Chemours says CEO, CFO violated ethics code

Dive Brief:

Global chemical business Chemours learned after an internal probe that three of its top executives — CEO Mark Newman, CFO Jonathan Lock, and Controller and Principal Accounting Officer Camela Wisel — engaged in unethical financial practices, the company said Wednesday.
The review, conducted by the audit committee of the company’s board of directors, determined that the three executives — who were recently placed on administrative leave — 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, according to a press release. They also took steps 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, the company said.
The executives engaged in these efforts in part “to meet free cash flow targets that the Company had communicated publicly, and which also would be part of a key metric for determining incentive compensation applicable to executive officers,” the release said.

Dive Insight:

Newman, Lock and Wisel didn’t immediately respond to requests for comment via LinkedIn. A Chemours spokesperson declined to comment on the executives’ future at the company.

Wilmington, Delaware-based Chemours announced last month that it placed the three executives on administrative leave and named temporary replacements for the CEO and CFO seats, pending a review of “one or more potential material weaknesses in its internal control over financial reporting as of December 31, 2023.” The focus included the effectiveness of the “‘tone at the top’ set by certain members of senior management,” the company said at the time.

On Wednesday, Chemours said it has now determined that Newman, Lock and Wisel violated the company’s code of ethics related to the promotion of “full, fair, accurate, timely and understandable disclosure.”

“The Chemours Board of Directors takes these issues very seriously and appreciates the diligent efforts by the Audit Committee, with support from its counsel and Company management, to review these matters,” Chemours Board Chair Dawn Farrell said in the release.

The review was triggered by an anonymous report made to the Chemours ethics hotline that was not elevated to the general counsel or the audit committee until the matter was identified in connection with the company’s year-end 2023 external audit process, the release said.

The company said the findings don’t affect its preliminary financial results for 2023, as disclosed on Feb. 29, although the executives’ action did have the effect of “significantly increasing” the company’s free cash flow for the fourth quarter, with a corresponding anticipated decrease in the first quarter of 2024.