Shares in Yara International tumbled 8%, missing out on a
rise in most fertilizer stocks, after prosecutors investigating corruption
allegations charged two members of the nutrient giant's senior management team.
Oekokrim, Norway's white collar crime unit, has charged both
Tor Holba, the head of Yara's so-called "upstream" manufacturing operations, and
Hallgeir Storvik, the group's chief financial officer and head of strategy.
Both are members of Yara's nine-strong senior management
team, headed by Joergen Ole Haslestad, group' chief executive, and long-term
employees of the company and Hydro, from which it was demerged in 2004.
Indeed, Storvik is seen as responsible for spearheading the
turnaround from 1999 of Hydro's fertilizer division, Agri, involving the
closure and sales of businesses and reduction of 35% in fixed costs, which paved
the way for the creation of Yara, the world's top nitrogen fertilizer group.
'Surprised by this
The charges follow the launch by Oekokrim last May of an
inquiry into a $1m payment made by Yara some five years ago in relation to
plans, which were never realised, for an Indian joint venture.
Norwegian police told reporters that the two executives had
been held on suspicion of "gross corruption", but declined to reveal further
Mr Haslestad said he was "surprised by this development",
but added that Yara would maintain "close co-operation" with Oekokrim.
"It is important for us to see this process through to its
conclusion, and we will now await Oekokrim's further investigation," he said.
Yara has launched its own inquiries into the Indian payment,
investigations which the group said two months ago were "still
The company in March said that an internal investigation into
potential corruption within Yara International, relating to a Libyan joint
venture, had discovered "unacceptable payments", findings which had
been relayed to Oekokrim.
Investors' immediate market reaction was to mark down Yara
shares 7.8% to a 2012 low of NOK230.50 in Oslo, wiping more than NOK5.5bn, more
than $900m, from the group's stockmarket value.
The shares recovered some ground to closed at NOK233.70, down 6.5%.
The decline contrasted with a relatively resilient performance in shares in
many other agribusiness groups, on a poor day for stockmarkets, which were again sapped by concerns over the eurozone crisis.
CF Industries shares gained 1.8% to close at $157.01 in New York, where Mosaic ended up 1.7% at $46.47, and Deere & Co added 0.3% to $73.19.
The sector gained help from the continued revival in grain prices, which in boosting prospects for farm returns stand to spur farm spending too.
Chicago wheat gained 5% on Friday, taking its total gains for the week above 17%.