?Mondelez International Inc. to pay USD 13 million for violation of FCPA
?Mondelez International Inc. to pay USD 13 million for violation of FCPA

US markets regulator the Securities and Exchange Commission (SEC) has charged snack-maker Mondelez International, Inc. with poor internal controls and violation of the Foreign Corrupt Practices Act (FCPA) in India.

Mondelez has agreed to pay USD 13 million (approximately Rs 90 crore) in civil penalties without admitting or denying charges that its subsidiary Cadbury India (now Mondelez India Foods) paid a consultant who was suspected to have bribed government officials and possibly top state politicians to obtain licenses and approvals for a chocolate factory in Baddi, Himachal Pradesh.

A company spokesperson said in a statement, "Mondelez 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. As part of the settlement, Mondelez International Inc. has agreed to pay a civil penalty of $13 million to resolve the investigation."

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 percent, documents show. It was suspected that the agent paid bribes to get the licences and approvals for the plant.

As of September 30, 2016, Indian tax authorities have demanded a total of Rs 820 crore in unpaid excise duties, penalty and interest, according to company filings with SEC.

A Mondelez spokesperson said, "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. The matter is currently in the legal domain and therefore it would be inappropriate for us to comment at this time."

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