French Subsidiary May Have Exposure for Retaliation Under Sarbanes-Oxley
April 7, 2008
O’Mahony v. Accenture
Earlier this year, a New York Federal Judge found that a former senior employee of a global consulting firm who was stationed in Paris can sue for damages under the whistleblower protection provision of Sarbanes-Oxley. Rosemary O’Mahony, a British citizen who worked for Accenture in France for 14 years, claimed the company demoted her after she accused it of withholding more than $3 million it owed in French social security payments. The Southern District of New York Judge rejected a motion to dismiss by co-defendants Accenture, which is based in Bermuda, and itsU.S. subsidiary. The co-defendants argued that the provision of Sarbanes-Oxley did not cover employees outside theUnited States. The Court determined that because the alleged “wrongful conduct and other material acts occurred in the United States … the exercise of jurisdiction by this Court to resolve the dispute before it would not implicate extraterritorial application of American law.” This appears to be the first case that applies Sarbanes-Oxley whistleblower protections to an employee working overseas.
The Plaintiff in the case, O’Mahony, was a partner at Accenture’s U.S. subsidiary from 1984 through Aug. 31, 2004, and a partner and employee of its French subsidiary from Sept. 1, 2004, to Oct. 31, 2006. Around September 1992, she left the United States to establish and head a new office for Accenture in France. She worked in France part time for a year, but in September 1993 her assignment was made full time.Accenture’s U.S. subsidiary received a certificate of coverage exempting it from making contributions to the French social security system for five years. But since she worked in Paris for more than five years, O’Mahony claimed that Accenture was obligated to make payments to the system. O’Mahony alleged in her complaint that her former employer owed the French government “in an amount equal to approximately 36 percent of Ms. O’Mahony’s total compensation for the period September 1997 through September 1, 2004. She said that she earned $10.4 million during that period, making the amount owed to the French $3.7 million. O’Mahony said that she notified American executives about the problem, but in September 2004 Accenture’s global financial controller in New York told her that the company had decided that its “‘interests’ would be better served by not making any of the French social security contributions and continuing to affirmatively conceal from the French authorities the fact that [O’Mahony] had been working in France since 1992. O’Mahony responded that she could not violate the law, and brought the matter to the attention to the French authorities. She claimed that Accenture responded by demoting her in November 2004 and reducing her salary by $670,000.
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