Call a recess, or wait. Wantonly damaging your own company is not appropriate behavior. Perhaps Walt should have called a recess in order to persuade Norm to abandon this position, if not expressly, at least implicitly. The engineer has the responsibility to see that management does not repeat errors, even if they might not confess to having made them. Nothing is to be gained at this point by Walt going further than management wishes to go.
Candor is fine, but at times serves no purpose and can be counter-productive.
The lesson Walt might learn is that honesty is one thing, discretion another. Apparently Norm believes in playing 'hardball,' and Walt doesn't. But the case doesn't give enough information about this. Walt might learn something about this from this case, but evidently there were no further consequences so maybe he didn't. If you are using Navigator 2.0 or later, and you see this message, you should enable JavaScript by on the Advanced page of the Preferences dialog box.