IFF Investigating Payments Made by Frutarom Subsidiaries

International Flavors & Fragrances Inc. posted sales gains in the second quarter, largely due to the company’s acquisition of natural ingredients business Frutarom — but now, the business is also in the middle of investigating payments Frutarom businesses in Russia and Ukraine made that may have been “improper.” In a compliance note in the company’s quarterly filing with the U.S. Securities and Exchange Commission, IFF said that it had been made aware of allegations that two Frutarom businesses in Russia and Ukraine had made “improper payments to representatives of a number of customers.” IFF said that while an investigation is not yet complete, “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.” The company said that it has no evidence the payments are linked to the U.S., and that it believes the improper payments are no longer being made. IFF estimated affected sales represent less than 1 percent of the combined company’s business and that overall, the events would not impact IFF’s financial condition. Since the company bought Frutarom in a $7 billion deal in October, the newly acquired business has been a significant contributor to sales. Buying

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