Kid Brands fires two executives over alleged import duty evasion

EAST RUTHERFORD, N.J. — Infant and youth furniture resource Kid Brands has fired two executives from its LaJobi subsidiary in response to alleged evasion of paying import duties in the wood bedroom furniture antidumping case.
The company announced Tuesday that it has terminated LaJobi President Larry Bivona and LaJobi's managing director of operations, who was not identified.

Bivona has been replaced by Rick Schaub, who also retains his current role as president of Kid Brands' Sassy subsidiary.

Kid Brands said the firings followed an investigation by its board of directors after U.S. Customs and Border Protection officials alerted the company to duty issues regarding wood bedroom furniture LaJobi imported from China. The board found that incorrect import duties were applied to certain LaJobi products imported from various Chinese resources, a violation of antidumping regulations.

In addition to finding incorrect duty payments, the board determined that LaJobi officials were involved in the misidentifying the manufacturer and shipper of products. Kid Brands said it also is investigating certain LaJobi business and staffing practices in Asia.

"Kid Brands is committed to the highest standards of business ethics and conduct," Raphael Benaroya, chairman of the company's board, 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."

The company said that it is working with U.S. Customs relating to the duty issues. It estimates that it owes about $7 million in duties and also may face a penalty from the government.

Pending the release of these penalties, the company has delayed its fourth quarter and full year earnings announcement. However, Kid Brands has said it expects to report net sales in 2010 exceeding its previous outlook of $267 million.

The U.S. Department of Commerce implemented duties on Chinese-made wooden bedrooms in early 2005 to address what the government determined were unfair pricing tactics of Chinese producers.

These duties are assigned to various Chinese factories, but are paid by importers of record such as LaJobi. The duties are aimed at leveling the playing field for U.S. wood bedroom producers that have been injured by unfairly priced imports.