Fertilizantes Heringer on Nov. 23 reported to have found evidence of fraud in the hiring of maintenance services and improper payments of R$50.7 million in overpriced services. It said practices were facilitated by failures in internal controls in the processes of selection and hiring of service providers.
The company said the irregular practices were detected as part of the first phase of an investigation carried out by independent consultants to investigate allegations of corruption at the company. The period investigated was from the beginning of 2019 to August 2022.
According to the investigation, there was manipulation of the competition process and selection of suppliers, as well as overpriced payments and undue amounts.
The company said the second phase of the investigation has begun and should be completed early next year, before the release of the balance sheet for fourth-quarter 2022. Heringer said it is seeking measures to repair the damage done to the company.
Heringer said it first shared the fraud allegations with the market on Aug. 11 and that the initial complaint was received in July (GM Sept. 2, p. 30). At the time, new majority shareholder EuroChem Group AG was seeking to buy out the remaining shareholders (GM April 1, p. 28), take the company private, and delist its shares.
Heringer said an appraisement of the takeover agreement released on Aug. 23 concluded that the fair price per share would be between R$11.48-R$12.62, which was below the price at which it was traded on the stock exchange – above R$15.
Heringer said EuroChem has increased the value offered per share, but there has not yet been an agreement with shareholders. Heringer said the takeover has been suspended since September.
EuroChem closed on the controlling 51.48% stake in Heringer in March. The deal was valued at R$554.8 million (approximately US$116.4 million in exchange rates at the time). The remaining shareholders were expected to receive equal treatment to that given the former majority shareholders.