Whistleblower complaints almost by definition involve complicated disputes between opposing parties. Getting to the truth behind these filings remains complex due in part to the resources powerful companies put into fighting charges that claim fraud.
A case involving ExxonMobil that began several years ago continues to make headlines.
Claims of asset inflation
A report in Sierra Magazine covers the efforts of a former ExxonMobil employee turned whistleblower who believes the company engaged in “fraudulent and defiant behavior” in a supplement to a case that began in 2015. Originally, the case centered on allegations that the company refused to correctly value assets in a way that misled investors. This gave investors a false picture of the company’s assets.
More recent filings from the same whistleblower and a team of advisors claimed that Exxon overvalued its assets by as much as $56 billion as of 2019. The filing with the SEC claims a consistent pattern of deceptive accounting practices to avoid a fair valuation of its holdings.
The company has a history of avoiding write-downs even while other oil and gas companies devalued assets. Exxon argued that conservative accounting practices did not require devaluing assets during market downturns.
Accusations of delayed actions
Recently, ExxonMobil did devalue assets to the tune of a write-down of just over $19 billion. The whistleblower responded that this action came too late and still did not accurately reflect the value of certain of the company’s assets.
The failure of the company, according to the complaint, to follow generally accepted accounting standards resulted in securities fraud, and recent actions do not correct past practices. The case remains under investigation by the SEC.