Chemical company Chemours completes an internal review of its finances after suspending three top management officials.
Chemours says their Audit Committee of the Board of Directors completed the review with the help of independent outside counsel.
The review stems from a tip to the Chemours Ethics Hotline. It found some senior executives delayed certain payments and accelerated the collection of some receivables, in part to meet benchmarks the company communicated publicly, benchmarks that would be part of determining bonuses for executive officers.
Those senior executives – President and Chief Executive Officer Mark Newman, Senior Vice President and Chief Financial Officer Jonathan Lock, and Vice President, Controller and Principal Accounting Officer Camela Wisel – were placed on administrative leave last week.
Chemours' statement Thursday notes they specifically "engaged in efforts in the fourth quarter of 2023 to delay payments to certain vendors that were originally due to be paid in the fourth quarter of 2023 until the first quarter of 2024, and to accelerate the collection of receivables into the fourth quarter of 2023 that were originally not due to be received until the first quarter of 2024,"
The review also revealed some issues may go back as far as 2022.
"The Audit Committee review also determined that similar actions, though to a lesser extent, were taken in the fourth quarter of 2022, resulting in a significant increase in these cash flow measures for the quarter ended December 31, 2022, and a decrease in these measures in the first quarter of 2023," the release adds.
Chemours release also pointed to "a lack of transparency with the Company’s Board of Directors" by those senior executives.
Founding Director of the University of Delaware’s Weinberg Center for Corporate Governance Charles Elson says that move leads him to believe the allegations have legs.
“Basically a good chunk of your leadership is seemingly being challenged, that is extremely unusual, and a real problem for the company, which probably explains why the stock dropped so dramatically when the news was announced," Elson says.
Chemours’ share price dropped by around half following the announcement. Several days later, it remains down almost a third.
Elson calls the situation a “mess."
“It’s very unsettling for those working at a company undergoing these sorts of questions," Elson says. "Who is going to lead it going forward? What is the true state of the company’s finances? Why did this happen? What are the correct numbers and what does that say about the company’s performance past, present, and future? This is every board’s nightmare.”
Elson adds he would expect an SEC investigation and potential shareholder lawsuits depending on final findings.
Chemours has delayed releasing its 2023 end-of-year report and first-quarter report.
