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Mondelez and Cadbury Settle FCPA Charges with SEC for $13 Million Related to India Chocolate Factory
On January 6, Cadbury Limited and its parent company Mondelez International, Inc. (formerly known as Kraft Foods Inc.), agreed to pay $13 million to settle the SEC’s allegations related to an agent’s interactions with Indian officials regarding a chocolate factory in India. The charges relate to payments made by Cadbury’s India unit in 2010 to a local agent who provided consultation services and dealt with Indian governmental officials to obtain clearances and licenses to increase production at Cadbury’s Baddi plant. The SEC alleged, and Cadbury and Mondelez neither admitted nor denied, that Cadbury violated the books and records and internal controls provisions of the FCPA.
According to the SEC, Cadbury failed to perform appropriate due diligence on the agent and to monitor the agent’s actions, creating a risk that payments could be used for improper purposes. While the agent submitted invoices claiming that he prepared various license applications, the SEC claimed that these license applications were actually prepared by other Cadbury employees. The SEC noted in its decision that Mondelez had completed its own internal investigation that led to Cadbury ending its relationship with the agent and that Mondelez both cooperated with the SEC’s investigation and undertook “extensive remedial actions with respect to Cadbury.”
Snack food company Mondelez International announced in its 10-K on Friday that it had received a Wells notice from the SEC regarding potential violations of the FCPA at an Indian factory. The Wells notice marks the latest development in a long-running FCPA investigation dating back to 2011, when Mondelez first received a subpoena from the SEC. The Indian operations were integrated into Mondelez following its 2010 acquisition of Cadbury; the SEC's allegations relate to interactions "with Indian governmental agencies and officials to obtain approvals related to the operation of that facility." The Wells notice indicated an intent by the SEC staff to recommend the filing of an enforcement action for violations of the FCPA's books and records and internal controls provisions. Mondelez has noted that it is cooperating with both the U.S. and Indian governments in various investigations.
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