Mondelez International Inc. has confirmed news reports that they might be facing a civil enforcement action from the U.S. regulators. The snack-food giant admits that this has been a long-running investigation of payments related to its Cadbury brand manufactured in India.
Reports from Reuters show that on Friday, Mondelez received a Wells notice last February 11. The regulatory filing indicated that the U.S. Securities and Exchange Commission (SEC) staff are planning to recommend an enforcement action. This was for "violations of the books and records and internal controls provisions of the Exchange Act in connection with the investigation."
STL Today reports that Mondelez has plans to submit its response to the notice it has received from the SEC. The notice will allow them a chance to defend why charges weren't merited before they have filed. At the same time, this will help them potentially convince the SEC that the case will not be pushed.
On Friday, the company said that they plan to continue cooperating with both Indian and U.S. goverments as investigation of the matters take place. They are willing to attend ongoing meetings with the U.S. government so that a potential conclusion may be resolved in the investigation.
While Mondelez has received the Wells notice, it doesn't necessarily guarantee action from the SEC. As reported by the Wall Street Journal in 2013, around 20% of individuals who received a similar warning ended up not facing charges.
The investigation being done is focused on the Baddi-based plant for the company's Cadbury candy brand. Before it changed its name to Mondelez in 2012, the company was called Kraft Foods Inc. In 2010, they acquired Cadbury PLC for a deal valued around $19 billion. The company changed its name to Mondelez after they spun off its North American grocery business.
On Feb. 1, 2011, the company announced that they had received a subpoena from the SEC in relation with their facility in India for having violated the Foreign Corrupt Practices Act. The subpoena paved way for an investigation and for the company to provide information regarding dealings with the Indian government officials and agencies so approvals for the plant may be obtained. This was after its lawyers reported that Mondelez had used a consultant to bribe officials in exchange of receiving factory approvals and permits.
