Diamond Foods Suspends CEO, CFO Over $80M Accounting Snafu

SAN FRANCISCODiamond Foods announced today its CEO Michael Mendes and CFO Steven Neil were put on administrative leave and the snack maker will have to restate financial results for fiscal years 2010 and 2011 after the audit committee of its board of directors determined improper accounting for approximately $80 million in payments made to walnut growers.

The Diamond Foods controversy began last year after the company announced plans to acquire the Pringles brand from Procter & Gamble Co. The deal would have tripled the size of Diamond's snack business.

The audit committee concluded that a "continuity" payment made to growers in August 2010 of approximately $20 million and a "momentum" payment made to growers in September 2011 of approximately $60 million were not accounted for in the correct periods, and the committee identified material weaknesses in the company's internal control over financial reporting.

The Board takes the Company's control and the integrity of its financial statements very seriously, and we are moving aggressively to implement corrective measures, including changes to the Company's leadership," said Diamond Foods' Chairman Robert Zollars.

Commenting on the announcement, Acting President and CEO Rick Wolford, said: "I look forward to working with the management team and the terrific employees at Diamond and will be focused on moving the business forward, further driving Diamond's strong brands and helping to find a permanent chief executive."

Diamond is working to complete financial restatements for the affected periods and will file all required reports with the U.S. Securities and Exchange Commission.