Kodak says it will make APIs despite insider-trading allegations

Kodak CEO Jim Continenza said the company still will make active pharmaceutical ingredients regardless of government assistance after its $765 million loan from the U.S. was stalled due to insider-trading allegations, The Wall Street Journal reported. 

Kodak, the photography company that invented the digital camera, received the multimillion dollar loan from the U.S. International Development Finance Corp. under the Defense Production Act in July to produce drug ingredients. It was meant to help the U.S. ease its reliance on China and India for APIs.

But the loan was put on hold in August after filings with the Securities and Exchange Commission showed that Kodak's executive chairman and a board member loaded up on shares shortly before the government deal was announced. 

White House trade adviser Peter Navarro, who spearheaded the deal, said after the insider-trading allegations came to light: "Based on what I'm seeing, what happened at Kodak was probably the dumbest decisions made by executives in corporate history. You can't even anticipate that degree of stupidity."

Mr. Continenza said Kodak will move ahead in its plan to make drug ingredients regardless of whether it gets the loan from the U.S. He declined to discuss the status of the loan.

The SEC is investigating how the company disclosed the loan, and several Democratic congressional committees also announced a probe of the agreement, the Journal reported. The U.S. International Development Finance Corp also opened an internal review of the deal, as did Kodak. 

Kodak said its review showed that the company didn't break any laws in its disclosure of the loan, but found several "governance issues," according to the Journal. One such issue was a gift of Kodak stock made by board member George Karfunkel on the same day the stock's price peaked after the government's announcement. He donated $116 million worth of stock to a religious charity he started. 

Mr. Continenza wouldn't say if Mr. Karfunkel will stay on the company's board, but said "he'll be accountable for what he does," the Journal reported.

When asked if Kodak had moved too quickly to secure the deal, Mr. Continenza said "it came together quickly, but I think it also needs to," because of the U.S. reliance on foreign countries for drugs. He said Kodak did its best in handling the deal, but the company has been understaffed during the COVID-19 pandemic, according to the Journal

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