Chemours said an internal review into the actions of senior managers alleged to have engaged in accounting misconduct uncovered violations of the chemicals company’s code of ethics regarding the promotion of full, fair, accurate, timely, and understandable disclosure.
The company’s update, provided in a press release Wednesday, followed its announcement last week that its Chief Executive Mark Newman; Senior Vice President and Chief Financial Officer Jonathan Lock; and Vice President, Controller and Principal Accounting Officer Camela Wisel were all placed on leave pending completion of the review.
The review was conducted by the audit committee of the Chemours board of directors with the assistance of independent outside counsel. It determined “there was a lack of transparency with the company’s board of directors by the members of senior management who were placed on administrative leave last week due to the payables and receivables timing actions … and their effect on free cash flow targets at the end of the relevant periods.”
Chemours did not immediately announce any disciplinary action regarding the executives’ apparent misconduct.
The company said the probe found Newman, Lock, and Wisel “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.” Their alleged actions were taken to meet free cash flow targets the company had communicated publicly that were expected to play a key part in dictating their respective incentive compensation packages, the audit committee noted.
Chemours said it is evaluating potential material weaknesses in its internal control over financial reporting as of Dec. 31, 2023, in relation to the alleged misconduct and is assessing some of its previously disclosed financial metrics.
The company’s review was initiated following receipt of a complaint from its ethics hotline, though it noted the tip was not properly elevated to its general counsel or the audit committee. The committee determined the failure “resulted from inadequate controls and procedures regarding the evaluation and escalation of hotline reports and poor judgment by certain employees who handle the intake of such reports,” it said.
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