Who’s Sorry Now - Whistle Claims and Counter Claims

Things can get very bitter when a company and a whistle blower begin to trade charges of prejudice and ulterior motives on each side. It is often difficult to know where the truth lies when the whistle blower and the employer both make strong cases and the evidence is not clear cut or easy to decipher. A recent case in point is that of Paul Liska, the former CFO (Chief Financial Officer) of Motorola’s mobile devices unit (cell phone division).

Last February, Motorola announced that the company’s mobile phone sales were at $2.35 billion; about half of what it had been a year ago. The current operating loss was $595 million compared with $388 million last year. A month before announcing these depressing figures, Motorola had said it was planning to cut 4,000 jobs, including 3,000 in its mobile phone unit.

Mr. Liska says he was given the mobile phone unit’s forecast for the current year and found that it was based on inaccurate information and fallacies and also ignored important facts. He says he brought this matter up with the company’s audit committee. During the meeting he also told them that one of the reasons for the dismal results was that the unit was incapable of accurately predicting sales numbers. He also informed them of the fact that the unit had no viable business plan for 2009. Additionally, he advised that same committee, that when credit rating agencies came to know of the fact that the company was producing forecasts without any factual basis, the credit rating would be badly affected.

According to Mr. Liska the day after his meeting with the audit committee he was fired. He says it was for his refusal to accept unsubstantiated and misleading financial forecasts. Mr. Liska is now suing Motorola for $1.5 million in severance pay as well as punitive damages.

Motorola on its part says that forecasting failures were common in the mobile phone industry and the global recession had only made things worse. The problem was not only with Motorola- all the cell phone manufacturers were in the same position. The effect of the recession on mobile phone sales had already been taken into account by the company board. The company also says that Mr. Liska has failed to perform as CFO and had been erratic, unprepared and abrasive and that the company had decided to replace him months before. When Mr. Liska got to know he was going to be fired, he staged the whole audit committee drama to try and extort additional money from the company when leaving.

While Mr. Liska’s track record shows him to have been a successful finance officer, the jury is still out on what happened at Motorola.