IFF: Frutarom made "unapproved "payments" as part of its operations in Russia and Ukraine

Frutarom, which was acquired by the US IFF last year at a huge exit, made unapproved payments" as part of its operations in Russia and Ukraine, IFF noted with the release of its Q2 2019 financial statements.
 According to IFF's preliminary findings, one of the top executives allegedly involved in the payments in question is Uri Yehudai, former president and CEO of Frutarom. In the merger deal completed last October, Yehudai was to serve as an outside advisor to the company, but is not yet a consultant. A Jewish response was received.
These are two main suspicions: bribery payments to customs officials, and kick back - payments to marketers for product promotion, from which senior executives cut their own commission. IFF claims that the officers involved in the prohibited practices, besides Yehudai, are the Vice President of Finance, Guy Gil, whom the company has opened with him in dismissal proceedings; Alon Granot, former Deputy President and CFO of Frutarom.
The IFF sent a letter of warning to senior officials detailing the suspicions and findings so far, claiming that their conduct was unknown to her as part of the negotiations or the pre-acquisition negotiations.
According to IFF, as part of Frutarom's merger process following its acquisition, IFF became aware of allegations that two Frutarom activities primarily operating in Russia and Ukraine made "improper payments to several customer representatives". The IFF stated that they conducted an immediate investigation into these allegations, with the assistance of legal consulting and external accounting firms.
These investigations have not yet been completed, but IFF has already produced preliminary findings that indicate "improper payments were paid and that key members of Frutarom's senior management at the time were aware of these payments." It was also reported that IFF had found no evidence to suggest that these payments had any connection to the United States.
According to the findings, as of today, IFF believes such unapproved payments "are no longer being made, and the estimated sales impacted by this is less than 1% of IFF and Frutarom's consolidated sales in 2018. IFF does not believe this impact could be material to the results of its operations. IFF or its financial condition. "
 IFF reported that sales in the second quarter of 2019 grew 40% to $ 1.3 billion, compared to sales of $ 920 million in the same quarter last year, following the consolidation of Frutarom's results.
Net income: $ 136 million, $ 1.2 per share, compared to $ 99 million, $ 1.25 per share, in the same quarter last year. Non-Gaap earnings were $ 1.61 per share, as expected by analysts.
 Following a reduction in the inquiry into activities in Russia and Ukraine, the company's share plunged by about 8% in the late trading on Wall Street.
IFF also stated that the company "is committed to the highest standards of ethics and enforcement and to the firm's rigorous policy on these issues that is regularly reviewed and updated. In accordance with this policy, IFF is performing or taking necessary corrective action on the issue presented above. Although investigations are ongoing, based on the findings as of today And other merger-related enforcement actions, IFF is not aware of other similar misconduct cases at this time. "

Frutarom was sold to IFF from the US for more than $ 7.1 billion. This is the second largest deal in the Israeli economy since the sale of Mobilay to Intel for $ 15 billion. The two companies will merge into one company and it will be listed for trade on the Tel Aviv Stock Exchange and will become one of the largest on the local stock exchange.