Enforcement Action

 

Docket or Case Number:    3-17759

Court:    N/A

Initiation Date:    01/06/2017  Information

Prosecuting Agency:    US Securities and Exchange Commission

Name of Prosecuting Attorneys:    N/A

Assisting Agencies:    N/A

Type of Action:    SEC Administrative Proceeding

Origin of the Proceeding:    N/A

Whistleblower:    Unknown

Case Status:    Resolved


Summary

Cadbury Limited, a company incorporated and headquartered in England, was a major manufacturer and distributor of candy and snack beverages. Prior to being acquired by Mondelez International, Inc. on February 2, 2010, Cadbury’s shares were registered with the SEC and traded on the New York Stock Exchange.

Mondelez International, Inc., a company incorporated and headquartered in the United States, which prior to October 2012 was known as Kraft Foods Inc., was a global manufacturer and marketer of food, beverage and snack products. In addition renaming itself in October 2012, Kraft spun off its North American grocery business into a new company called Kraft Foods Group, Inc., and Mondelez retained the global snacking business. Mondelez common stock was registered with the SEC and traded on the NASDAQ.

Cadbury India Limited was Cadbury's Indian subsidiary, and it was renamed Mondelez India Foods Private Limited when Mondelez acquired Cadbury. It operated six manufacturing plants and four sales offices in India.

As part of an effort to obtain licenses and approvals in connection with the expansion of a chocolate factory in Baddi, Himachal Pradesh, India in early 2010, Cadbury India hired an agent to interact with Indian government officials in charge of the licenses and approval process. Cadbury India failed to conduct appropriate due diligence on the agent or to monitor the agent's activities, and these failures created the risk that funds paid to the agent could be used for improper purposes.

In an administrative proceeding on January 6, 2017, the SEC issued a settled cease-and-desist order against Cadbury and Mondelez. Under the terms of the proceedings, the SEC ordered both companies to cease and desist violations of the books & records and internal controls provisions of the FCPA. The SEC further ordered Mondelez to pay a civil penalty of $13 million. The SEC noted Mondelez's internal investigation into the matter as well as its remediation and cooperation with the SEC in its investigation. No compliance obligation was imposed.

Country(ies) involved:    India

Sanction to Bribe Ratio:    $13,000,000 / $90,666 = 14338.30 %

Sanction to Revenue Ratio:    N/A

Sanction to Profit Ratio:    N/A

Number of Related Enforcement Actions (Including This Enforcement Action):    1

Country(ies) involved:    India

Total $ Bribery Payments:    $90,666

Total $ Revenue Generated from Bribery:    N/A

Total $ Profit Earned or Expenses Avoided from Bribery:    N/A

Total $ Monetary Sanctions:    $13,000,000

Sanction to Bribe Ratio:    $13,000,000 / $90,666 = (14338.30 %)

Sanction to Revenue Ratio:    N/A

Sanction to Profit Ratio:    N/A

Name:    Mondelez International, Inc.

Place of Incorporation:    United States

HQ Country(ies):    United States

Entity Type:    Public Company

FCPA Claims:    Books & Records, Primary, Issuer (15 U.S.C. § 78m (b)(2)(A)) ; Internal Controls, Primary, Issuer (15 U.S.C. § 78m(b)(2)(B))

Related Claims:    N/A

Statutory Basis for FCPA Jurisdiction:    Issuer


Name:    Cadbury Limited

Place of Incorporation:    United Kingdom

HQ Country(ies):    United Kingdom

Entity Type:    Subsidiary

FCPA Claims:    Books & Records, Primary, Issuer (15 U.S.C. § 78m (b)(2)(A)) ; Internal Controls, Primary, Issuer (15 U.S.C. § 78m(b)(2)(B))

Related Claims:    N/A

Statutory Basis for FCPA Jurisdiction:    Issuer

Period of Bribery:   2010 - 2010

Total Bribery Payments:    $90,666

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    N/A

Country(ies) involved:    India

Officials Potentially Influenced (Name; Title; Organization): 

  • Name N/A, Officials; Indian government

Defendant-Related Entities Involved in the Misconduct:    N/A

Third-Party Intermediary:   

  • Agent No. 1 , Agent/Consultant/Broker

Type of Bribe:   Money

Cash, Wire or Check:    No Available

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Payments to Agent 1 in India

Period of Bribery:   2010 – 2010

Total Bribery Payments:    $90,666

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    N/A

Country(ies) involved:    India

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Officials; Indian government;

Defendant-Related Entities Involved in the Misconduct:    N/A

Third Party Intermediary:    Agent No. 1 - Agent/Consultant/Broker

Type of Bribe:   Money

Cash, Wire or Check:    No Available

Purpose of Bribe:    Obtain/retain business

Misconduct by Subsidiary?  Yes


Parent(s):   Cadbury Limited; Mondelez International, Inc.

Subsidiary:  Mondelez India Foods Private Limited

  • Percentage of Ownership:    N/A
  • Direct or Indirect Ownership:    Unknown
  • Parent Had Knowledge of Sub’s Bribery?:    No
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    Yes

Subsidiary:  Cadbury Limited

  • Percentage of Ownership:    100.00 %
  • Direct or Indirect Ownership:    Unknown
  • Parent Had Knowledge of Sub’s Bribery?:    No
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    Yes

M&A Negotiated or Completed During Misconduct, Investigation, or Resolution?     Yes

Type of Transaction:    Acquisition


Successor(s):   Mondelez International, Inc.

Predecessor:  Cadbury Limited

  • Nature of Misconduct   
    • Misconduct Occurred Solely Pre-acquisition:    No
    • Misconduct Occurred Pre- and Post-acquisition, with NO Knowledge and/or Involvement of Successor:    Yes
    • Misconduct Occurred Pre and Post-acquisition, with Knowledge and/or Involvement of Successor:    No
  • Quality of Due Diligence:   
    • Poor Due Diligence Cited:    Yes
    • Good Due Diligence Cited /(e.g. as mitigating factor/):    No
  • Voluntary Disclosure by Successor in Connection with the Transaction:    No
  • DOJ Opinion Sought in Connection with Transaction:    No
  • Successor Liable for Predecessor Misconduct? :    Yes

  

Re: Mondelez International, Inc.

  • Inadequate internal controls or auditing

Mitigating Factors Referenced by the Government (Company Defendants):

Defendant Self-Report Cooperation Voluntary Remedial Measures Misconduct Limited to Low Level Individuals Other factors
Cadbury Limited          
Mondelez International, Inc.      

Aggravating Factors Referenced by the Government (Company Defendants):

Defendant Insufficient Cooperation Insufficient Remedial Measures
Cadbury Limited    
Mondelez International, Inc.    

Total Monetary Sanctions for the Action:    $13,000,000

Case Status:    Resolved


Disposition:    Cease and Desist Order

Date of Disposition:    01/06/2017

Mondelez International, Inc.

—  Total Monetary Sanctions for Defendant:    $13,000,000

—  Compliance Obligation:    No

—  Reporting Obligation:    No Applicable

—  Admission of Guilt/Acceptance of Responsibility:    Yes


Cadbury Limited

—  Total Monetary Sanctions for Defendant:    $0

—  Compliance Obligation:    No

—  Reporting Obligation:    No Applicable

—  Admission of Guilt/Acceptance of Responsibility:    Yes

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