The U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) has ordered Clean Diesel Technologies Inc. to pay $1.9 million to its former chief financial officer, who was fired for reporting conduct he believed was detrimental to the company’s shareholders.
OSHA’s investigation found that the company violated the whistleblower provisions of the Sarbanes-Oxley Act when it wrongfully terminated the former CFO for warning the board of directors about ethical and financial concerns raised by a proposed merger.
“OSHA plays a key role in protecting the integrity of the financial markets and the economy,” said Assistant Secretary of Labor for Occupational Safety and Health Dr. David Michaels. “We protect those who are courageous enough to speak out, even internally, about violations of securities rules and regulations.”
In late March 2010, the former CFO provided information to the company’s board of directors based on a reasonable belief there was a conflict of interest involving the chair of CDTI’s board of directors. The former CFO believed that a proposed merger was: detrimental to the company, critical financial information had been withheld from board members, and the conflict of interest violated internal company controls mandated by the Securities and Exchange Commission as well as the company’s own corporate code of ethics. After being terminated from employment in April 2010, the former CFO filed a whistleblower complaint with OSHA one week later. OSHA’s investigation found merit to the complaint.
“This order should send a clear message to publicly traded companies that silencing those who try to do the right thing is unacceptable,” Dr. Michaels added.
As a result, OSHA has ordered CDT,I a manufacturer and distributor of emission control systems based in Ventura, Calif., formerly headquartered in Stamford, Conn., to pay the complainant more than $486,000 in lost wages, bonuses, stock options and severance pay. In addition, the company must also pay the complainant over $1.4 million in compensatory damages for pain and suffering, damage to career and professional reputation and lost 401(k) employer matches and expenses.