When a red-light camera executive warned his bosses of an alleged bribery scheme in Chicago so serious it would "take down the contract and most likely the company," the corporate chiefs turned to the national law firm Quarles & Brady for help.
The result was a three-week, Quarles-led internal investigation that would mostly clear its client and end without a hint to stockholders — or to City Hall — that there might be a problem. For the next two years, millions of dollars continued to flow to Redflex Holdings Ltd. from its Chicago contract, the Australian company's largest and most lucrative camera program.
In the aftermath of Chicago Tribune reports last year about the close relationship between the company, its Chicago operations consultant and the former city official who oversaw its decadelong contract, Redflex now says the Chicago program was likely built on a $2 million bribery scheme and that the company-initiated internal investigation in 2010 was "clearly inadequate."
Those were the findings of a second law firm hired by the company in October following the newspaper reports, which also prompted Mayor Rahm Emanuel to accuse Redflex of deceiving City Hall and call for an investigation by the city's inspector general.
The starkly contrasting conclusions of two different law firms investigating the same claims have some legal experts scratching their heads.
"There is definitely a tale to be told there," said James Grogan, chief counsel of the state Attorney Registration and Disciplinary Commission. "There's no way to really know without all the facts, but much of it has to do with the nature of the relationship between the law firm and corporation.
"I mean, if you are hamstrung, limited on the people you are allowed to interview, the availability of records from outside the country, noncooperative employees, you might be stuck because of the limitations set by the company itself," he said. "The bottom line is they have a duty of competency, and to do as exacting a job as permissible under the conditions of that relationship.
"Sometimes the law firms themselves are the victims of a conspiracy."
John W. Daniels Jr., chairman of Milwaukee-based Quarles & Brady LLP, referred all questions to Redflex at the request of the company. Redflex representatives declined to comment.
"Quarles & Brady LLP provides excellent, timely and appropriate legal work for its clients, including completing internal investigations within the confines of the projects clients retain us to perform in any matter," the firm said in a statement to the Tribune. "The ethical rules that govern our conduct limit what we may say about our representation in any particular case without first receiving approval from our client."
In October, one of the law firm's longtime Chicago partners, Sanford Stein, accompanied the general counsel of Redflex's Phoenix subsidiary — Redflex Traffic Systems Inc. — to the Tribune's offices to be interviewed about the company's response to a 2010 whistle-blower letter. The letter, sent to the board of directors of the Australia-based parent company, detailed how the company plied former Chicago transportation official John Bills with "non reported lavish vacations" and the "illegal transfer of 'commission'" to him through its Chicago consultant.
Bills and the consultant, Marty O'Malley, have denied any wrongdoing.
Both Stein and then-Redflex General Counsel Andrejs Bunkse discredited the allegations during the October interview. They told the newspaper the Quarles & Brady review found no merit to the accusations, aside from one inadvertent $910 hotel stay for Bills at the Arizona Biltmore paid by a top company salesman who was disciplined with anti-bribery training.
"When I read the letter I expected to find a great deal more," Bunkse said in the interview. "And we dug in very deeply, exhaustively into the expense reports and records of the company to the point of extreme redundancy, and the issue — the one instance of a problem — was this one instance where there were no meals reimbursed, there was no flight reimbursed and a two-day hotel stay was found.
"In every other instance, nothing else came up that was problematic," Bunkse said.
Stein even staked his firm's 120-year reputation on it.
"It's our reputation that we put on the line every day for every client. But it is our reputation of our law firm that is far more important — and our service — that supersedes everything," Stein said toward the beginning of the interview. "So we are happy to say that our investigation, which Andy will talk about, is consistent with the high quality standards that we support."
Later in the interview, Stein sought to reinforce that the results were trustworthy because of the firm's involvement.