Anderson said the audit of the Customer Events Department began in much the same way other audits did: through office gossip, or what he called "whisperings."
His team was unfamiliar with the department. "Nobody knew much about this group, nobody watched it very carefully, and the expenses were kind of high," Anderson testified. "…there was a lot of money flowing through there."
He said he wanted to examine the department without it "becoming a political issue." So, Anderson said he tucked the investigation into the audit plan that he typically submitted to the Dow audit committee. That way, the inquiry would appear no different than many of the other audits his unit undertook.
Not long after the examination began, Anderson testified, the audit team "came back to me and said, 'We're seeing some real funny stuff in here.' I said, 'What kind of funny stuff are you seeing?' 'Well, we're seeing Super Bowl parties, we're seeing Andrew's vacations, we're seeing all sorts of things in here.'"
Among the expenses auditors were examining were an African safari and a $218,938 trip to the 2010 Super Bowl in Miami between the New Orleans Saints and the Indianapolis Colts. Liveris and family members were along for both. Dow declined to comment on whether customers were present.
Anderson said he brought in Wood, a fraud investigator at Dow, not long after. He testified that the probe's initial findings showed "evidence of potential wrongdoing from Liveris from the documentation we're seeing … and from the vague answers we're getting." Precisely what Anderson meant is unclear from the documents reviewed by Reuters.
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The head of the Customer Events Department, Robert Long, had spent more than three decades at Dow. His role included organizing company-funded outings to sporting events for Dow customers and vendors.
Long also offered another service: He was "the go-to guy" for Liveris and family, Anderson testified. Emails between Liveris and Long were frequent. Anderson knew this, he testified, because company fraud investigators had installed software on Long's computer to document the exchanges.
"We can easily see emails back and forth, you know, like a minute apart.…It was frequent communication between those two to set up events for – for things that Andrew wanted, you know, the son's birthday party at the Piston's suite … going to the cricket, World Cup down in Barbados…" The emails he cited were not among the documents Reuters reviewed.
Auditors reported finding that Dow was billed for a party for the CEO's son and his friends, held in a suite at the arena of the National Basketball Association's Detroit Pistons, Anderson testified. The company also was billed for a vacation that Liveris family friends took in Barbados, where matches for cricket's 2007 World Cup were being played, Anderson testified.
What struck Anderson was that, in many cases, the primary customer served by the Customer Events Department was the Liveris family.
"You would think customer events would have a customer," Anderson testified. "There were a number of events there was not a single customer there."
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Auditors determined that Liveris owed around $1 million in personal expenses to Dow. With that tally in hand, Anderson said he called a meeting in 2010 with top executives. In attendance, he testified, were Dow's chief financial officer, its head of human resources, its director of ethics and compliance, and its general counsel, Kalil. Dow declined to make those executives available for comment.
"I presented the information, went through it, and immediately they started to argue…," Anderson testified. "Kalil was the most vocal in arguing with me as to what was a valid business expense and that I should basically stand down and let these things go."
In the deposition, Anderson recounted his efforts to recoup the money. He said Dow's chief financial officer, Bill Weideman, acted as an intermediary between him and Liveris.
"Bill goes back and talks to Andrew, comes up with (a) hundred and something thousand. I tell him it's not enough," Anderson testified. "He goes back and gets some more. It drips and drabbles in over time because the corporate auditor is saying, no, not enough."
Weideman, who retired from Dow last year, did not respond to requests for comment.
It's unclear when Liveris first saw the findings from the internal investigation. After he was presented with them, wife Paula wrote Dow a check, dated Sept. 20, 2010. It was for $124,446.60, according to Michigan court records.
Again, Anderson testified that he determined the amount wasn't enough. The company's audit committee then hired the law firm Gibson Dunn & Crutcher and forensic accountants from PriceWaterhouseCoopers to independently review the expenses.
The outside review showed that Liveris owed more than he had repaid – another $595,476.95. After that review, Liveris' wife wrote Dow a check for that amount on Dec. 31, 2010. Dow disclosed the total amount that Liveris repaid in its 2011 proxy.
That total was still less than the roughly $1 million that Dow auditors believed Liveris owed, Anderson testified. But by the time the investigation concluded, the longtime chief auditor had been reassigned to a new department at Dow, working as a finance director for the company's controller.