Tomer Food Crisis: Founder to be Removed as Chairman Amid Inventory Scandal
Tomer Food, an Israeli food importer, is moving to oust its founder and controlling shareholder, Doron Kimelblat, from his role as chairman. This action follows Kimelblat's admission to an independent committee that he influenced or caused the valuation of the company's inventory at various times. The company is seeking candidates for the chairman position to separate it from the CEO role, after appointing Guy Freeman as deputy CEO and CFO.
Trading in Tomer Food's shares remains suspended pending the release of corrected financial reports and a decision from the Israel Securities Authority. The company is set to re-publish its 2025 financial statements for its private subsidiary, Tomer Food, along with comparative data for 2024 and 2023. These reports will include a restatement due to a material error discovered, which is expected to erase the subsidiary's previously reported net profit of NIS 3.09 million for 2025. The restatement will also reduce the company's equity as of December 31, 2025, by NIS 3.2 million to NIS 20.9 million.
The Securities Authority mandated the restatement due to qualitative materiality, specifically Kimelblat's involvement in inventory data. Investigations revealed that cost prices of some inventory items were inflated without supporting purchase documentation, increasing closing inventory values by NIS 503,000 in 2023 and NIS 2.5 million in 2025. Additionally, revenue was recognized for goods invoiced but not yet delivered, with these items remaining in company warehouses but excluded from closing inventory value. This correction reduced sales revenue by NIS 5.7 million in 2025 and NIS 506,000 in 2024.
Further discrepancies include an overstatement of NIS 300,000 in supplier credits for meeting sales targets, and inadequate write-downs for expired inventory and destroyed goods. The review also identified control deficiencies in inventory cost price recording, lack of documentation for price updates and responsible parties, and inconsistencies between actual inventory costing methods and reported accounting policies.
Separately, an investigation into related-party transactions, including the commingling of personal and company expenses, is ongoing. Tomer Food has secured consent letters from its financing banks, Leumi, International Bank, and Mizrahi Tefahot, waiving immediate debt repayment demands due to non-compliance with financial covenants based on 2025 reports, until the 2026 financial statements are published. The company and banks will work towards establishing new IFRS-compliant financial covenants by the end of November.
The crisis originated with the resignation of CFO Avital Cherni shortly after her appointment, due to inventory discrepancies she discovered in prior reports. This led to the trading suspension and the company's internal review of inventory management.
