IFF counts the cost of Frutarom bribery probe

The share price of International Flavors & Fragrances Inc. (IFF) (NYSE: IFF; TASE: IFF) continued its descent today on the Tel Aviv Stock Exchange (TASE) after plunging 15% on Wall Street yesterday, pushing the company’s market cap down to NIS 44.5 billion. IFF, which develops ingredients, flavor essences, and fragrances for the food and beverages industry, published its financial statements and lowered its annual revenue and profit guidance for 2019 as a whole.

IFF, which last October acquired Israeli company Frutarom for $6.5 billion, revealed with its reports that it had been informed that Frutarom employees had made “improper payments” in Russia and Ukraine before the merger between the two companies. IFF stated that its investigations had not yet been completed, but that initial findings indicated that improper payments had been made, and that key executives in Frutarom at the time had been aware of these payments. IFF added that it had found no evidence indicating that these payments were linked in any way to the US. As far as is known, the executives referred to by IFF include Ori Yehudai, CEO of Frutarom until the merger, and Alon Grant, who was CFO of Frutarom during the period involved.

“It is certainly possible that Frutarom’s senior management was unaware of the event and these payments, even though IFF reported explicitly in its reports that key executives were aware of this. The information that they published now, although it was in the framework of their reports, could prove to be incorrect or inaccurate later in the investigation,” Adv. Lior Aviram, a partner in the Shibolet & Co. law firm and specialist in mergers and acquisitions, told “Globes.” Also taking part in the conversation with “Globes” was Shibolet & Co. partner and head of corporate anticorruption compliance Adv. Chaim Gelfand. Aviram and Gelfand have no connection to the people involved in the affair.

Globes: Israel’s Business Arena | August 6th, 2019