In the wake of an inquiry into the accounting practices of ag commodity firm ADM, a shareholder and former executive at an ADM-owned company is calling for the resignation of ADM Chief Executive Officer Juan Luciano.
Several financial websites, from Yahoo Finance to Reuters, Bloomberg, Progressive Farmer and MSN, have all recently reported that Hartwig Fuchs, former board chairman of German trader Toepfer International and former CEO of Nordzucker AG, a large European sugar producer, has said ADM hasn’t done enough to reverse $12 billion in share losses.
“If a highly paid CEO of such an important company cannot manage to provide clarity within a few months — i.e., fully clear up the scandal, communicate with full transparency about what went wrong and what will be done in the future, regain investors trust and, above all, protect the company from long-term damage — then he has to go,” Mr. Fuchs said.
In February 2024, a group of investors sued ADM after the company placed its chief financial officer on administrative leave amid an investigation of the company’s accounting practices.
The litigation, announced Feb. 5 and filed by Herman Bergan, a national trial attorney firm, focused on ADM’s statements about the performance of its nutrition segment, a business the company poured billions of dollars into to protect against commodity price volatility in its legacy agricultural commodities trading business.
According to a news release, the complaint alleged ADM made misleading statements and concealed that: (1) the nutrition segment’s financial reporting and accounting practices did not provide investors with an accurate impression of the company’s performance and future prospects, including reported operating profits; (2) the nutrition segment’s accounting practices created a heightened risk of regulatory scrutiny and adverse impacts to the company’s business; and (3) based on the foregoing, the defendants lacked a reasonable basis for their positive statements about the nutrition segment and related financial results, growth, and prospects.
In January 2024, ADM announced that it had placed Vikram Luther, its chief financial officer, on leave, “pending an ongoing investigation being conducted by outside counsel for ADM and the Board’s Audit Committee regarding certain accounting practices and procedures with respect to ADM’s Nutrition segment, including as related to certain intersegment transactions.”
Mr. Luther subsequently resigned his position, and a new CFO has been appointed, but ADM’s accounting troubles have deepened. In early November, ADM disclosed it found more errors in the way it reported transactions between its business units, and by year’s end, the company’s stock was down by nearly 30%.
“The ADM company, the people who work at ADM — and they are good people — they must be protected and these negative reports must be stopped,” Mr. Fuchs said. “The share price must rise again to levels that properly reflect the company’s true earning power (which, admittingly, would make me smile again).”
