China Syndrome: A Company Melts Down

Cooking up some ethanol is one thing. Cooking the books, something else entirely.

Mark A. Emalfarb learned that the hard way today, when the board at Dyadic International fired him as president and chief executive today.

In a press release, the company said an internal probe had concluded that Emalfarb had "willfully concealed facts relating to material operational and financial improprieties at the company's Asian subsidiaries."

He remains on the board, but the company is none too pleased about that and has asked him to step down before his term ends.

Dyadic, based in Jupiter, Florida, describes itself as a biotechnology company that supplies enzymes and other proteins, as well as peptides and other biomolecules to the bioenergy and pharmaceutical industries. It was also among a handful of companies looking for an economic way to make ethanol from agricultural waste.

The company, whose stock has been suspended from the American Stock Exchange, has told the Securities and Exchange Commission that its Asian subsidiary was tied up in a tax-evasion scheme involving a dummy company in China and cash transactions that were misrepresented back to Dyadic headquarters.

The company didn't say if Emalfarb played a direct role in the arrangement or knew about the scheme before internal investigators uncovered it. However, he temporarily stepped down from his executive positions when the scandal broke in April, after the company's chief of Asian operations died and a whistleblower stepped forward.

Dyadic did say that it has abandoned its Asian operations "because of its concerns over these material operational and financial improprieties."

by Mark Stein