• Thu. Apr 18th, 2024

ADM says employees received DOJ subpoenas amid probe over accounting practices

(Reuters) — Global grains merchant Archer-Daniels-Midland said on Tuesday some of its employees have received subpoenas from the Department of Justice amid an ongoing investigation over its accounting practices.

ADM said some sales between business units within the company were not recorded at amounts approximating market value and corrected certain segment-specific financial information for previous financial statements from 2018 to 2023.

Reuters reported FBI agents delivered subpoenas to company employees in Illinois last week.

They show that a criminal probe into ADM’s accounting issues first reported by Reuters last month is escalating fast and directly relates to accounting issues that the company said in January were the subject of an internal probe.

The world’s largest corn mill of global grain company Archer Daniels Midland in Decatur, Illinois. REUTERS/Karl Plume (Reuters / Reuters)

The investigations have brought more uncertainty to ADM’s nutrition segment, which has struggled to meet lofty revenue targets and faces slowing demand for meat alternatives and supply chain problems.

“The DOJ directed grand jury subpoenas to certain current and former company employees. The company is cooperating with the DOJ,” ADM said in a filing.

The company said the adjustments made to previous statements following the investigation have no impact on consolidated financial statements as a whole for any period as they were made to sales between business segments.

The company’s shares were up 3.4% in premarket trade.

Touted by executives to be the future of ADM, the nutrition division, ADM’s smallest, had seen explosive growth until profits began to erode in late 2022.

ADM said the unit took a goodwill impairment charge of $137 million in 2023.

The company reported profit of $6.43 per share for the full year, after an investigation into accounting practices at the company’s nutrition division delayed the release of its financial results for nearly two months.

ADM had cut its 2023 profit estimate in January, pulled its forward-looking outlook for nutrition, announced an internal investigation and put finance chief Vikram Luthar on administrative leave. The company said the investigation covers the period between January 2018 and September 2023.

ADM said that over the next couple of years it would gradually implement worldwide enhancements to its internal controls and improve documenting the company’s pricing guidelines for inter-segment sales.

(Reporting by Karl Plume in Chicago and Sourasis Bose in Bengaluru; Editing by Bill Berkrot, Shilpi Majumdar and Tomasz Janowski)

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