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Mondelez to settle with SEC in India bribery probe by paying US $13 mn

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Mondelez International Inc has agreed to pay US $13 million in civil penalities to settle US Securities and Exchange Commission charges that its Cadbury unit violated a federal anti-bribery law through efforts to expand a chocolate plant in Baddi, India.
In a statement on Monday, Mondelez said it was pleased to reach the civil settlement, in which it neither admitted nor denied wrongdoing.
The accord resolves charges that Mondelez violated the internal controls and books-and-records provisions of the Foreign Corrupt Practices Act.
According to the SEC, Cadbury India paid a local businessman US $90,666 in 2010 to work with Government officials in Himachal Pradesh and obtain licenses and approvals to add capacity at the Baddi plant, which was built in 2005.
The issue relates to Cadbury India’s largest manufacturing plant located in Baddi, Himachal Pradesh, which makes Bournvita, 5-Star bars and button-shaped Gems.
According to the company’s investigation, it sought to designate production lines of 5-Star and Gems as a separate unit (Unit II) to claim excise and income tax benefit of more than 60 million pounds (Rs 600 crore) over 10 years. It would have helped the company make an internal rate of return of 58.5 per cent, documents show. It was suspected that the agent paid bribes to get the licences and approvals for the plant.
The SEC said Cadbury India’s books and records did not accurately reflect the nature of the businessman’s services, for which it received five invoices but had no written contract.
It also said Cadbury India lacked FCPA adequate compliance controls to ensure how the payments were used.
Mondelez ended its relationship with the businessman in October 2010, the SEC said. An SEC subpoena was issued four months later.

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