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The first CFO to file for Sarbox whistle-blower protection; a new tip on some stolen artwork leads to a surprising source.
CFO Staff, CFO Magazine
April 1, 2005
The fate of David Welch, the first CFO to file for Sarbanes-Oxley whistle-blower protection, is one step closer to being decided. In February, administrative law judge Stephen Purcell upheld his 2004 decision that Welch, the former finance chief of Cardinal Bankshares Corp., should be reinstated and paid back wages, damages, and attorneys' fees—a total of just under $173,000—by the small Floyd, Va.-based bank.
In October 2002, Welch refused to certify Cardinal's financial statements, citing concerns about suspected insider trading and possible inflated earnings. After he refused to meet with the company's audit committee without his lawyer, Welch was fired.
Although reinstatement at a company that dismissed him and has since accused him of failing to perform his job properly would seem to be awkward at best, Welch is determined to resume his role as finance chief should the judge's decision stand. "I would feel a responsibility to go back," he told CFO last year. Daniel Westman, a partner at Shaw Pittman LLP in Virginia, and lead author of Whistleblowing: The Law of Retaliatory Discharge, says that in a situation where the relationship has turned sour, judges will often award so-called front pay, or wages from the date of the decision to some point in the future, rather than reinstate the employee. But Welch is not seeking front pay, and since the judge has ruled he should be reinstated, he will likely have to return.
Welch also needs a job. Although for the past year he has been working as the fiscal director of a medical practice, that temporary assignment has ended. "He has been blackballed in the banking field," says Welch's attorney, D. Bruce Shine of Shine & Mason, in Kingsport, Tenn. Although returning to his former employer could be difficult, says Westman, "going back to a job where people don't like you may be better than the alternative, which is being unemployed."
The appeals process in Welch's precedent-setting case is far from over. Laura Effel, a partner at LeClair Ryan Flippin Densmore and the attorney for the defense, has called the judge's decision "disturbing," and says the bank has filed an appeal to the Administrative Review Board.—Kate O'Sullivan
The Art of White-collar Crime
While nowadays accusations of corporate fraud seem almost routine, an allegation of purchasing stolen artwork can still raise eyebrows. Jean-Marie Messier, former Vivendi Universal chairman and CEO, has been alleged to know the whereabouts of paintings lifted from Boston's Isabella Stewart Gardner Museum in a 1990 art heist, the nation's largest ever. In February, art historian Alexander Boyle, of the Connecticut firm Hamilton Auction Galleries, told the Federal Bureau of Investigation that he believes Messier has been in possession of 4 of the 13 stolen works.
Although Boyle's information was obtained from a onetime mob informant and has not been corroborated, the bureau's Boston office sent two agents to Paris to investigate. "This was not an unknown source for the bureau," says Boyle, who has been looking into the Gardner heist since 2001. "When you're looking for stolen pictures, you don't go to the Boy Scouts for information."
Gail Marcinkiewicz, spokesperson for the FBI in Boston, says the bureau regularly receives tips about the theft, which involved an estimated $300 million worth of paintings and drawings, including famous works by Vermeer, Rembrandt, Degas, and Manet. Neither the museum nor the FBI would comment on the details of the new lead, although Gardner marketing director Cathy Deely says the 15-year-old investigation is still a top priority at the museum. There is a $5 million reward for the return of the stolen items.
Messier's lawyer, Olivier Metzner, told the Boston Herald that the allegations were "totally without merit" and "the kind of information pulled from a trash pail." Messier is now running Messier Partners LLC, a boutique mergers-and-acquisitions firm in New York and Paris.—K.O'S.
CFOs On The Move
Robert Ryan, veteran finance chief at medical-devices maker Medtronic Inc., is retiring this month. Medtronic corporate controller and treasurer Gary Ellis will succeed him.... Tenet Healthcare Corp. has added a new member to its revamped management team, naming Robert Shapard, a former energy-industry executive, to head up its finance group.... For-profit education company Corinthian Colleges has appointed Kenneth Ord CFO.... Jean Mandeville will be the new CFO at troubled telecom Global Crossing Ltd.... Software maker PalmSource Inc. named Jeanne Seeley to the CFO post.... Glenn Richter is leaving Sears, Roebuck & Co. to become the new finance head at printer R.R. Donnelley & Sons.