Executives Replaced at Company Under Federal Investigation
DUNCAN, S.C. (AP) _ Ross Cosmetics Distribution Centers Inc. said three executives have stepped down amid a federal investigation into suspicions the company has been secretly controlled by its main supplier.
Chairman and president, Eugene Derry, 65, who was placed on administrative leave two weeks ago, has retired, the company said Tuesday.
Michael E. Emery, 45, has resigned as chief operating officer and a director, but will remain a consultant until the end of this year.
John Waters has resigned as chief financial officer and was named director of accounting, the company said.
Ross disclosed in June that affiliates off its main supplier, S&J Perfume Co. Ltd. of London, might have bought up to 60 percent of the company without disclosing the purchases. Ross’ stock fell to $5 from $14.50 on the news.
The Securities and Exchange Commission is investigating the allegations and Ross has started its own internal probe.
The departures, which came after a meeting of directors on Monday, were a further effort by the company to distance itself from officials who may have been familiar with the company’s ties to the supplier.
Ross Cosmetics appointed two lawyers who have handled the investigation to help lead the company. Richard P. Rifenburgh, 60, will become chairman and Robert R. Sparacino, 64, vice chairman and chairman of the audit committee.
Daniel R. Carter, 58, a management consultant for start-up businesses, was named president and chief executive. Eugene Karam was promoted from vice president and director to executive vice president and chief operating officer.
Derry, who lives in Nairobi, Kenya, issued a statement saying he had retired to pursue other interests.
″Given the current tasks facing the company ... I believe that the company would be best served by a chairman and president who can devote more time to the task than I can at this point in my life,″ he said.
Shashikant Sheth, the director who controls 60 percent of Ross’ stock, will remain on the board, Rifenburgh said. Sheth is related to the family that runs S&J Perfume and is cooperating with the internal investigation, he said.
The internal report is expected to be ready by the end of this month and will be made public then turned over to the SEC, he said.
Ross faces several shareholder lawsuits alleging insiders used the relationship with S&J to keep down the cost of supplies and artificially inflate the price of the company’s stock.