Dive Brief:
- Roughly six months after Archer Daniels Midland disclosed a remediation plan to address problems related to its accounting practices involving intersegment reporting, the grain trading giant’s newly-minted CFO Monish Patolawala said Tuesday that the “material weakness” would be one of his priorities and he plans to help fix the “root cause,” according to a transcript of his remarks at a Barclays conference.
- “It's very important that we continue the journey of strong governance, controllership compliance,” said Patolawala, who spoke during a presentation at the conference alongside CEO Juan Luciano.
- Patolawala — formerly the finance chief of industrial product maker 3M — who joined the Chicago-based company last month, has arrived at a critical time for the grain trading giant’s financial leadership. He succeeds Vikram Luthar, who was abruptly placed on administrative leave in January after ADM announced an internal accounting probe; by April, the company said Luthar would resign.
Dive Insight:
Patolawala, 54, is a veteran finance leader who was previously CFO at 3M for about four years. He also has experience dealing with a Securities and Exchange Commission investigation: Last year, 3M agreed to pay over $6.5 million to resolve charges that it violated the books and records and internal controls provisions of the Foreign Corrupt Practices Act, CFO Dive previously reported.
He is taking ADM’s finance reins as scrutiny of the company’s accounting practices has broadened. In March, the company said it received voluntary document requests from the Department of Justice after disclosing an internal probe into certain accounting practices on Jan. 21. As recently as March, the company said it was continuing to cooperate with the SEC and DOJ on government investigations. The company did not immediately respond to requests for comment.
In addition to addressing accounting matters, Patolawala’s early priorities in his new role will include focusing on the company’s operating rigor and smart capital allocation, he said.
With regard to operating rigor, he said he is a big believer of leveraging data. “You visualize the data and then you use lean principles, which is good root cause analysis,” he said. “You do problem solving by finding out what the true root cause is, and then you get teams together to create solutions that have sustained value creation.”
As for his views of capital allocation, he said companies that are successful invest “smartly,” pace themselves and are prepared to shift plans should the outlook sour. Teams that are successful “look at risk, and then they decide this is the path they are going to go, and using lean again, you start saying, ‘I will fail, but I will fail fast or I will pivot if I need to.’ And I've followed that over my career,” he said.
