Syracuse, N.Y. -- A U.S. government agency says it is putting a recently announced deal to help Kodak move into the production of pharmaceuticals on hold, saying “allegations of wrongdoing raise serious concerns.”
The U.S. International Development Finance Corp. said in a tweet late Friday that it would not move forward with a $765 million loan to Rochester-based Kodak until the allegations are cleared.
“On July 28, we signed a Letter of Interest with Eastman Kodak. Recent allegations of wrongdoing raise serious concerns. We will not proceed any further unless these allegations are cleared,” the agency said.
It did not specify what allegations it was referring to. However, questions have been raised about a surge in the price of the company’s stock before the July 28 announcement that the DFC, on orders from President Donald Trump, would provide a $765 million loan to the former photography giant to support the launch of Kodak Pharmaceuticals, a new arm of the company that would produce critical pharmaceutical components.
Sen. Elizabeth Warren, D-Massachusetts, sent a letter to the U.S. Securities and Exchange Commission on Monday asking it to investigate whether insider trading laws have been broken.
She also asked the SEC to look into whether Kodak board members were buying stock in the company while they were secretly negotiating the loan with the Trump administration. After the news of the deal came out, Kodak disclosed in regulatory filings that it had issued stock options to several executives on July 27 before its shares soared. Kodak CEO James Continenza was among the recipients.
On Friday, Kodak announced it has appointed a special committee of independent directors to oversee an internal review of “recent activity by the company and related parties in connection with the announcement of a potential loan by the U.S. International Development Finance Corporation to support the launch of Kodak Pharmaceuticals.”
Trump has been pushing for the nation’s supply of critical pharmaceuticals to be manufactured in the U.S. rather than in China and other nations. The Kodak project was expected to create 300 jobs in Rochester.
On Thursday, Trump signed an executive order requiring the federal government to purchase certain drugs from American manufacturers rather than from overseas companies.
Rick Moriarty covers business news and consumer issues. Got a tip, comment or story idea? Contact him anytime: Email | Twitter | Facebook | 315-470-3148
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Deal to help Kodak make pharmaceuticals put on hold over ‘allegations of wrongdoing' - syracuse.com
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