Skip to content

The “Unwritten Policy” Trap

2005 July 29
by John Wallbillich

When something is important, it’s probably worth writing down.

Continuing the storyline of the GC as witness, the Topeka Capital Journal reports (reg req) about testimony in a federal re-trial in Kansas:

The former general counsel for Westar Energy said this morning in the trial of former Westar executive officers David Wittig and Douglas Lake, that the utility had an unwritten policy that a relative could fly on the corporate jet if there is a seat available.

Richard Terrill, who worked 21 years for Westar or Kansas Gas and Electric, which later became part of Westar, testified that he, his wife and his two children, flew aboard the Westar jet. Terrill saw the director and officer reports and none of the other Westar executives and board directors reported personal travel on those reports.

These reports were apparently to be used for tax purposes and also for securities disclosures. Prior testimony by a prosecution witness placed the value of this personal use of corporate aircraft at $2,151,354.

A rather large alleged benefit to be governed by an unwritten policy. This would of course never pass muster in even the most rudimentary review of internal controls.

But all may not be lost for Messrs. Wittig and Lake, due to questions of prosecution document production raised by the defense.

Given that the FBI reported in May that there are 405 corporate fraud cases being pursued in the US (double the number in 2003), there may be more opportunities for GCs (current and former) to hone their witness skills.

Footnote: Corporate aircraft are a lightning rod for scrutiny, as the recent reports about Sanford Weill’s attempt to leave Citicorp early indicate. Does Citi-Jet One have this?

EJECT!  EJECT!  EJECT!

No comments yet

Comments are closed.