THE WHAT? International Flavors and Fragrances has warned that it may freeze payments to several former senior employees of Frutarom linked to the ‘improper payments’ uncovered back in summer, according to a report published by CTech by Calcalist.

THE DETAILS Within its results announcement for the second quarter of the current financial year back in August, the flavors and fragrances giant notified shareholders of the discovery.

“During the integration of Frutarom, IFF was made aware of allegations that two Frutarom businesses operating principally in Russia and Ukraine made improper payments to representatives of a number of customers. IFF promptly commenced investigations of such allegations with the assistance of outside legal and accounting firms,” reads a statement issued by the company at the time. “IFF’s investigations are not yet complete, but preliminary results indicate that improper payments were made and that key members of Frutarom’s senior management at the time were aware of such payments.”

Now, says Calcalist quoting anonymous sources familiar with the matter, the ingredients supplier is considering withholding payment of the cash exercise of stock options granted to employees between 2013 and 2017.

Those entitled to the pay out include former CEO and President Ori Yehudai, ex VP of Finance, Guy Gill and one-time CFO Alon Granot, all of whom were allegedly involved or aware of the payments.

IFF and Frutarom have filed a lawsuit against Yehudai to recover the US$20 million bonus paid to Yehudai prior to the completion of the deal.

THE WHY? Not only are the sums involved considerable – some US$13.2 million, US$2.6 million and US$2.3 million for Yehudai, Gill and Granot respectively, but IFF is also keen to distance itself from such behaviour.

“IFF is committed to the highest standards of ethics and compliance and has strict compliance policies in place that are regularly reviewed and updated,” the company said in a statement. “Consistent with such policies, IFF has taken or will take appropriate remedial actions with respect to the matters described above. Although the investigations are continuing, based on the results to date and other compliance-related integration activities IFF is not currently aware of similar instances of misconduct.”