Dow, fired exec exchange contract lawsuits

08 May 2007 23:39  [Source: ICIS news]

HOUSTON (ICIS news)--Dow Chemical and its former chief financial officer traded breach-of-contract lawsuits on Tuesday in the wake of the firing of the executive on accusations that he held unauthorised talks to sell the company.

J. Pedro Reinhard sued Dow and chief executive Andrew Liveris on Tuesday for $75m (€55.5m), alleging libel and breach of contract.

Also on Tuesday, Dow filed a breach-of-fiduciary duty lawsuit against Reinhard and former Dow executive vice president Romeo Kreinberg, who was also fired last month after he was also accused of holding unauthorised sales talks.

Dow said it was seeking performance awards amounting to several million dollars that it had given to the Kreinberg and Reinhard during the three years prior to their termination.

Reinhard’s suit was filed in the US District Court, Southern District of New York, and was “was brought to recover for the damage inflicted upon Mr. Reinhard's reputation resulting from both the company's and Mr. Liveris' false and malicious statements”, according to a statement released by Reinhard.

The lawsuit also seeks to recover compensation and benefits that Dow has ceased to pay to Reinhard since 12 April, according to the statement.

"I am deeply saddened that I have to file a lawsuit to clear my good name and restore my reputation against a company to which I devoted 37 years of loyal service," said Reinhard.

Reinhard denied he was part of  “part of any secret effort to take over or acquire Dow Chemical". His lawsuit seeks both compensatory and punitive damages for libel, and compensatory damages for breach of contract.

Dow spokesman Chris Huntley denied the allegations made in Reinhard’s lawsuit.

Dow’s lawsuit against Reinhard and Kreinberg said the two repeatedly failed to tell the company about their alleged involvement in talks concerning the sale of the chemical giant. The Dow lawsuit was filed in the US District Court, Eastern District of Michigan.

The Dow lawsuit said the company had tried for three months to track down the source of news media reports that said the company was the subject of a potential buyout or acquisition.

According to the lawsuit, a bank chief executive (not named in the lawsuit) told Liveris at a dinner on 9 April that the bank’s London affiliate “had been working on behalf of certain Middle Eastern investors on potential major transactions involving Dow”, and that a variety of potential transactions were being discussed including a purchase of Dow in its entirety.

On 10 April, the bank chief executive told Liveris that Reinhard and Kreinberg were the Dow employees who were involved in the discussions, according to the lawsuit.

“The startling realisation was worsened by the fact that Dow did not learn of the senior executives’ involvement from the senior executives themselves, but rather from a third party source,” according to the Dow lawsuit.

Reinhard and Kreinberg denied the allegations and were subsequently fired, according to the lawsuit.

Dow said it was seeking to recover performance awards given to or held in reserve for the two executives during the past three years. According to the lawsuit, Reinhard had outstanding equity awards of about $16.2m and had realised $14.7m in value from his awards in the three years prior to being fired.

Kreinberg had outstanding equity awards valued at $15.0m and had recognised about $5.0m in value from his equity awards during the three years before he was terminated.

By: Brian Ford
+1 713 525 2653

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