The U.S. Securities and Exchange Commission and Mondelez International Inc. have agreed to a $13 million civil penalty to settle violations of federal anti-bribery law in a case involving Mondelez’s Cadbury India division.
In announcing the settlement, Mondelez neither admitted or denied wrongdoing.
The complaint traces to early 2010, soon after the former Kraft Foods Inc. acquired London-based Cadbury Ltd. It involved bribes paid by a local business person, identified as Agent No. 1, to obtain excise and income-tax benefits worth $72.9 million over 10 years for an expansion at Cadbury India’s plant in Baddi, Indiana.
Built in 2005 and the largest of six production facilities in India, Baddi added production lines in 2008 to manufacture 5-Star bars, Bournvita candy and Gems, a button-shaped confection. More than 30 licenses and approvals were needed, and in late 2009 the division retained the services of a local tile and marble vendor to facilitate the process.
During the first half of 2010, the business person submitted five invoices totaling $110,446 for license applications and other services. However, the SEC contended, company employees prepared the license applications. “After receiving each payment, Agent No. 1 withdrew from its bank account most or all of the funds in cash,” according to the SEC complaint. “Cadbury India did not receive documentary support for Agent No. 1’s services and did not have any written contract with Agent No. 1.”
Besides the necessary licenses, the agent secured an approval that treated the new lines as a separate plant that qualified for tax benefits. Documents indicated the tax breaks would have enabled to company to realize a 58.5 percent internal rate of return.
