Ormat Exec Relieved Of Duties, Director Won’t Seek Re-Election, After Allegations Of “Dirty Dealings”
On Monday morning, Hindenburg Research – best known for being the firm that exposed Nikola’s One semi truck as rolling down a hill in a video that purported to show the semi “in action” – released a report on Israeli-based geothermal power company Ormat.
The lengthy report, called “Ormat: Dirty Dealings in ‘Clean’ Energy”, alleged that Ormat engaged in what Hindenburg believed “to be widespread and systematic acts of international corruption.”
“We expect the blowback to these revelations to be severe, threatening Ormat’s contracts in its most lucrative markets. In fact, history is already catching up to Ormat’s senior leadership,” Hindenburg wrote. “Ormat’s General Counsel & Chief Compliance Officer, along with an Ormat director, are under pre-indictment in Israel. This is a formal stage of prosecution just prior to indictment. Ormat has apparently chosen not to disclose that the two are currently in the midst of a criminal prosecution. Both still serve in senior oversight roles at Ormat.”
The report also alleged routing sales through undisclosed related party entities, ties to government corruption in Kenya and South America, and that Ormat’s key customer in Kenya could be “broke” and “technically insolvent”.
Ormat responded after market close on March 1, calling Hindenburg’s report “inaccurate and filled with innuendo in an attempt to mislead investors about Ormat.”
“We have been providing clean renewable energy in Kenya, Honduras and Guatemala for many years, supporting local communities. Our facilities are financed by numerous leading multinational banks, which conduct extensive due diligence on the Company and its operations prior to entering into lending agreements. We are committed to conducting all of our business according to the highest ethical standards, and we have clear policies in place to ensure our people and our partners act accordingly and consistent with all applicable laws and regulations.”
But then it also disclosed that one of its board members would not stand for re-election and that its General Counsel and Chief Compliance Officer would transfer his responsibility to other members of the management team, pending a “governmental hearing”:
The Company is aware of claims being investigated in Israel regarding Ravit Barniv, an Ormat Board member, and Hezi Kattan, the Company’s General Counsel and Chief Compliance Officer. The claims involve Ms. Barniv’s and Mr. Kattan’s work at another company, prior to joining Ormat. Those claims remain subject to a governmental hearing that may take time to conclude and Ormat is monitoring the process closely.
On February 24, 2021, the Company’s Board of Directors determined that, at this time, it would be prudent to transfer the responsibility for the Company’s compliance function to other members of the Ormat management team until these issues are resolved. In addition, Ms. Barniv told the Board of Directors that she believes that investor attention should be focused on Ormat’s strong performance and future prospects. Accordingly, she has decided not to stand for reelection at the upcoming Annual Meeting expected in May.
Hindenburg followed with a Tweet on Monday evening:
Eight hours after our $ORA report, a Director announces she is stepping aside and the General Counsel/Chief Compliance Officer has been relieved of his responsibilities by the board.
— Hindenburg Research (@HindenburgRes) March 1, 2021
“Ormat’s Board of Directors and leadership team are confident in the Company’s strategy. Our strong performance shows that we are on the right path for long-term success and to continue the Company’s growth trajectory. We are focused on capitalizing on our momentum – even in light of the COVID-19 pandemic – and will continue to serve and act in accordance with our values, high ethical standards and in our shareholders’ best interests,” Ormat said on Monday.
Despite falling from recent highs well over $120 per share, Ormat is still about 40% higher over the last 6 months, as what appears to be endless cash pours into any type of ESG name the market can get its hands on.
Tue, 03/02/2021 – 09:39
This Article was first published on: ZeroHedge