Companies' Responsibility for Truth is Key to Elimination of Environmental Fraud

NEWARK, N.J., July 13, 2011 /PRNewswire/ -- Whether it is an act of brazen deceit regarding the discharge of toxic chemicals or a matter of "shading the truth" on emissions, either action constitutes environmental fraud, according to veteran environmental attorney James A. Kosch. In the June 22 issue of Corporate Compliance Insights – an online knowledge-sharing forum for the corporate compliance community –Kosch outlines three areas of risk in an article titled, "Eliminating Environmental Fraud: The Truth, and Nothing but the Truth, is the Only Option."

While environmental fraud "does require deceit, even well-intentioned companies sometimes run the risk of committing fraud by taking a few furtive steps onto a certain slippery slope that involves 'shading' the truth," writes Kosch, a Newark, N.J.-based shareholder in the Tort Defense Practice of national law firm LeClairRyan and a director of the New Jersey Bar Association's environmental law section. "Small companies in particular tend to be less aware of the need to establish strong internal controls geared toward preventing fraud."

The first risk area, according to Kosch, is "fudging the numbers 'just a little.'" Referencing the days when drivers might turn off their catalytic converters to boost vehicle performance but turn them back on for emissions tests, "plant managers are sometimes guilty of 'fudging the numbers.' They might, for example, reduce the volume of emissions coming out of a smokestack for a few days each month in order to create the appearance of regulatory compliance." In his view, there is no such thing as "minor" environmental fraud.

The second risk area is "running afoul of right-to-know obligations" regarding being forthright with environmental agencies and the general public. While it might be tempting for companies to foster a positive environmental image through false reporting, there are indeed risks relating to noncompliance. State environmental agencies and the federal EPA, for example, conduct site and general industry examinations.

The third risk area is false statements regarding compliance with codes of ethics. Here, the onus falls on engineers, geologists and other environmental professionals who, as signatories to international and industry group standards, are legally bound to comply with those standards. Any false statements relating to compliance may also constitute fraud, according to Kosch.

The solution? "Be a good corporate citizen," he advises, noting that the responsibility rests on companies to meet their obligations for environmental disclosure on everything from voluntary agreements and professional standards, to mandated environmental reporting requirements. And when a violation does occur, the best possible action is to self-report any incident.

Mishaps do occur, of course, and when they happen, "acknowledge them and fix them," Kosch says, noting that a cover-up is just as bad as "lying in the first place." The key: Establishing strong internal operating codes.

"The truth, and nothing but the truth, in other words, is the only option," he concludes.

The full article is available at http://www.corporatecomplianceinsights.com/2011/eliminating-environmental-fraud-the-truth-and-nothing-but-the-truth-is-the-only-option/

About LeClairRyan

Founded in 1988, LeClairRyan provides business counsel and client representation in corporate law and high-stakes litigation. With offices in California, Connecticut, Massachusetts, Michigan, New Jersey, New York, Pennsylvania, Virginia and Washington, D.C., the firm has approximately 335 attorneys representing a wide variety of clients throughout the nation. For more information about LeClairRyan, visit www.leclairryan.com.

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Name: James A. Kosch

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SOURCE LeClairRyan