Digi CFO resigns; investigation launched
- Article by: JENNIFER BJORHUS
- Star Tribune
- May 12, 2010 - 5:43 AM
The chief financial officer of Minnetonka-based Digi International Inc. has resigned amid a corporate investigation into possible violations of its gifts, travel and entertainment policy overseas.
Subramanian Krishnan, Digi International's senior vice president, chief financial officer and treasurer, resigned Friday, the company disclosed Tuesday in a filing with the Securities and Exchange Commission. In its quarterly report, filed Monday, the company disclosed that its audit committee is investigating allegations "regarding possible violations of our gifts, travel and entertainment policy in the Asia-Pacific region by a few employees."
It said it's examining internal control issues, "including any possible violations of law, such as the Foreign Corrupt Practices Act" and that it has informed the U.S. Department of Justice and the Securities and Exchange Commission (SEC) about the ongoing probe.
Brenda Mueller, Digi International's corporate controller, will act as chief financial officer while the company looks for a new one.
The company declined to discuss the matter. Krishnan, 55, of Plymouth, issued a statement Tuesday through his attorney, Kevin Coan. He said he'd been with the company 12 years, and that his decision to resign was "difficult" but in everyone's best interest.
"I believe that new leadership will service the company well during this audit," Krishnan said.
The Foreign Corrupt Practices Act is best known for its anti-bribery provisions, and regulatory agencies have been cranking up enforcement. Last month, the German carmaker Daimler AG announced it paid more than $180 million in fines and penalties to settle allegations by the Justice Dept. and SEC that it bribed officials in more than a dozen countries to score contracts. Also last month, Avon Products Inc. suspended four executives related to a bribery probe.
Forbes magazine currently has a cover story on the bribery crackdown, noting that in 2000 no federal cases were prosecuted under the Foreign Corrupt Practices Act while last year there were 34. According to the report, the Justice Department has 150 open investigations of Foreign Corrupt Practices Act violations.
Jay Meier, senior research analyst at Feltl & Co. in Minneapolis, warned against rushing to conclusions since there's been no public allegations against Krishnan.
"I've known Kris -- he goes by Kris -- for nine or 10 years now and I've always known Kris to be of the highest character and integrity," Meier said. "To me, this is a shock."
Feltl has no banking relationship with Digi International, Meier said.
Digi International sells equipment globally for device networking. About 12 percent of the company's second-quarter sales were in Asia.
Digi shares closed Tuesday at $9.62, up 23 cents.
Jennifer Bjorhus • 612-673-4683
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