The Robert Zicklin Center for Corporate Integrity hosted a Q&A panel with “whistleblower” Anthony Menendez, a former employee of multinational corporation Halliburton and Jennifer M. Pacella, assistant professor of law at Baruch College. The event was part of Ethics Week, a time in which Baruch features in-class discussion of ethics-related course material, conducts student-oriented ethics workshops and invites speakers to host events. Before the Q&A began, Menendez recounted his story leading up to Halliburton and the pivotal moments in which both his career and life would drastically change.
Halliburton, which is one of the world’s largest oil services, companies, was publishing its revenue before generating sales and charging its customers particularly high prices for the equipment/machinery it was responsible for. None of the company’s operations were disclosed to the SEC, shareholders or investors. In fact, the same year in which Menendez joined Halliburton, the company was moving forth from a two-year investigation with the SEC.
After acknowledging the disfiguration in numbers that he knew was overlooked, Menendez filed a confidential complaint to the SEC, citing Halliburton’s practices were “distort[ing] key financial rations and keep[ing] assets and liabilities off of the company’s books.” Menendez also included how KPMG, Halliburton’s external auditor, also worked in violation of the GAAP and GAAS by not disclosing any of Halliburton’s infractions and seemingly “downplay[ed] Halliburton’s inexcusable accounting and control failures.”
Once the complaint was filed, there seemed not to be any further progress on this case. Because of this, Menendez decided to take action once again and this time, sent, in confidence, a memo to the audit committee of Halliburton’s board of directors regarding the problem. However, as Menendez described in his recollection, the email he had sent was not in confidence. Instead, it reached the Halliburton legal department as well as the board committee. The SEC once again commenced investigation on the company, and Menendez would be under scrutiny for the next nine years of his life.
In recounting the repercussions of his whistleblowing, Menendez was in “isolation” at the firm. Although he had not lost his position at Halliburton, he was excluded from company responsibilities. He explained that even close friends of his “wouldn’t even set foot in [his] office. No one called [him] or emailed [him]” once he was framed as the company whistleblower. Eventually, Menendez resigned from his position, explaining that his situation at Halliburton during this time was “terrible,” and he was without another choice.
According to Menendez, the only investigation that had been done during this time was the internal one conducted by Halliburton itself. As he explained in his speech, the thought that “politics might run [him] over” throughout the case came true when the investigation was cleared and the SEC released the statement that it would not take any action against Halliburton in the case.
In explaining his story, Menendez many times referenced the parallels to his with that of Enron, the notorious scandal the executive board of the energy company faced in 2001. Sherron Watkins explained her role as a whistleblower in the Enron case, the same way in which Menendez did in his. In fact, Menendez sought legal advice from the attorney who represented Watkins in the trial, Philip Hilder, but Hilder dropped himself from the case due to his belief that there were seemingly absent “prospects of prevailing.”
From 2006 to 2008, Menendez found himself in and out of courts with attorney Joe Ahmad, suing for non compensatory purposes, but rather, for his position back and the refurbishment of his reputation. In the trial, close to three years after the email was sent, the judge ruled in favor of Halliburton, citing in his decision the reasonability of Menendez’s case, and explaining that, “It is not unreasonable that [Halliburton employees] would be reticent to communicate with him about the topics being investigated. That reluctance was not retaliation for whistle blowing, but recognition of complainant’s role as an SEC agent.”
Menendez, however, did not give up and continued to appeal the court’s decision incessantly, beginning in 2008. Although cited by Halliburton to have been a very “black or white” employee, Menendez had no problem with persistently fighting for what he believed to be ethical. He explained that “team is important,” but “in a huddle there is no debate. The quarterback is like, ‘do this.’” He pushed forth, and in the end, it paid off. The appeals court ruled in favor of Menendez in an 8-7 decision, and in November of 2014, he was vindicated. The case that had persisted for so long finally came to a close.
Following his trial, reforms were made with regards to whistleblowers. In 2010, President Barack Obama passed the Dodd–Frank Wall Street Reform and Consumer Protection Act. This law established the Whistleblower Bounty Program, which legally
According to the Dodd-Frank Act, the program “expressly prohibits retaliation by employers against whistleblowers and provides them with a private cause of action in the event that they are discharged or discriminated against by their employers” Although it came 5 years after his first email, Menendez recognizes it as a big step for
When asked if Menendez would “blow the whistle again” if given the chance, the now high-ranking employee of General Motors said that he would. He stated “I would have done it again; not as naive, trusting of folks. I owed it to myself, my profession, especially during that time with Enron. I owed it to something bigger than myself.”
For these reasons, Menendez’s viewpoint on the ethics that
are sometimes masked in multibillion dollar companies such as Halliburton, has not only welcomed him to Baruch for this panel as well as a classroom presentation but also in various discussions throughout the city.