Dive Brief:
- The SEC is gearing up civil charges against Mondelez International after "a long-running investigation of payments its Cadbury unit made in India," according to sources cited by The Wall Street Journal.
- The most serious allegations involve a $90 million tax break, spread out over a decade, that stemmed from the second-floor addition to Cadbury's plant in Baddi, India, which Mondelez claimed as a new, independent unit to secure a tax break granted to companies that built new plants in that region by March 31, 2010.
- When Cadbury's lawyers realized various licenses and approvals would be needed just a few months before the deadline, Cadbury paid consultant fees to handle everything quickly, and those fees were allegedly passed on to Indian officials as bribes, according to a report from internal investigators.
Dive Insight:
Mondelez has cooperated with the SEC's investigation, and "Mondelez’s lawyers from Baker & McKenzie have furnished SEC attorneys and federal prosecutors with thousands of pages of documents and other evidence, according to the people familiar with the matter," The Wall Street Journal reported.
SEC and Mondelez are still in settlement talks, and a deal could fall through at any time, the sources said.
"In March, an Indian tax commissioner fined Cadbury more than $90 million, rejecting the company’s argument that the addition of a second floor was the legal equivalent, for tax purposes, of a new plant," acording to The Wall Street Journal. But Cadbury is appealing the commissioner's order.