Herbalife CFO Tells FBN "We Will Not Run Away From Anything"

Herbalife Chief Financial Officer (CFO) John DeSimone speaks with FOX Business Network (FBN) about hedge fund manager Bill Ackman’s accusations against Herbalife Ltd. (NYSE:HLF) and the future of the company. DeSimone said that today’s presentation was “a lot of smoke and mirrors, a lot of misrepresentation,” and while they “will not run away from anything,” Ackman says, the company believes a “focus on performance is the most important thing we can do.” When asked about the compliance of Herbalife, DeSimone says, “We are 100 percent confident in the compliance of our company,” he goes on to say, “there is no economic monetary arbitrage within Venezuela,” and that is “a non-issue and completely inaccurate.” DeSimone also addresses reports that the Illinois attorney general is investigating the company, saying “we read that…we have not been contacted.”

Herbalife CFO: We will not run away from Ackman’s accusations

Watch the latest video at video.foxbusiness.com

Herbalife CFO on Bill Ackman’s presentation:

“I came into today thinking it would be more of the same. And more of the same to me means a lot of smoke and mirrors, a lot of misrepresentation. It was different than that. I mean there was certainly plenty of that. He insulted twenty plus people today. Kenny Moelis, Bill Stiritz, Carl Icahn, Joele Frank, Boies Schiller, PWC. He insulted our membership by saying they were uneducated, I mean he went deep.”

Herbalife CFO on Ackman’s Herbalife Club accusations:

“He completely misunderstands Club CN. Club CN was a powerful model. It had some weaknesses and we had to tweak it and we incorporated it into Herbalife. But, Club CN means Club 100. It means have 100 consumptions. It means before you open up a club, learn how to operate a business. Learn how to get customers. Learn how to maintain customers, then you can open up a club. Its training and there’s a lot of power in that training.”

Herbalife CFO on whether the FTC investigation into Herbalife:

“They are doing an inquiry, yes.”

Herbalife CFO on whether the Illinois attorney general is doing an investigation into Herbalife:

“We read that…We have not been contacted.”

Herbalife CFO on the compliance of the company:

“We are 100 percent confident in the compliance of our company, of our practices. We have a 10-Q coming up next week. That 10-Q we take our disclosures seriously. If there is a material investigation to announce we will announce it.  I don’t expect to be any change from where we were last quarter.”

Herbalife CFO on whether Herbalife is being investigated by New York attorney general Eric Schneiderman:

“You know, I’m going to stick to our filings.”

Herbalife CFO on reports there were listening devices planted inside the company:

“When you brought that story we didn’t comment and we are not going to comment today. It’s a lot of noise I’d just rather not comment on something along those lines.”

Herbalife CFO on the money transfer scheme accusation in Venezuela:

“So I know where that came from. It came from the former employee that he’s paid, that’s public. And it comes from early 2008, actually right when I joined the company. There was a time, a three month period when the curb rate, which is the secondary rate. Back then, in 2008 spiked up from the official rate and we were still paying at the official rate. We don’t pay at the official rate now. We pay at whatever the parallel rate is 50 to 1. So there is no economic monetary arbitrage within Venezuela. In fact, Venezuela was one of our biggest declining countries last quarter.”

Herbalife CFO on the money laundering accusations being “inaccurate:”

“A non-issue and completely inaccurate.”

Herbalife CFO on letting others control the narrative:

“When this started, we made the decision that focusing on our performance was the most important thing we could do. Because Ackman could win and still be wrong if we didn’t perform. So we focused most of the core management on nothing more than delivering results. I think now that we are 18 months in to this we are getting a more organic drive from our member base to respond more publicly and we are going to start doing that and I am probably going to be a big piece in it. We will not run away from anything that he says.”

Herbalife CFO on the possibility that Herbalife will go private:

“I have no comment…I don’t want to imply that I know something and can’t say it.”

Herbalife CFO on whether there are plans to take legal action against Ackman:

“I think we had a great response today. So, this morning, again I don’t know if you had time to read the release, but we had Doctor Vandaele, Former FTC economist do a deep dive into our business. We gave him access to our database. He has access to our studies and our protocols. From those studies he was able to create his own studies. He concluded today that we are a socially beneficial, economically sustainable MLM. So, he actually disproves Ackman’s thesis. And he has complete access something Ackman doesn’t have.”


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