US/RUSSIA: Central European Distribution Corp denies corruption allegation

By | 21 November 2012

CEDC has denied it is the subject of an external investigation by US authorities

CEDC has denied it is the subject of an external investigation by US authorities

Central European Distribution Corporation (CEDC) has denied a claim by its biggest shareholder, Roustam Tariko, that company executives are being investigated for corruption. 

The company's “special committee” sent a letter to shareholders late last week rejecting the allegation from Russian Standard founder Tariko. He had claimed that CEDC executives are the subject of an investigation with “possible violations of the Foreign Corrupt Practices Act”. 

“Despite suggestions in the Russian Standard letter to the contrary, the company is not on notice that any of its current executives are under investigation with respect to FCPA violations or otherwise,” the CEDC letter said. 

In his own letter to shareholders, Tariko, who is also CEDC's chairman & interim president, said he has “deep concerns regarding the financial and operating condition of CEDC” and stated his “frustration with the board’s persistent refusal to take the steps necessary to address the situation”.  

However, CEDC said that Tariko's letter came less than 48 hours after its board had voted against his bid to take control of the company's operations and finance. “This request follows repeated attempts by Russian Standard to remove the interim CEO,” the CEDC letter added. 

It also emergerd yesterday that CEDC founder Bill Carey, who stepped down as CEO in July, has written to the company's board calling for a board meeting with shareholders to discuss the firm's future plans "as early as possible". A CEDC spokesperson declined to comment on this development. 

In a previous filing, CEDC said it is carrying out its own internal investigation over “retroactive trade rebates and trade marketing refunds”. It also said it plans to “implement measures designed to remediate the material weaknesses in our internal control over financial reporting regarding the implementation of our policy on compliance with applicable laws, including the FCPA”. 

Last week the company announced it had returned to profit in the nine months to the end of September, after reporting losses of US$854.1m in the prior year.

Expert analysis

Spirits in Russia

Spirits in Russia industry profile provides top-line qualitative and quantitative summary information including: market share, market size (value and volume 2006-10, and forecast to 2015). The profile also contains descriptions of the leading players including key financial metrics and analysis of competitive pressures within the market. Essential resource for top-line data and analysis covering the Russia spirits market. Includes market size and segmentation data, textual and graphical analysis of market growth trends, leading companies and macroeconomic information.

Sectors: Spirits

Companies: CEDC

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