Mondelēz International, Inc. agreed Friday to pay $13 million to resolve FCPA offenses related to payments by its Cadbury unit in India.
The SEC said in an administrative order (pdf) that both Cadbury Limited and Mondelēz violated the internal controls and books-and-records provisions of the FCPA.
The offenses occurred in connection with payments to a local agent to obtain government licenses and approvals for a chocolate factory in Baddi, India.
Mondelēz, formerly known as Kraft Foods, Inc., acquired Cadbury Limited and its subsidiaries, including Cadbury India Limited, in February 2010.
That same year, Cadbury India paid the agent to deal with Indian government officials to obtain licenses and approvals for the proposed plant in Baddi. Cadbury India didn't conduct appropriate due diligence or monitor the agent, the SEC said.
From February 2010 to July 2010, the agent submitted five invoices to Cadbury India for preparing license applications, among other things. But Cadbury India employees at Baddi, not the agent, had prepared the license applications, the SEC said.
Cadbury India paid the agent about $90,000 (after withholding tax) under the invoices. "After receiving each payment, the agent withdrew from its bank account most of the funds in cash," the SEC said.
Cadbury India obtained some of the licenses and approvals it needed for the Baddi factory.
The SEC said Cadbury India’s books and records didn't "accurately and fairly" reflect the nature of the services rendered by the agent. Also, Cadbury didn't implement adequate FCPA compliance controls at Cadbury India, according to the SEC.
Cadbury violated the FCPA by failing to keep accurate books, records, and accounts and failing to devise and maintain adequate internal accounting controls, the SEC said.
Cadbury's accounts were consolidated into Mondelēz's books and records. Mondelēz, as the acquirer of Cadbury, was also responsible for Cadbury’s violations, the SEC said.
Cadbury and Mondelēz settled the SEC's allegations without admitting or denying the findings.
The SEC said it considered Mondelēz’s cooperation and remedial actions.The FCPA Blog | Monday, 9 January, 2017