By Kanishka Singh
(Reuters) – Eastman Kodak Co.’s $ 765 million (£ 587 million) loan deal with the U.S. government to produce pharmaceutical ingredients has been suspended due to “recent allegations of malpractice,” the U.S. International Development Finance Corp (DFC) said.
Earlier this week, senior Democratic lawmakers asked federal regulators to investigate securities transactions made by the company and its executives around the time it learned it could get the government loan.
“Recent allegations of crime are causing serious concern,” DFC said late Friday in a tweet.
“We will not proceed unless these allegations are dispelled,” the DFC said. It referred to a letter of interest it signed on July 28 with Kodak.
President Donald Trump said Tuesday that the government will investigate the circumstances surrounding the announcement of the loan, which will help the maker of photographic equipment shift into making pharmaceuticals at its U.S. factories.
Kodak shares rose more than 1,000% last week after the announcement of the loan, generating a windfall for executives, some of whom were given options a day earlier.
Lawmakers said they had “serious concerns” about the transactions and asked the Securities and Exchange Commission to investigate the circumstances surrounding the case. They cited growing concerns about insider trading.
The company said it has appointed a special committee of independent directors of its board to conduct an internal review.
“The internal review will be conducted before the Committee by Akin Gump Strauss Hauer & Field LLP,” Eastman Kodak said in a statement.
(Report by Kanishka Singh in Bengaluru; Edited by Sonya Hepinstall)
