Just as the end of Grifols’ conference call with his investors was about to clear up any doubt about the content expressed by bearish fund Gotham City Research, one of the participants brought up the elephant in the room: When will pharmaceutical governance improve? Thomas Glanzmann, the firm’s chairman and CEO, recognized that there was still room for improvement, both in this respect and in terms of communication. As confirmed by sources close to Grifols, this dialogue, which is constantly repeated in the latest meetings with its investors, will not be a surprise for those who follow the journey of the Catalan company. How far does the problem go if failures in good management are openly acknowledged by the person running the company?
Let’s start with official data. Grifols’ latest Annual Corporate Governance Report prepared by the National Securities Market Commission (CNMV) in 2022 partially asleep Suggestion to encourage continuation majority of dedicated and independent directors on the board management, providing information about its members on the web and The audit committee has additional functions. The firm never followed the recommendation to keep the appointments and compensation committee separate between 2020 and 2022.
The report on good governance submitted by the company to the CNMV, Raimon Grifols Roura, Tomás Daga and Víctor Grifols Rourathree as “non-controlling shareholders for the purposes of the Securities Market Law”, from Scranton EnterprisesInvestment vehicle of the family that controls 8.40% of Grifols. At the same time, Raimon Grifols and Víctor Grifols Roura appear in the document as “shareholders” of the family company Deria SA, controlling 9.19% of the pharmaceutical company; The difference is that the latter is also the person who represents the company. Grifols’ board of directors. Víctor Grifols Deu appears to be a partner of Ralledor Holding Spain, whose owner is Nuria Roura (Víctor Grifols’ mother) and owns 6.154% of Grifols.
Grifols also Third most opaque company in Ibex 35According to the 2023 Transparency and Good Governance Ranking on Ethics and Compliance Practices prepared by the Haz Foundation, this figure was surpassed only by ArcelorMittal and Unicaja. Not disclosing the audit committee report and its results to the public, not managing the ethics channel, not having a body responsible for the compliance system, not disclosing the compliance policy in question to the public and not allowing an independent organization to conduct an external audit IT. And one more is added to this data, according to the ‘Matter pending’ report, Grifols has 25 companies spread across 6 tax havens. Limited progress on financial responsibility of large companies, according to Oxfam Intermón.
Family business gear at Ibex
The pharmaceutical company has had management problems for years. Grifols committed to improvement from the start of 2023. On February 15, it launched an operational improvement plan that includes annual cost savings of €400 million, mainly from reducing the workforce by 8%. A week later, Steven F. Mayer, who had been executive chairman since September 30, 2022, when Víctor Grifols Roura stepped down as chairman, resigned. The witness was Thomas Glanzmann, who has been vice chairman of the company’s board of directors since January 2017. five monthsgriffles Presided by three different people. Market sources remind that “Grifols has a very international shareholding” and that their structure is far from international expectations, which call for close to 100% independence on the board, greater control over operations and more isolation of the founding family. management of the company.
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“The structure of the company is not completely transparent”EAE Business School professor Javier Rivas says: “No investor can know for sure whether Gotham is telling the truth.” There are two important points that affect both the management and the reliability of the company: the merger by Grifols and Scranton of the two companies sold by the pharmaceutical company to Biotest US Corporation and Haema, the investment vehicle of the Catalan family, and Scranton itself. . “Many families have their own investment vehicle, that’s the extent of the relationship,” he adds. In this case, there is joint debt and there is evidence of cross payments and transactions between both companies. At the meeting with investors, the company tried to cover up the claim that “There are 22 investors in Scranton and only three members of the Grifols family own 20% of the company” without revealing who or what the remaining members are. A part of the company belongs to each of them.
These are the unknowns that needed to be resolved during this Thursday’s conference call with investors, and the result was the exact opposite. The firm has fallen 16.17% on the stock market since the publication of the Gotham City Investigation report, in which it was accused of manipulating its accounts and hiding part of its debt, losing 2,651.63 million euros in just three days. “The feeling after the conference with investors absolute communicative chaos“, says Rivas. Some sources explain that “in some companies in Spain, communication is set aside to be effective and complete”, which coincides with the Grifols case. The CNMV required the pharmaceutical company to recognize all investors who invested in it. With the founding family of the group They have been in Scranton for ten days starting last Thursday to clarify who they are related to. Auditor KPMG remains silent. Without more information, investors are distrustful and sell their actions.