CASE 8.13

MOHAMED SALEM EL-HADAD, INTERNAL AUDITOR

Synopsis

In 1976, Mohamed Salem El-Hadad completed his four-year undergraduate accounting degree at an Egyptian university. Three years later, after satisfying his compulsory military requirement, El-Hadad entered the accounting profession. El-Hadad immigrated to the United Arab Emirates in 1981 to take advantage of the booming job market in that small Middle Eastern nation. The young Egyptian soon landed an auditing position with the Ministry of Education, a UAE government agency. Ten years later, El-Hadad immigrated again, this time to the United States to accept a supervisory audit position with the UAE’s Washington, D.C., embassy. Only three months into his new job, El-Hadad uncovered an embezzlement scheme masterminded by his new boss and friend, the embassy’s cultural attaché. El-Hadad who was known for his work ethic and integrity, reported the fraud, resulting in the dismissal of the cultural attaché and five other embassy employees. Two years later, El-Hadad suffered a fate common to many whistleblowers, namely, recriminations. UAE government officials who had apparently been embarrassed by the fraud uncovered by El-Hadad “got even” with him by producing false documents that indicated he had been involved in the fraud. The scrupulously honest El-Hadad lost his job and found it impossible to obtain another auditing job in the U.S. or Egypt where he was forced to return with his family in 1997. Before leaving the U.S., El-Hadad sued the UAE embassy for wrongful termination, defamation, and for ruining his accounting career. For more than twelve years, El-Hadad’s lawsuit worked its way through the U.S. federal court system. Every court that presided over the lawsuit or an appeal of an earlier verdict regarding the lawsuit ruled in El-Hadad’s favor on all major legal issues raised by the given appeal. El-Hadad claimed a final victory in the lawsuit when the U.S. Supreme Court refused to review the final appeal filed by the UAE embassy. Unfortunately, at last report, El-Hadad had yet to collect the more than $2 million owed to him by the embassy.

372 Mohamed Salem El-Hadad--Key Facts

1. Mohamed El-Hadad graduated with an accounting degree from an Egyptian university in 1976.

2. In 1981, El-Hadad immigrated to Abu Dhabi, the capital of the United Arab Emirates, to take advantage of employment opportunities there in the accounting profession.

3. For ten years, El-Hadad worked as an auditor for UAE’s Ministry of Education; he consistently received excellent performance appraisals from his superiors.

4. In 1992, the cultural attaché of UAE’s Washington, D.C., embassy encouraged El-Hadad to apply for a supervisory audit position with that embassy.

5. El-Hadad accepted the supervisory audit position in January 1993 after receiving excellent recommendation letters for that position from his superiors at the Ministry of Education.

6. In April 1993, El-Hadad discovered that his new boss and friend, the embassy cultural attaché, was maintaining a secret bank account along with two other embassy employees; these individuals, who were subsequently fired, embezzled at least $2 million of UAE government funds.

7. El-Hadad was congratulated for his role in discovering the fraud and received excellent performance appraisals through late 1995 from the new cultural attaché.

8. UAE government officials familiar with El-Hadad were shocked in late 1995 when UAE’s State Audit Division reported that El-Hadad had participated in the fraud that he had uncovered in early 1993.

9. In early 1996, El-Hadad was fired as a result of his alleged