A US regulator has ordered Clean Diesel Technologies Inc (CDTi) to pay nearly USD1.9 million to its former chief financial officer (CFO) who was fired for reporting conduct the former CFO believed was detrimental to the company's shareholders.
CDTi manufactures and distributes emissions control systems and products for use in heavy-duty diesel, materials handling equipment and automotive markets.
Investigators for the Occupational Safety and Health Administration (OSHA) found that the company violated whistleblower provisions of the Sarbanes-Oxley Act of 2002. OSHA says the company wrongfully terminated the former CFO for warning the board of directors about ethical and financial concerns raised by a proposed merger.
In late March 2010, the former CFO provided information to the board based on a reasonable belief there was a conflict of interest involving the chair of CDTi's board of directors.
Filings with the US Securities and Exchange Commission (SEC) say Ann B Ruple was CDTi's CFO, vice president and treasurer from 13 December 2006 until the CDTi board of directors terminated her employment on 19 April 2010. The certified public accountant who holds an MBA degree filed the whistleblower complaint with OSHA on 30 April 2010.
OSHA says the former CFO believed that the proposed merger was detrimental to the company, that critical financial information had been withheld from board members and that the conflict of interest violated internal company controls mandated by the SEC and the company's corporate code of ethics. OSHA's investigation found merit to the complaint.
"This order should send a clear message to publicly traded companies that silencing those who try to do the right thing is unacceptable," says David Michaels, assistant secretary of labour for OSHA.
On 30 September, OSHA ordered Ventura-based CDTI to pay the complainant more than USD486,000 in lost wages, bonuses, stock options and severance pay and more than USD1.4 million in compensatory damages for pain and suffering, damage to career and professional reputation and lost 401(k) employer matches and expenses.
The company must post OSHA's findings in an 8-K submission to the SEC since previous filings about the complainant's termination and whistleblower activity had also been posted to the SEC. CDTi must expunge all files and computerised data systems of disciplinary actions related to the complainant's termination, pay reasonable attorney's fees and post the order and a notice to workers at all company locations and on its internal website. OSHA will inform the SEC of its findings so that the agency can pursue any other appropriate action.
OSHA is a unit of the US Department of Labor.
Publicly traded CDTi reports a loss of USD1.4 million on sales of USD12.6 million for the three months ended 30 June.
The diesel systems unit designs and manufactures verified exhaust emissions control solutions. The other division uses proprietary mixed-phase-catalyst technology in producing formulations to reduce emissions from gasoline, diesel and natural gas combustion engines. Manufacturing occurs in Reno, Nevada; Thornhill, Ontario, Canada; and Malmö, Sweden for diesel systems and Oxnard, California for the catalyst products.
On 19 February, CDTi and Pirelli & C Ambiente SpA of Pero, Italy formed a venture to jointly sell CDTi emission control products in European and Commonwealth of Independent States countries.
As of 31 December 31, CDTi had 162 full-time employees and two part-time staff.