INDIA – Mondelez International, the maker of Cadbury and Oreo cookies, has agreed to pay $13 million in civil penalties to US markets regulator the Securities and Exchange Commission (SEC) to settle charges of violating the internal controls and books-and-records provisions of the Foreign Corrupt Practices Act (FCPA) in India.
The SEC said that Mondelez’s subsidiary here, Cadbury India (now known as Mondelez India Foods), had made payments to a consultant, who had allegedly bribed government officials and politicians to get licenses for its factory in Baddi in Himachal Pradesh.
It was alleged that the licences helped Cadbury claim a tax exemption of around $90 million (around Rs 600 crore).
A statement from the SEC said Cadbury India paid the consultant around $90,666 (after withholding tax). After each payment, the agent withdrew the funds in cash from his bank account.
Kraft Foods bought UK-based Cadbury in 2010 for about $19 billion and in 2012 changed its name to Mondelez after spinning off its North American grocery business.
The company acquired the Baddi plant, when it bought Cadbury.
“Mondelez International and Cadbury Limited are pleased to have reached an agreement with the SEC to settle charges related to internal controls and books-and-records provisions of the FCPA, without admitting or denying the charges.
As part of the settlement, Mondelez International Inc has agreed to pay a civil penalty of $13 million to resolve the investigation,” a Mondelez India spokesperson told TOI in a statement.
Although, it has agreed to pay $13 million (around Rs 90 crore) to SEC, Mondelez is still not out of trouble.
The Indian Central Excise Authority has asked Mondelez around Rs 700-800 crore in unpaid excise duties, penalties and interest as of September 30, 2016.
“We continue to hold that the decision to claim excise tax benefit is valid and that our executives acted in good faith and within the law in the decision to claim excise benefit in respect of our plant in Baddi.
The matter is currently in the legal domain and therefore it would be inappropriate for us to comment at this time,” said a Mondelez India spokesperson.