ACFE Communications Manager
ExxonMobil Corp. was ordered to reinstate two computational scientists who were fired in 2020 and pay them a collective total of more than $800,000 in back wages, interest and compensatory damages following a federal whistleblower investigation by the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA).
Citing whistleblower protections afforded by the Sarbanes-Oxley Act, OSHA determined that ExxonMobil wrongfully fired the employees for communicating with the Wall Street Journal for a 2020 article in which multiple sources within ExxonMobil alleged the multinational oil and gas corporation was intentionally falsifying its estimated production and valuations.
The Wall Street Journal’s article, “Exxon Used to Be America’s Most Valuable Company. What Happened?” detailed ExxonMobil’s initiatives to overcome significant financial losses amidst the COVID-19 pandemic, plummeting demand for fossil fuels and mounting climate concerns. The Wall Street Journal interviewed 20 current and former employees who questioned the company’s decision makers in several areas. In particular, multiple employees believed the company’s total production and reported value of oil and gas deposits in the Permian Basin — an 86,000 square mile area of West Texas— were “overly optimistic.” One particular area was marked with a net present value around $60 billion, but the employees claimed some on the project believed that number was actually closer to $40 billion.
Exxon denied those claims at the time, saying in a statement to the Wall Street Journal, “We reject the claims made by your sources who, based on their comments, have an inaccurate, incomplete and dated perspective of resource and development plans.”
In late 2020, ExxonMobil fired the two computational scientists, who became the subjects of OSHA’s whistleblower investigation. One of them leaked company information and the alleged violations to a relative who was then anonymously quoted for the Journal’s report, according to OSHA’s findings.
“ExxonMobil’s actions are unacceptable. The integrity of the U.S. financial system relies on companies to report their financial condition and assets accurately,” said Assistant Secretary for Occupational Safety and Health, Doug Parker. “Whistleblower protection is integral to ensuring that financial disclosure laws work. As was the case in this instance, OSHA will aggressively protect the rights of employees who raise concerns related to financial improprieties or potential fraud against shareholders.”
“We reject all claims made by the former employees and will defend the company accordingly,” an Exxon spokesperson told The Washington Post in response to OSHA’s report. “The terminations in late 2020 were unrelated to the ill-founded concerns raised by the employees in 2019.”
Exxon is not facing action from the Securities and Exchange Commission for alleged fraud related to the whistleblowers’ claims, according to a court filing in which the company produced an SEC letter on the matter. According to The Washington Post, a separate shareholder lawsuit echoing the fired scientists’ concerns was dismissed in September 2022 on grounds that there was not sufficient evidence to prove Exxon executives committed fraud to deceive investors. The judge in the case did invite the plaintiffs to refile if more evidence becomes available.
Exxon continues to defend itself in a number of other lawsuits alleging fraudulent claims the company has made about its business’ true impact on climate change over the years.
According to Occupational Fraud 2022: A Report to the Nations, 42% of occupational fraud is detected through tips; of that group, 55% of them are company employees. Whistleblower protections are in place to protect those who feel fraud may be occurring. Speaking up against actions one feels are inappropriate is difficult, but it opens the door for fraud examiners to inspect what might be happening at companies of all sizes around the world. Those efforts should not go unrecognized.
SOURCE: ACFE Insights – A Publication of the Association of Certified Fraud Examiners