Monsanto has agreed to pay a penalty of $80 million to The Securities and Exchange Commission (SEC) on account of misstated earnings over a rebate program for its top-selling product, Roundup. The announcement, made on Tuesday, also states that three accountants and executives are liable to pay settlements for being party to this deal.
These charges relate to the rebate program the St Louis-based agribusiness rolled out to counter its competition eating into its market. According to Reuters, the company did not have necessary controls in place to manage the millions of dollars it offered to its distributors and retailers by way of rebate. The misstatement happened when it booked huge sums as revenue for three years without incorporating the related expenses.
This happened at a time when Monsanto was losing its share of customers to competitors who had invaded the market with herbicides at a price much lower than Roundup's. The books of accounts reflected sales for two consecutive years, but not the rebates till the third year, the regulators said as per ABC News.
"Public companies need to have robust systems in place to ensure that all of their transactions are recognized in the correct reporting report," said Scott Friestad, the SEC's associate director for the enforcement division. However, strangely, the company has neither agreed nor denied these allegations and intends to hire a consultant to review the rebate programs in question. SEC also did not go ahead and press charges of intentional wrongdoing.
The New York Times represented that Monsanto's chief executive, Hugh Grant, paid up $3,165,852 as reimbursement for the cash bonuses and dividends he had enjoyed during the period under review. At the same time, Carl Casale, the former CEO returned $728,843 in compensation. The SEC has decided not to follow the clawback path under Sarbanes-Oxley Act as both individuals' conduct gave no reason for complaint. An additional penalty totaling $185,000 came from the accused accountants and executives who are currently facing temporary suspension.
The company seems confident that its financial records do not need any modifications as it has already revised the documents for that period after conducting an internal investigation in 2011. The agribusiness giant has no qualms in settling the dues slammed on them by SEC, if required, and are eager to wrap up this matter as soon as possible and regain their footing. "The company is pleased to put this matter behind it," it stated on Tuesday. "Monsanto is committed to operating its business with the utmost integrity and transparency."
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