A civil complaint filed last month in Indiana state court alleges that Allison Transmission executives paid bribes in China to win work there.
Stephen Lowe, an American working for Allison in Shanghai, said he witnessed cash payments, gifts of jewelry, and lavish parties for customers. Allison’s main business in China is selling bus transmissions to government-owned companies.
Lowe alleges that soon after he objected to the practices and told another employee his American expatriate boss was “corrupt,” he was fired. He’s suing under an Indiana state law that protects whistleblowers.
There’s no private right of action under the FCPA. Only the DOJ and SEC can enforce it. State court suits alleging behavior that might violate the FCPA were recognized by the DOJ as a possibility. The Lay Person’s Guide to the FCPA notes that “[c]onduct that violates the antibribery provisions of the FCPA may also give rise to a private cause of action for treble damages under the Racketeer Influenced and Corrupt Organizations Act (RICO), or to actions under other federal or state laws.”
But examples of state laws being used for FCPA-related civil suits are rare. In one case from 2003, the plaintiff brought a claim under California’s Unfair Competition Law that alleged potential FCPA violations. See Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134. The court allowed the suit based on the bribery allegations but said California law wouldn’t let the private plaintiff recover any money damages — just injunctive relief or restitution.
Indiana’s whistleblower protection law allows for reinstatement, double the amount of back pay that’s owed, interest, and attorney’s fees.
A few days after Lowe was fired, according to an account in the Indianaoplis Business Journal, he sent a letter to his former boss saying “you want to terminate me because I told you about one employee’s FCPA violations in China. You want to protect this employee and yourself.”
Lowe hired a Washington, D.C. labor-law firm to bring his suit in Indiana state court. The Indianapolis Business Journal said Lowe’s lawyer wouldn’t “say whether he lodged a complaint with the Justice Department. The federal agency would not confirm nor deny an investigation.”
Allison, the paper said, hasn’t yet filed an answer to the complaint. “We’re looking into the allegations but we can’t comment on the specifics of pending litigation,” a spokesperson said.
Whatever happens, Lowe won’t be in line for a whistleblower bounty under the new SEC rules. Allison Transmission isn’t a public company and doesn’t file any reports with the SEC. It’s apparently still owned by private equity firms Carlyle Group and Onex Corporation, which bought the company from GM in 2007 for $5.6 billion.
Our thanks to a reader in D.C. for sending us a link to the story.