What you appear not to understand is that NOBODY can order a P.Eng. to sign off on anything. It is his decision and his ALONE. All you can do is fire him. In this particular case, that would be highly counterproductive, for very obvious reasons.

@JohnR.Strohm nope, I don't have any problem understanding that at all, but unless you live in Wonderland you know that there are ways and means of dealing with recalcitrant employees of which firing is one option.

Firing the PE doesn't accomplish anything the OP is looking for. According to the OP it'll just incur a huge cash expense (severance to the PE), cost who knows how much time to find a replacement (good luck finding one when you tell the applicants what happened with the last guy), and reset the supervision-time clock on all their engineers-in-training.

are you serious? If it was me, I'd have the guy pulling his socks up and doing his work properly or he'd be the one having trouble ever finding work again. No idea why you guys think this crook is in a position of absolute power over the company. So he didn't get a promotion, sad, but tough cookies.

I think it's because he can effectively cost the company a lot of money, and there's no way the company can fire him without having to pay out a lot of cash, face potential lawsuits, cost the company even more money by effectively preventing new products from being approved for a year, and setting back the professional development goals of his peers. If this was an at-will employment state in the US, some of these concerns would be lessened. It seems the P.Eng. knows just how far he can push things. Remember, OP even states he's not breaking any company rules.

@Dogbert he's already costing the company a lot of money, whats the difference? Either meet with him and fix it or get rid of him. Without meeting with him this goes nowhere. The sooner the better because he's messing with other peoples professional careers and they won't take it nicely.

@Kilisi So you are okay with losing a promotion to some one who doesn't have the qualifications and is magically related to the CEO? You think this employee is the crook? Not the CEO pushing nepotism? Did you get the promotion over him or something?

No argument from me on that point. Reminds me of an ironic MacBeth quote: If it were done when 'tis done, then 'twere well. It were done quickly. I'm just noting why the company can't really force him to stop screwing around: he's holding all the cards. Maybe they think they can make him change his mind, I'm guessing. I can't fault the company for spending a few days trying to avoid a one year setback. They've already pretty much screwed him out of a promotion, so they can't threaten his career. All they can do is sign what's likely a $400,000 cheque and make him go away.

@WernerCD I wouldn't sabotage my work, I'm a professional, but the reason he's upset (however much I may sympathise, which I do) is not the point, the point is giving the OP some advice he can use to help resolve his problem.

@Kilisi and the best advice is to upper management who is doing irreparable damage to the moral of any employee near enough to hear about how this guy got screwed over. I agree with the top poster - this guy has all the cards. It's shown that the company has no loyalty to him. The company cares more about the bosses nephew. Why should he sign where he doesn't have too, promote others that remove his due position and reward the company for sticking it to him? Karma is a...

@WernerCD You are underrating the company and the proficiency of the OP (manager) and the professionalism of the aggrieved person. In my experience most things can be sorted through dialogue, and there's plenty of other recourses if need be. I'll have to agree to disagree.

@Kilisi Of course we are getting one side of the story... and I have no issue with agreeing to disagree :) It's just hard to feel bad for the company who has someone THAT important who gets the shaft... for the CEO's nephew.

@Kilisi The problem is, the difference between what he is doing now and what he is supposed to be doing is very thin. A good P.E. is a check against the company shipping an unsafe product and it is literally illegal to force them to sign off on anything if their refusal is based on the P.E.'s informed belief that the product is unsafe. Without knowing what is in their head it is hard to prove otherwise. You could try to get him disciplined under the ethics guidelines, but that is most likely a wash. For all you know, he was making it easier for the company to pass, and now has no reason to.

@Kilisi Based on the information the OP presented, he is likely violating his ethical oaths. But honestly, their job is to hold the company's procedures to a strict guidelines. Now, the fact that he is not signing off on trainee's forms is probably a little clearer offense. The thing is, they have to fire him, but they can't claim insubordination, they can't give him a lousy reference, and they can't for the love of god try to use firing him as a threat to sign off on anything. If they do, they risk serious legal problems.

@Kilisi: Re "You are underrating the company and the proficiency of the OP (manager)...", from what has been said in the (now unfortunately deleted) comments, I don't think that's the case. The company having created this situation in the first place doesn't say much for them; that the OP still seems more interested in preventing the PE from profiting than in actually fixing the problem (by adopting some of the many good suggestions given) doesn't say much for him. The OP still hasn't internalized the fact that the PE holds all the cards here.

only in your imagination does he hold all the cards, there is a host of things that could be done, the measure of a good manager is deciding which and doing it quickly both for the sake of the company and the safety of the PE who is basically screwing the professional careers of several others.

@kleineg read my answer, that's taken into account to check that he's not just doing his job properly. If he was I'd then fix it. But if I found his was screwing the company over, he'd end being dismissed with cause for having porn found on his machine or something similar and frogmarched out of his office. He can try his luck suing the company. This isn't something for the OP to do, if he finds out he's being dishonest he just needs to pass the info up the line, the bosses will come up with a resolution. And it won't include a 400K handshake to the blackmailer.

any region, the OP wouldn't do this. but the bosses would find a reason not to pay a blackmailer. Who is saying plant information, if you look hard enough you always find something. Porn was just an example. But for $400k a lot worse things than planting evidence have been done, I don't care what country you're in.

Your negative attitude constructs a horrible world, @Kilisi, and will bring you nothing but trouble: what you give is what you get.

@Kilisi: You clearly don't understand the problem. Firing the P.Eng means there is nobody to sign off until you get a replacement in, which is already hard enough given the nepotism. Finding a replacement P.Eng while the company is being sued by the previous P.Eng is an outright disaster. And if you do manage to hire one, (s)he'll soon spot that company culture of forged evidence, which prevents him/her from signing off on anything either. He must painstakingly verify that the fraud does not extend to any part he'd be signing for.

feel free to write your own solution to the OP problem if you don't understand what I'm saying. I stick by my answer, and it would never get that far if I was the manager in question, I'd sort it long before it needed to be taken to the next level.

@Kilisi You'd frame an employee to get rid of him? Wow, just..... wow.

@RichardU No need to frame them, if you look hard enough there is always something you can dismiss someone for, it may be marginal, but there is always something.