2/25/2016Redflex Admits Corporate Bribery Chicago, Illinois Lawsuit
Redflex Australia throws US division under the bus in $383 million Chicago, Illinois bribery lawsuit.
Lawyers for Redflex Traffic Systems provided the first look at how they intend to respond to the looming $383 million red light camera lawsuit filed against it by Chicago, Illinois. The Windy City insists Redflex violated the municipal ethics code by lying in documents filed with the city. Judge John J. Tharp Jr on Tuesday granted Redflex permission to expand on its counterargument.
The new Redflex strategy is to deny that its Australian headquarters, Redflex Holdings Limited, had any idea what its US subsidiary, Redflex Traffic Systems Inc, was doing.
"Defendants admit that statements in some of the economic disclosure statements to the effect that Redflex Traffic Systems Inc had not engaged in bribery were false," Redflex attorney Steven A. Weiss admitted in court papers. "Redflex Traffic Systems Inc admits that its CEO and at least one other of its executives were aware that some statements in the economic disclosure statements related to bribery were false. Redflex Holdings Ltd denies that it knew at the time that the statements were false."
Prosecutors pointed out that this seemed unlikely, considering Redflex executives in the United States were part of the top management at the Australian headquarters, and that they routinely consulted each other on important matters. Australian executives even had direct contact with Chicago transportation official John Bills, who was found guilty of taking Redflex bribes. The company conceded these points.
"Defendants admit that Bruce Higgins was a member of Redflex Holdings Ltd's board of directors at the same time he was CEO of Redflex Traffic Systems Inc and that Karen Finley was a member of Redflex Holdings Ltd's board of directors at the same time she was CEO of Redflex Traffic Systems Inc," Weiss wrote. "Defendants admit that Chris Cooper, then-chairman of Redflex Holdings Ltd's board, met in the United States with Bills on two or three occasions... Defendants admit that [Aaron M.] Rosenberg had multiple meetings in the United States with members of Redflex Holdings Ltd's board of directors in which they discussed US sales plans."
Company lawyers argue that the Australian headquarters never lied because nobody in the headquarters bribed any Chicago officials. US employees must have gone rogue and acted without any instructions from down under, the lawyers implied. The bribes were paid through Martin O'Malley, who admits that he delivered payments to Bills out of his commissions. Redflex paid O'Malley up to $2000 for each new red light camera intersection and up to five percent of all the revenue collected for "out of scope" work.
Redflex is also asking the judge to throw out the potential multi-million-dollar fine as a violation of the Eighth Amendment protection against excessive damages because Chicago profited from the corruption.
"Here, the city's actual damages are non-existent or extremely limited because the city received significant value under the digital automated red light enforcement program, which Redflex Traffic Systems Inc supplied, operated and maintained," Weiss wrote. "In fact, the city earned in excess of $500 million in revenue due to the Redflex Traffic Systems Inc-supplied system."
The judge scheduled a status hearing for the case on May 26.