Kid Brands fires Bivona over alleged misconduct regarding import duties
Action Follows Investigation by Board of Directors
Jane Kitchen -- Kids Today, 3/15/2011 10:29:02 PM
EAST RUTHERFORD, NJ -- Kid Brands has fired LaJobi President Larry Bivona and LaJobi's managing director of operations in response to findings from an investigation into LaJobi regarding alleged evasion of import duties. Bivona, who with his brother was a co-founder of LaJobi (the company was originally named for the two brothers), has been replaced by Rick Schaub, who is also currently president of Kid Brands' Sassy subsidiary.
Kid Brands said in a press release that it took these actions based on the findings to date of an investigation into LaJobi, initiated at the direction of the Board of Directors, and supervised by a Special Committee of three non-management members of the Board.
The company said the board's investigation has found instances at LaJobi in which incorrect import duties were applied on certain wooden furniture imported from vendors in China, resulting in a violation of anti-dumping regulations.
The U.S. Department of Commerce implemented duties on Chinese-made wooden bedroom furniture in 2005 to address what the government determined was unfair pricing tactics of Chinese producers. The duties are aimed at leveling the playing field for American wood bedroom manufacturers that have suffered from unfairly priced imports. The duties are assigned to various Chinese factories, but are paid by importers such as LaJobi.
On the basis of the investigation, the board concluded that there was misconduct involved on the part of certain LaJobi employees in connection with the incorrect payment of duties, including misidentifying the manufacturer and shipper of products. The ongoing investigation is also focusing on certain of LaJobi's business and staffing practices in Asia.
"Kid Brands is committed to the highest standards of business ethics and conduct," Raphael Benaroya, chairman of the board of directors, said in a statement. "We have taken actions against personnel who engaged in misconduct and are introducing other remedial steps. The Board will consider additional appropriate actions necessary to uphold ethical standards."
Kid Brands said in a press release that it is committed to working closely with U.S. Customs to address issues relating to incorrect import duties, and it currently estimates that it will incur costs of approximately $7 million relating to customs duty owed and may be assessed a penalty of up to 1x customs duty by U.S. Customs as well as possibly being subject to assessment for additional duties on other items.
Schaub, 51, who is taking over as LaJobi's president in addition to his role with Sassy, is a sales and marketing veteran in the infant and juvenile industry. He joined Kid Brands in February 2010 as President of Sassy, and has also held positions with RC2/Learning Curve, Maclaren, and Evenflo.
"Kid Brands is a leader in infant and juvenile branded products, with a strong portfolio of innovative products, brands and strategic growth initiatives under way," Bruce Crain, Chief Executive Officer of Kid Brands, said in a statement. "Rick Schaub will bring his deep relationships with retail customers and Asia sourcing experience to his new leadership role at LaJobi."
Kid Brands' operating business is composed of four wholly-owned subsidiaries: Kids Line, LaJobi, Sassy and CoCaLo. In addition to Kids Brands' branded products, it also markets certain categories of products under various licenses, including Carter's, Disney, Graco and Serta. LaJobi also debuted a line of Kathy Ireland licensed nursery furniture at the ABC Expo in October.
Kid Brands, then doing business as Russ Berrie, acquired LaJobi in 2008; the company subsequently changed its name from Russ Berrie to Kids Brands in 2009 in order to reflect the company's transformation and growth strategies on the infant and juvenile products industry.
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