Kraft will pay $62 million to settle SEC accounting probe

The SEC announced the formal charges and the settlement on Friday after a long-running regulatory investigation that Kraft disclosed in 2019. The company will pay $62 million as part of the settlement.

The agency alleges that from the last quarter of 2015 to the end of 2018, Kraft “engaged in various types of accounting misconduct” — including faking supplier contracts to get discounts that the company hadn’t earned — to ultimately make their financials look better to analysts and investors.

Two individuals, Kraft’s former chief operating officer Eduardo Pelleissone and former chief procurement officer Klaus Hofmann, were also personally charged for alleged misconduct in the case after fabricating an estimated 59 supplier and procurement transactions, according to the SEC’s complaint. They settled for $300,000 and $100,000, respectively. Hofmann will be barred from serving as an officer or director for five years.

“Investors rely on public companies to be 100% truthful and accurate in their public statements, especially when it comes to their financials,” SEC division of enforcement director Gurbir S. Grewal said Friday in a written statement.

Kraft did not admit to or deny the allegations as part of the settlement.

“We have fully cooperated with the SEC throughout its investigation and took prompt and extensive remedial action and proactive steps to improve our internal policies, procedures, and internal controls over financial reporting,” Kraft Heinz global chief communications officer Kathy Krenger, told CNN Business in an emailed statement Friday morning.

The company also said the bogus transactions had a maximum effect of 1% on its earnings in any reporting period, and that “internal control weaknesses” it identified as part of its internal investigation in 2019 were fully remediated in 2020.

As part of its financial restatements as a result of the scandal, Kraft Heinz officials ultimately wrote down the value of its Kraft and Oscar Mayer divisions by $15 billion, reported a fourth quarter 2018 loss of $12.6 billion and cut its dividend by 36%.
Former Kraft CEO Bernardo Hees resigned in 2019, about five months after the accounting scandal was revealed. Miguel Patricio took over in July of that year and has served as CEO since.

Suez Canal: Egypt impounds Ever Given ship over $900 million compensation bill

An Egyptian court ordered the vessel’s Japanese owner, Shoei Kisen Kaisha, to pay $900 million in compensation as a result of losses inflicted when the Panamanian-flagged Ever Given prevented marine traffic from transiting through the vital global trade waterway.

The hefty bill also includes maintenance fees and the costs of the rescue operation, Al Ahram reported.

An international salvage operation worked around the clock to dislodge the ship from the banks of the canal, intensifying in both urgency and global attention with each passing day, as ships from around the world, carrying vital fuel and cargo, were prevented from entering the canal.

The Ever Given was successfully re-floated on March 29 and moved to the nearby Great Bitter Lake to be inspected for seaworthiness and to allow repairs to be carried out.

Shoei Kisen Kaisha said insurance companies and lawyers were working on the compensation claim, and refused to comment further.

UK Club, the protection and indemnity insurer for the Ever Given, said Tuesday that they had responded to a claim from the Suez Canal Authority for $916 million, and questioned its basis.

“Despite the magnitude of the claim which was largely unsupported, the owners and their insurers have been negotiating in good faith with the SCA. On 12 April, a carefully considered and generous offer was made to the SCA to settle their claim,” the statement said.

UK Club says it is the insurer of the Ever Given for certain third-party liabilities including obstruction claims or infrastructure issues, but is not the insurer for the vessel itself or the cargo.

Its statement went on to explain why UK Club believes the magnitude of the claim is not valid.

“The SCA has not provided a detailed justification for this extraordinarily large claim, which includes a US$300 million claim for a ‘salvage bonus’ and a US$300 million claim for ‘loss of reputation.’ The grounding resulted in no pollution and no reported injuries. The vessel was re-floated after six days and the Suez Canal promptly resumed their commercial operations. The claim presented by the SCA also does not include the professional salvor’s claim for their salvage services which owners and their hull underwriters expect to receive separately,” the UK Club statement said.

The ship’s cargo has been seized until the dispute is resolved, according to the Suez Canal Authority.

More than 400 ships were blocked from passing through the crucial shipping lane when the Ever Given ran aground on March 23. The circumstances that led to the situation are still being probed separately by Egyptian authorities.

— CNN’s Mostafa Salem reported from Abu Dhabi and Mai Nishiyama from Tokyo.

500 million LinkedIn users’ data is for sale on a hacker site

The sale of the data was first reported on Tuesday by cybersecurity news and research site CyberNews, which said that an archive including user IDs, names, email addresses, phone numbers, genders, professional titles and links to other social media profiles was being auctioned off on the forum for a four-figure sum.
According to LinkedIn, the database for sale “is actually an aggregation of data from a number of websites and companies.” The data from LinkedIn users includes only information that people listed publicly in their profiles, the professional social media site, which is owned by Microsoft (MSFT), said in a Thursday statement.

“This is not a LinkedIn data breach, and no private member account data from LinkedIn was included in what we’ve been able to review,” the company said.

The news comes just days after a separate incident in which data scraped from more than 500 million Facebook users in 2019 — including phone numbers, birthdays, emails and other information — was posted publicly on a website used by hackers. While these kinds of data are less sensitive than, say, credit card details or social security numbers, information like phone numbers can still be exploited by bad actors, including for robocall scams.

LinkedIn has more than 675 million members, according to its website, meaning that around three quarters of its users’ information may be included in the database.

Social media companies have tools in place aimed at preventing scrapers — LinkedIn on its terms page details “technical measures and defenses” against such abuse — but they don’t always work.

The company said that “any misuse of our members’ data, such as scraping” violates its terms of service, which prohibit third-party software, bots, browser extensions or plug-ins that scrape data from the site.

“When anyone tries to take member data and use it for purposes LinkedIn and our members haven’t agreed to, we work to stop them and hold them accountable,” LinkedIn said in its statement.

The company did not immediately respond to a request for comment about whether it will alert users whose data was scraped and is included in the database for sale.

Former Nike Marketing Manager Charged With $1.5 Million Fraud Scheme

A former Nike marketing manager is being charged by federal prosecutors in a scheme to allegedly defraud his former employee of $1.5 million.

U.S. attorney general Billy J. Williams said Thursday that Errol Amorin Andam, a 49-year-old resident of Beaverton, Ore., has been charged by criminal information with wire fraud, money laundering and making false statements on a loan application as part of a plan to defraud his former employer.

From 2001 until his termination in 2018, Andam was employed at Nike Inc. corporate headquarters in Beaverton, according to officials. Most recently, he worked as a manager in the company’s North American Retail Brand Marketing division, where he managed the design, build-out and operation of Nike pop-up shops that were situated near sports competitions and other special events in the U.S.

Scheduled to be arraigned on March 5 before a U.S. Magistrate judge, Andam could face a maximum penalty of 30 years in prison, fines up to $4.5 million and five years of supervised release.

The case is being investigated by the Federal Bureau of Investigation and Internal Revenue Service Criminal Investigation. Ryan W. Bounds, the assistant U.S. attorney for the district of Oregon, is prosecuting the case.

Nike said in a statement issued Thursday, “Nike’s internal investigation team uncovered Mr. Andam’s activity in 2017 and after he was terminated from the company, we turned over the evidence to the U.S. attorney. It’s unfortunate that Mr. Andam, who had a job that allowed him access to some of the most exciting events in the world of sport, chose to abuse the trust that Nike put in him. We want to thank the U.S. attorney for its efforts on this case.”

According to a statement provided by Williams’ office, Andam recruited a childhood friend in the summer of 2016 to establish a company to build and design pop-ups as an independent contractor for Nike. Andam allegedly used his influence as a manager at Nike to ensure that his friend’s company was consistently awarded the contracts for the jobs. While Andam held no official role in his friend’s company, he allegedly assumed control of much of its financial operations, managing financial accounts and issuing invoices to Nike. He was said to have used the alias “Frank Little” to invoice Nike and manage the contract company with the mobile payment company Square Inc.

From September 2016 through December 2018, Andam allegedly embezzled $1.5 million in Nike proceeds for his own use. In July 2018, he was said to have submitted a fake financial statement from his LLC in support of a residential mortgage loan application. That document allegedly falsely reflected revenue checks drawn on a bank account owned by his friend’s business. Andam was said to have forged his friend’s signature on the check and withdrew much of that money without his friend’s knowledge.

Prosecutors claim that Andam renewed the lapsed registration of an Oregon-based limited liability corporation he owned in order to use the defunct entity as a shell company to divert proceeds from Nike and his friend’s company to accounts that were under his own control.