Monsanto, the world's largest biotech manufacturer of widely controversial genetically modified seeds and companion pesticide, the glyphosate-based Roundup, announced that it is under investigation by the Securities and Exchange Commission for offering customers of its pesticide financial incentives.
Monsanto executives announced the SEC investigation, which hung like a dark cloud over another announcement made this week by the company that profits for the last quarter were up 77 percent. But the soar in profits is not likely coming from sales of Roundup, which has been struggling to compete with cheaper pesticide products, many of which are coming out of China. The subpoenaed documents by the SEC are believed to show the incentive program was designed to buy off key customers to help boost the brand's lagging sales. The company allegedly misstated expected earnings for Roundup sales in 2009 and 2010, which artificially inflated Monsanto's stock.
In a call with investors, Monsanto CEO, Hugh Grant, said the investigation is still in the early days and connected only with the pesticide side of the business and not the seeds.
Monsanto is still under investigation after the Department of Justice launched a probe in January 2010 concerning competition issues over its genetically modified soybeans.
Monsanto's last fiscal quarter, which ended May 31, showed a profit of $680 million, up from $384 million a year earlier, with overall revenue climbing 21% to $3.59 billion.
Genetically modified seeds—the core of Monsanto's business—have been connected to a number of health issues including major organ damage, infertility, neurological disorders, birth defects and cancer.
According to the California Department of Food and Agriculture, at least 70 percent of processed foods in U.S. supermarkets now contain GM ingredients. 93 percent of soy, 86 percent of corn and 93 percent of cotton and canola planted in the U.S. in 2010 were genetically engineered.
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