order, and Foster's fight continues.

GAP Senior Counsel Richard Condit described the importance of the case: "Eileen Foster's case and those that will follow provide penetrating insight into how the home mortgage crisis arose and was readily accepted by corporate cultures that cared more about short-term gain than long-term disaster. Bank of America-Countrywide rejected the results of a two-year OSHA investigation. There is little indication the culture that created this crisis will ever change."

Click here to watch the 60 Minutes segment.

by GAP President Louis Clark

In recent years, we have learned about a number of corporate horror stories. A major toy company had sold and widely distributed toys manufactured in China with lead-tainted paint. A pharmaceutical company had manufactured a vaccine for babies with a compromised quality assurance program. Government contractors employed in Iraq to provide infrastructure were instead padding their profits and cutting corners while the buildings they constructed crumbled.

In each instance, scores of employees knew about the problems but for whatever reason did nothing to end the faulty practices. It is no wonder that so many of those in the know about wrongdoing chose job security over courage. No one should rely on public anti-corruption assurances from corporate public relations operatives until effective systems are in place so that everyday workers who spot potential disasters in the making will report them – putting public health and other significant concerns above corporate profits. Sadly, this right to blow the whistle, free of retaliation and harassment, has steadily eroded over the last five years.

Following a wave of massive corporate fraud, exemplified by the Enron and WorldCom scandals, Congress passed the 2002 Sarbanes-Oxley (SOX) Act. Our legislators were reacting to the revelations of a tiny handful of brave whistleblowers who exposed the massive corruption – a few out of hundreds and hundreds who were aware of the wrongdoing. Others did not come forward with incriminating information, either out of fear or the knowledge that whistleblowing is futile in a culture where fear of reprisal is so pervasive. To address this need, within SOX Congress included provisions that would hopefully ensure that whistleblowers within publicly traded companies would no longer remain defenseless.

by GAP General Counsel Joanne Royce and National Employment Lawyers Association (NELA) Executive Director Terisa E. Chaw. This op-ed also appeared in the Baltimore Sun, Salt Lake Union Tribune, and the Canton Repository (OH).

When former Enron Chief Executive Jeffrey K. Skilling was sentenced last week to more than 24 years in prison for his role in the company's 2001 collapse, it was a reminder of how the Enron scandal forced changes in government's oversight of corporate America.

In the wake of that scandal, Congress strengthened securities laws in 2002 to protect investors and markets from future financial disasters. Unfortunately, powerful corporations are challenging these laws in bitter legal disputes across the country. One such battle threatens to disarm perhaps the most effective post-Enron legal remedy: the protection of corporate employees who identify suspected securities fraud within their corporations. This provision, as part of the Sarbanes-Oxley bill, was designed to avert economic disasters by shielding whistle-blowers of publicly traded companies from retaliation.

Corporations are capitalizing on minor ambiguities in the language of this whistle-blower statute to claim that only employees of parent corporations, not wholly-owned subsidiaries, are covered by these legal protections. Defense lawyers find support for this argument in "black letter" corporate law, which contends that parent companies are independent from subsidiaries and should thus not be held liable for subsidiary misconduct.