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The Cost of Whistleblowing

Stanley Adams v. Hoffmann-La Roche

by Ole Baekgaard

In 1972, Stanley Adams had risen to become world product manager in the area of vitamins in the Swiss based drug company Hoffmann-La Roche. He enjoyed the seductive lifestyle of the top international business executive together with his wife and his three young daughters. But he was worried. He found himself unable to stomach some of the trading practices of the company, which were now unveiled to him. Practices like transfer pricing, market sharing with competitors, and illicit fidelity rebates to favored customers with repression of others. Practices that enabled the company to collect big profits at the expense of consumers world-wide.

In December that year, Switzerland signed a free trade agreement with the European Economic Community (EEC), thus recognizing the rules of competition of the EEC. Adams decided to take this opportunity to try to curb the malpractices of the company. He approached the European Commission (the governing body of the EEC), and during the following months confidentially passed on information solicited by the Commission's Department of Competition. Then in October 1973, he resigned from Hoffmann-La Roche.

Adams settled with his family in Italy, where he invested all his energy and substantial savings in starting a large-scale pig farm. Seeing that Italy imported more than half of its meat consumption, he thought that the project held all the prospects of a lucrative business, not only for himself, but also for the underdeveloped region. The Italian authorities thought so too and gave him firm promises of financial support. Everything pointed to a bright future.

On New Year's Eve 1974, however, Adams was crossing the Italian/Swiss border for a family reunion when he was arrested by the Swiss police and placed in strict solitary confinement. Eventually, he was told of the charge: espionage and treason against the Swiss Confederation. Hoffmann-La Roche had lodged a complaint against him for leaking secret economic information to a foreign power. In Switzerland this is not only illegal according to the civil code-it is a criminal offense against the state.

Adams wife was also interrogated several times. On one occasion she was informed that her husband, if convicted, could face 20 years in prison. What else she was told nobody but the police officers involved knows. A few days later, she committed suicide. Stanley Adams was informed of her death only after two days had passed, and was denied the right to attend her funeral.

That was the beginning of a train of events which was to lead Adams to his ruin and moments of complete loneliness and frustration, but which also infused him with a deep anger and a sense of mission.

In late March, 1975, Adams was released on a bail of 25,000 Swiss francs, later refunded by the European Commission. He returned to Italy and tried to reshape some sort of life with his three children, deciding also to continue with his plans for the pig farm. But all of a sudden agreements for state-financing were withdrawn.

The next year, following an in camera trial held in Switzerland in July, he was sentenced in absentia to 12 months imprisonment suspended for three years, five years banishment from Switzerland, and payment of legal costs, including the forfeiture of bail. Just three weeks earlier, based largely on information supplied by Adams, the European Commission had fined Hoffmann-La Roche 240,000 pounds for breaking the EEC rules of competition.

These events practically coincided with a dioxin blow-out from a Hoffmann-LaRoche-owned plant in Seveso, which had been producing T.C.P. (trichlorophenol) without proper licenses. Adams was interviewed by the weekly L'Europeo about Hoffmann-LaRoche connections in Italy, and his statements did not exactly enamour him to certain right-wing politicians. He found himself increasingly entangled in a maze of intrigues and bureaucracy around his project in Latina, and eventually he was unable to stop an impending foreclosure and bankruptcy.

In 1979, he was arrested by the Italian police on a trumped-up charge of fraud. He spent almost two months in prison before the accusations finally crumpled.

In the meantime, his case had come to the notice of British members of the socialist group of the European Parliament, and at their instigation the Parliament's juridicial committee looked into the role of the European Commission. Its report was a smarting blow to the Commission. The committee found that the Commission had utterly failed to enforce the free trade agreement with Switzerland and to protect Adams, who had rendered invaluable assistance in that respect. The Parliament unanimously passed a resolution asking the Commission to intervene with the Swiss authorities and demand the re-opening of Adam's case and to compensate him for his losses.

The Commission, after inexplicable delays, paid Adams 20,000 pounds-about one-tenth of his current debts-and utilized his predicament to extract from him a declaration of "no further claims" on the EEC. It otherwise ignored the resolution of the European Parliament, probably considering a favorable relationship with Switzerland-the domicile of many of the world's largest and most influential corporations-more important than the legal rights of an individual. The case had become an embarassment to the Commission, since it had been disclosed that none less than the director general of the Department of Competition had told HoffmannLaRoche that Adams had been the informer for the department.

Adams was by then separated from his children, whom he could no longer support. In January 1981 he fled to England. Supported by several prominent lawyers and politicians representing both the Labour and Conservative Parties, he obtained a permanent permit of stay there that November.

But the Stanley Adams case isn't closed yet. Although appeals of the verdict in Switzerland have been rejected, Adams still wants his name cleared. He is now pursuing his case against Switzerland at the European Commission of Human Rights. He has issued a writ against the European Commission at the European Court of Justice claiming considerable damages, and wants to sue Hoffmann-LaRoche for damages. Some economic support has come from a committee including many outstanding personalities in British public life to cover his legal expenses.

In Denmark, consumer co-ops have taken an active interest in his case. In April this year, they invited him to Copenhagen to address an audience representing a wide range of institutions and the press. The coops recognize that Adams case is of crucial importance to consumers worldwide.

In his book "Roche versus Adams," published recently in England, Adams himself states: "This struggle is not only for me, but for other potential whistle blowers who think `its not worth it' and keep silent. We need them. The fiercer the pressures to keep silent, the more urgent the need is for people to speak out!" ow

Ole Baekgaard is an assistant editor of the Danish monthly "Samvirke" issued by the Coop Denmark to all members of the consumers' cooperative movement in Denmark.

"A Travesty of Justice"

Stanley Adams on his experience

"I was not there to hear the sentence. Despite protests by my lawyer to the court, and representations by the E.E.C. Commission to the Swiss government, my trial was held mainly in camera. I was not prepared to be present at a trial that was not being held in public. In my view it was a travesty of justice. There was no national security risk, no obscenity likely to damage public morals, just a big multinational which wanted to keep its business practices away from the glare of public opinion. But in Switzerland the interests of Roche coincided with the interests of the State. If Roche had a valid reason for wanting to keep its secrets secret, the State had a valid reason for keeping them secret, and the trial could be held in camera."

"Even when the facts of 'economic life' that Roche wanted to keep hidden were illegal and broke the provisions of an international agreement that Switzerland had signed, they were still protected under Swiss law. What's more, anyone who attacked Roche by revealing those secrets was deemed to be attacking the interests of the Swiss State. The two were linked together. What was good for Roche was good for Switzerland, and woe betide anyone who challenged that link or dared to report them to on outside body, even if that body was a partner in an international agreement."

"From the moment f was arrested and charged in Switzerland I was an officially declared outcast. I had had hundreds of friends in Roche at headquarters and around the world. Once I Had left and it was known that I had been in contact with the European Commission not one friend phoned or invited me for a drink, or wrote to me, or asked how I was despite all that had happened to me. I discovered later that r Jann had sent a circular to all Roche employees everywhere, from top management to the cleaning staff, to say that no one was to have any contact with me."

"When I had first realized that there was a chance I might not get my pig form off the ground, I had written to several different companies, first in the pharmaceutical field, and later in other industries, looking for work. Some of these were companies who would have been only too happy to poach me from Roche when I was working there if they had been able to. All the replies I had were negative, and some companies did not even bother to reply. I could not find work as a desk clerk, never mind as a manager. To all intents and purposes I was on a- blacklist, unspoken and unwritten, but none the less there. Big business did not want me."

Reprinted, with permission, from Roche versus Adams, by Stanley Adams, published by Jonathan Capte Ltd., London. Copyright 1984 by Stanley Adams.

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