Mondelez payments form focus of US Department of Justice investigation

The probe pertains to claims that Cadbury India has secured back-dated permissions for its Baddi factory to avail excise benefits

After studying law I vectored towards journalism by accident and it's the only job I've done since. It's a job that has taken me on a private jet to Jaisalmer - where I wrote India's first feature on fractional ownership of business jets - to the badlands of west UP where India's sugar economy is inextricably now tied to politics. I'm a big fan of new business models and crafty entrepreneurs. Fortunately for me, there are plenty of those in Asia at the moment.

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The US Department of Justice (DOJ) is looking into claims of bribe payments made by Mondelez’s Indian subsidiary in 2010.

A letter written by Mark Mendelsohn, of Paul Weiss, who is liaising with the DOJ on behalf of Mondelez, to former employees of the company states that the DOJ “expressed a view that bribery had indeed taken place”. The letter has been seen and reviewed by Forbes India. Mendelsohn is the co-chair of the Foreign Corrupt Practices Group, an organisation that works on FCPA compliance.
 
“In our meeting with Ms Sentilles and Mr Getter, they informed us that DOJ’s investigation is ongoing and [it] remains focused on the retention and payments to the consultant Daksh Associates & Consultants (“Daksh”) for its services in obtaining licences for Unit II of the Baddi plant in 2010.” Della Sentilles and Matt Getter work for the Department of Justice.

An April 2017 story published in Forbes India had revealed how Cadbury India had secured back-dated permissions for its Baddi factory to avail excise benefits. Emails accessed by a whistleblower showed that the decision to bribe government officials was taken with the knowledge of senior personnel in the company. The bribes were routed through Daksh. An internal investigation by the company led by consultants EY had confirmed that bribes had indeed been paid. As a result, the company terminated the services of several employees even though repeatedly denied that bribes had been paid.

Kraft acquired Cadbury in 2010. Mondelez was listed as a separate company in 2012.

The US Department of Justice investigation comes after the company paid $13 million (Rs 89 crore) in a January 2017 settlement with the Securities and Exchange Commission for violating the internal control and books and records provisions under the Foreign Corrupt Practices Act. The company neither admitted nor denied any wrong doing.

“Specifically, they are interested in certain of our clients’ knowledge of decisions and authorisations to retain Daksh; payments made to Daksh, including how such payments were recorded in the books and records of Cadbury Limited; and any details regarding Daksh’s interactions with government officials in order to obtain licences for Unit II of the Baddi plant,” the letter goes on to state.

Last, the letter states that DOJ is unwilling to give any binding legal assurances that they would not criminally prosecute any individuals.

Mondelez has steadfastly maintained that they have no information of the investigation. In an emailed statement the company said, ““We continue to cooperate with all authorities to address this matter, which relates back to 2010-11, through the administrative and judicial process. This includes providing our executives with appropriate legal support during the process. We firmly believe 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. We are not aware of any criminal proceedings having been initiated by any authority against our company or ex-employees.” The company has also not disclosed the investigation to the stock exchanges.

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