Tony Menendez, Whistleblower

David rarely fights Goliath and lives to tell about it. Tony Menendez, a lone accountant in a global enterprise, did just that after a nine-year battle, and he told his tale when he visited campus Sept. 29.

David’s Pebble

In 2005, Menendez was director of technical accounting research and training with Halliburton in Houston, Texas. He loved his job, he told students in a lecture sponsored by the College of Business Administration Center for Accounting Ethics, Governance and the Public Interest. But within months of his hire, Menendez realized the company was reporting revenue received on sales of equipment that hadn’t been delivered to customers, and occasionally not even assembled.

He urged his superiors to make changes to conform to regulations, but changes were not introduced. In November 2005, Menendez filed a confidential complaint with the Securities Exchange Commission. In February 2006, he notified the audit committee of the Halliburton board of directors. Somehow, that notification, which was required by law to be held confidential, was passed to the company’s legal department. Menendez’s complaint became public, and there followed a series of actions by the company that restricted his role and responsibilities.

In May 2006, Menendez filed a claim against Halliburton under the provisions of the Sarbanes-Oxley Act: He said he had been retaliated against for blowing the whistle. Appeals began, plus counter-appeals, remands of decision and a case history that took the matter to the Fifth Circuit Court of Appeals and just short of the U.S. Supreme Court. For several years, Menendez had no counsel and represented himself. After a series of back-and-forth appeals lasting until 2014, Menendez won his case. He received $30,000, but the case was never about money. “I felt the situation was pretty egregious. … I was defending myself, and I thought it was very important.”

Lawrence Kalbers, R. Chad Dreier Chair in Accounting Ethics, who introduced Menendez’s lecture, said, “While it may not seem glamorous, professional accountants and auditors are the glue that holds the financial markets together. Despite financial and emotional pressure, Tony didn’t give up or give in. And for that he is a great role model for our students.”

The Law

Tony Menendez, known as the “accountant who beat Halliburton,” filed his claim against the company under the provisions of the Sarbanes-Oxley Act, which was enacted in July 2002, to reform accounting practices and protect stockholders and the public as a result of scandals involving Enron, Worldcom, Arthur Andersen, Adelphia and others. The act contains provisions specifically to protect whistleblowers who work for publicly traded companies. In 2014, the U.S. Supreme Court extended the act’s protections to employees of privately owned contractors and subcontractors of public companies. Menendez now works as a controller for General Motors in Detroit.

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