Tomer Food Review Finds Inventory Gaps, Halts Share Trading
A review at Tomer Food found inventory-handling gaps at its subsidiary Tomer Import Food and alleged interference by CEO and chairman Doron Kimelov in setting inventory values. CPA Guy Fridman was appointed, trading was halted, and the Audit Committee expanded checks to revenue and related-party transactions.
A review at Tomer Food Company found gaps in how the company’s subsidiary, Tomer Import Food, handled inventory, along with findings that allegedly indicate interference by Doron Kimelov, the controlling shareholder who currently serves as chairman and CEO, in setting inventory values. The company appointed CPA Guy Fridman as vice president for finance and deputy CEO of Tomer Food Public Company and of Tomer Import Food, its subsidiary.
Inventory valuation gaps and possible restatement
So far, the review into how inventory was handled identified discrepancies between the inventory-item cost figures held by the subsidiary, Tomer Import Food, which formed the basis for presentations reflected in parts of some financial reports published in certain periods, and the amounts that would have been required to be reflected in the financial statements. These gaps may require the company to restate those reports.
The findings also allegedly point to interference and influence by the controlling shareholder and CEO, Doron Kimelov—serving as chairman as well—both directly and through subordinates, regarding the determination of inventory values.
Expanded probe, board decisions, and finance executive resignation
Following the findings, the Audit Committee made decisions and is expected to make additional decisions regarding strengthening oversight and controls and the distribution of authorities within the company, including through the appointment of Fridman.
After additional information reached Audit Committee members, the committee decided to deepen the checks also regarding revenue aspects and the disclosure and recording of certain transactions with related parties. The reviews will be carried out by the examiner from the law firm Nishitz, as well as by dedicated legal advisors appointed by the Audit Committee, including through questioning current and former officeholders.
The developments come in the wake of the resignation of the company’s finance vice president, Avital Cherny, one day after her appointment, due to inventory gaps she discovered in the company’s prior reports published ahead of the company’s offering.
As a result, trading in the company’s share was halted. The company decided to enter an immediate review of how the inventory issue was handled, to compile the findings, and to quantify inventory gaps in the relevant review periods, if any.
A further decision concerns the appointment of a committee to examine the financial statements, which will operate as an independent committee; the appointment of Fahn Kna Consulting as an independent company to conduct specific checks on the inventory matter; and the appointment of Prof. Haim Assiag as a professional adviser to the committee.
The company said in response: "The reviews have not yet been completed. The company will continue to act with responsibility and transparency and will report to the public on further developments and findings as required."
