Just the kind of PR FDP needs in this market. Ugh.
Fresh Del Monte Produce (NYSE:FDP - News) Chairman and CEO Mohammad Abu-Ghazaleh controls more than 50% of the outstanding shares of Fresh Del Monte, and it has been relatively easy for the company to engage in transactions that enrich the family at the expense of other shareholders. As Morningstar analyst Ann Gilpin points out in her Analyst Report on the firm, Fresh Del Monte has one of the worst corporate-governance records we have ever seen, with concerns about the Abu-Ghazaleh family starting from the moment they purchased the fresh produce firm out of bankruptcy in 1996. While accusations of bribery were never proven, it seems odd that the Abu-Ghazaleh family was able to pick up Fresh Del Monte for a modest $125 million when other bids ranging from $250-$275 million were reportedly on the table. The family then benefited handsomely when it took Fresh Del Monte public in 1997, selling 36% of the company for $250 million. Since that time the Abu-Ghazalehs have reduced their ownership stake to around 52%. Unfortunately, the self-dealing didn't stop there, as family members have engaged in a plethora of related-party transactions, which cost the company $62 million last year alone. The company is based in the Cayman Islands (where shareholders have only limited rights) and three family members sit on the board, so the situation is unlikely to improve anytime soon.