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Engineer Prepares Fraudulent Board Minute to Cover CEO’s Misconduct

Situation

Newspaper clippings concerning the testimony of an engineer and ASCE member in a federal trial are forwarded to the Committee on Professional Conduct (CPC). The defendant in the trial, the chief executive officer of a large engineering firm, has been charged with obstruction of justice and perjury in relation to a Federal Bureau of Investigation (FBI) investigation into bribery and corruption of state legislators.

The federal investigators claim that the defendant made sizable payments to members of the state legislature to obtain their support for legislation that would be favorable to the executive’s company. The investigators further maintain that, when the chief executive officer learned of the impending FBI investigation, he took steps to cover up the illegal movement of funds, including the drafting of minutes of board meetings that never took place. The minutes were written to disguise the purpose and recipients of the transferred funds.

The ASCE member served as the secretary of the company at the time of the alleged bribery and cover-up. Testifying under a grant of immunity from federal prosecution, the member acknowledges that he signed the meeting minutes in his capacity as secretary even though he knew that the meetings had not been held and that the company was currently under investigation in connection with alleged acts of bribery.

Question

Did the engineer’s actions in participating in a cover-up of an executive’s illegal activities violate ASCE’s Code of Ethics?

Discussion

At the time of this investigation, canon 6 of the Code of Ethics read as follows: “Engineers shall act in such a manner as to uphold and enhance the honor, integrity, and dignity of the engineering profession.” Moreover, category (a) in the guidelines to practice for that canon had this to say: “Engineers shall not knowingly act in a manner which will be derogatory to the honor, integrity, or dignity of the engineering profession or knowingly engage in business or professional practices of a fraudulent, dishonest, or unethical nature.”

The CPC obtained transcripts of the member’s testimony and contacted the member to request an interview. During the meeting, the ASCE member claimed that he had no knowledge of the chief executive officer’s illegal activities and that his signature on the fraudulent minutes alone did not rise to the level of unethical conduct. Furthermore, he was of the opinion that his cooperation with federal prosecutors and his immunity from criminal penalties also should insulate him from disciplinary action by ASCE.

While the members of the CPC were satisfied that the member had not participated in the bribery itself, they believed that his involvement in preparing fraudulent documents, which was done with full knowledge of a pending investigation into the firm’s actions, violated canon 6 of the Code of Ethics. The CPC voted to suspend the member for a period of two years and contacted the member to advise him of his right to have a hearing before the Board of Direction or to accept the committee’s sanction and waive his right to a hearing. Instead, the member restated his belief that he had not acted unprofessionally and said that he would take no further part in combating what he deemed to be “frivolous and ridiculous charges.”

Despite the member’s refusal to present a defense, the Board of Direction’s Executive Committee, in accordance with article 3 of the Society’s rules of policy and procedure, conducted a formal hearing. Upon review of the CPC’s reports, which included transcripts of the member’s trial testimony, the board upheld the CPC’s finding that the member had violated canon 6 of the Code of Ethics. It voted to suspend the member for one year and to announce the action in an ASCE publication without citing the member by name.

In 2005 ASCE adopted Policy 510 (“Combating Corruption”), which spells out ASCE’s commitment to corporate transparency and to eliminating bribery, fraud, and corruption in the engineering and construction industry. (See www.asce.org/pressroom/news/policy_details.cfm?hdlid=508 for the current version of this policy, adopted in May of this year by the Board of Direction.) In accordance with that policy, ASCE has undertaken a number of initiatives in recent years to extirpate corruption in the global marketplace, among them revising canon 6 of the Code of Ethics in July 2006. The current version of canon 6 and its implementing guidelines includes a number of provisions expressly signaling ASCE’s policy of “zero tolerance for bribery, fraud, and corruption.”

Members who have an ethics question or would like to file a complaint with the Committee on Professional Conduct may call ASCE’s hotline at (703) 295-6061 or (800) 548-ASCE (2723), extension 6061. The attorneys staffing this line can provide advice on how to handle an ethics issue or file a complaint. Please note that individual facts and circumstances vary from case to case and that the general summary information contained in these case studies is not to be construed as a precedent binding upon the Society. 

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