The US Securities and Exchange Commission (SEC) issued a subpoena to Mondelēz in 2011 informing the firm it was investigating how the company obtained government approvals when expanding its factory in Baddi, Himachal Pradesh, India.
In February last year, SEC recommended enforcement action against Mondelēz, alleging the company had violated the US Foreign Corrupt Practices Act (FCPA) by improperly declaring payments to a consultant that helped it obtain government licenses and approvals.
‘Without admitting or denying’
“Mondelēz International Inc. 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,” a spokesperson for the Oreo maker told ConfectioneryNews.
“As part of the settlement, Mondelēz International Inc. has agreed to pay a civil penalty of $13 million to resolve the investigation,” they said.
SEC said in an administrative document that it had considered Mondelēz’s cooperation and remedial actions when accepting the offer.
Indian tax probe
Mondelēz continues to face action in India for allegedly unlawfully claiming excise exemption for the same Indian facility.
In March 2015, the firm was ordered to pay 5.8 billion Indian rupees ($88 million) in unpaid excise tax, but has appealed the decision.
The Indian Central Excise Authority has issued further notices for Mondelēz to pay an additional 2.4 billion Indian rupees ($36 million) of unpaid excise taxes for the same issue covering a later period.
“The excise tax issue in India is a separate matter,” said Mondelēz’s spokesperson.
“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,” they said.
In 2008, Cadbury India decided to increase production capacity at the factory. It estimated it may require more than 30 different licenses and approvals for the expansion. Mondelēz subsidiary Cadbury India – now Mondelēz India Foods Limited - constructed the Himachal Pradesh chocolate plant in 2005.
The company operates four production facilities in India: Thane, Induri (Pune), Malanpur (Gwalior), Baddi (Himachal Pradesh) and Sri City (Andhra Pradesh).