GE Resolves FCPA-Related Private Claims

General Electric and its former in-house counsel, Adriana Koeck, who claimed she was fired for telling her superiors about the company’s possible Foreign Corrupt Practices Act violations in Brazil, have settled their litigation. GE had sued her for wrongfully disclosing its confidential information, while she claimed she was fired in retaliation for whistleblower activity protected by Section 806 of the Sarbanes-Oxley Act (18 U.S.C. § 1514A) and state law.

Koeck went to work for GE in January 2006 as the lead attorney for Latin America at its Consumer and Industrial Division in Louisville, Kentucky. She was fired a year later. With respect to the FCPA, Koeck said she was sent an article in March 2006 from a Brazilian newspaper alleging that GE and a GE / Brazilian joint venture were among a number of major corporations involved in a Brazilian “bribing club.” The corporate participants allegedly met regularly to agree on how they would allocate orders from the public sector throughout Brazil, and how much they would pay as bribes. Brazilian news reports, she said, indicated that more than $20 million in bribes had been paid to more than 150 Brazilian politicians. A copy of her SOX retaliation complaint can be downloaded here.

In June 2008, however, an administrative law judge at the Department of Labor dismissed Koeck’s SOX complaint, saying it wasn’t filed within the 90-day time limit. That same month, GE sued her in federal court in Alexandria, Virginia. It alleged she had wrongfully disclosed the company’s confidential and privileged information contained in internal e-mails, memos, and legal opinions. She claimed the documents proving her retaliation case against GE weren’t covered by the attorney-client privilege because of the crime-fraud exception. She also filed counterclaims against GE, alleging illegal retaliation for her whistleblowing activity. General Electric Company v. Adriana Koeck, Case No. 1:08-cv-00591-TSE-JFA)

GE’s complaint has remained under seal, along with Koeck’s reply and counterclaims. But GE’s memorandum in support of its motion to dismiss the counterclaims isn’t sealed and can be downloaded here.

In October 2008, the court dismissed Koeck’s counterclaims. A month later, she joined the settlement of a federal gender discrimination class action suit against GE (Lorene F. Schaefer v. General Electric Company, et al., Case No. 3:07-CV-0858 (PCD)). With that settlement, she waived any further claims against her former employer, and GE agreed to withdraw its complaint that she wrongfully disclosed its confidential information. Financial terms of the settlement weren’t disclosed. In January 2009, GE and Koeck filed a joint stipulation of dismissal, ending their federal court litigation with prejudice, with each party paying its own costs and attorney’s fees.

Last year, the Corporate Crime Reporter said the information in Koeck’s whistleblower retaliation complaint was also given to the Justice Department’s Fraud Section, which was conducting an initial review of the case. The DOJ has never commented publicly on the matter and GE has said Koeck’s claims were without merit.

As an aside, Koeck discharged her D.C.-based trial counsel, Bernabei & Wachtel, in August 2008. She claimed in a subsequent court filing that the firm (1) failed to abide by her explicit instructions, (2) acted in the absence of her authority; and (3) failed to communicate with her about the case. Two months before she fired the firm, it had written to her, saying “we do not believe there is a basis for [your counter-claims] . . . the real settlement value of your case to GE is resolving it and buying peace, not the potential counter-claims.” She later retained another firm to help her. Meanwhile, Koeck has disputed Bernabei & Wachtel’s assertion that it has a legal interest “in any monetary settlement payments” she may have received from GE through the Shaefer case.
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