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Friday, April 21, 2017

MONDELEZ INDIA (FORMERLY CADBURY INDIA) BRIBERY CASE MAY SEE TOP GUNS FACE OFF IN THE USA.

BY DINESH NARAYANAN, ET BUREAU | UPDATED: APR 21, 2017, 09.20 AM IST

NEW DELHI: It has been a long-running battle for snack maker Mondelez International, Inc. The company, maker of button-shaped Gems candy-chocolate and Dairy Milk chocolate bars, has been trying to convince the US and Indian regulators for seven years that allegations of it having set up a phantom factory in Himachal Pradesh and paid bribes to regularise it were just that — mere allegations. 
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ET now learns that the investigations both in India and the US are nearing an end. A team from the US Department of Justice (DOJ) may visit India in the next few days to interview former and current employees of Mondelez India, formerly Cadbury India, according to a source at the Central Bureau of Investigation (CBI) which is assisting the US regulator. 

In January this year, US markets regulator the Securities and Exchange Commission (SEC) had charged Mondelez with poor internal controls and violation of the Foreign Corrupt Practices Act (FCPA) in India. Mondelez agreed to pay $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. 


Apart from an anti-corruption unit of the CBI assisting DOJ, the Indian agency's local unit in Himachal Pradesh and India's Central Vigilance Commission are also conducting separate investigations under the Indian Prevention of Corruption Act of 1988. An investigation by the excise department had found the company and several of its officials guilty and imposed heavy fines on all of them.The company is contesting the excise order at the Customs, Excise and Service Tax Appellate Tribunal. 

The case may also pit two of the most celebrated FCPA personalities against each other — Daniel Kahn who joined the DOJ in 2010 and Mark Mendelsohn who left the department in the same year for private practice. Kahn is known as one of the most successful FCPA enforcers while Mendelsohn is considered the architect of the DOJ's FCPA enforcement programme. The DOJ's investigation, headed by Kahn, chief of FCPA unit, began in 2010 when a whistle blower who worked at Mondelez (then Cadbury) alerted the department as well as the SEC. Kahn, a rookie at the DOJ then, was the person the whistle blower first engaged with, the whistle blower told ET. 

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A blog called The FCPA Blog which documents enforcement actions under the eponymous law says Kahn was the lead prosecutor in 10 major cases, including Alstom. It said the engineering company paid $772 million in criminal penalties — the biggest criminal fine ever levied for FCPA offences and the second-biggest FCPA. enforcement action overall

In an emailed response to ET's queries, Kahn said he was not authorised to comment but a spokesperson for the DOJ would get back. Peter Carr in the office of public affairs, DOJ, wrote to ET: "As a matter of policy, the department generally neither confirms nor denies whether a matter is under investigation." 


A source at India's CBI told ET on condition of anonymity that "all investigations are likely to conclude by month end''. Last month, the CBI had sent out letters to former and current employees named by DOJ to be present at the agency's headquarters in Delhi on April 17. However, last week they were informed that they need not come as the hearing may be held on a later date. 
Those letters set off a flurry of activity within Mondelez in the US as well as India. Mondelez has hired Mendelsohn, FCPA specialist and partner at the law firm Paul, Weiss to handle the case. "DOJ stud Mark Mendelsohn headed to Paul Weiss'' is how the Wall Street Journal headlined his move in 2010 and described FCPA litigation as "a sizzling hot practice area". 

His profile on the web site of Paul, Weiss says he is "internationally acknowledged and respected as the architect and key enforcement official of DOJ's modern Foreign Corrupt Practices Act (FCPA) enforcement program". Mendelsohn did not respond to ET's message left with his secretary. 

Mondelez was surprised by the CBI letter and Mendelsohn personally spoke with those who had received it, according to two people with direct knowledge of the matter. 


A Mondelez spokesperson admitted to ET that it was aware that some of the former and current employees had received intimations from the CBI. In a written reply to ET's queries regarding the DOJ starting criminal proceedings against the company, the spokesperson 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 CBI source said DOJ officials may visit India soon and the employees would be called then for interviews. The agency had sent a report to the DOJ last year after the US regulator sent a letter rogatory in January 2016. A letter rogatory is a formal communication from one country requesting another for help in investigations in the latter's jurisdiction. 

The US request and the ensuing CBI action had come close at the heels of an ET story on December 8, 2015 which used evidence from Mondelez's own investigations, internal emails and documents etc to piece together how it may have bribed government officials and possibly top politicians. It showed how Mondelez's top management in the US knew about the irregularities at least three months before the SEC-DOJ began their probe. 


Mondelez had ordered an internal forensic investigation after allegations surfaced regarding the bribe payments. According to one internal communication between company officials, the investigation unearthed evidence that "the allegations regarding improper payments to government officials appear to be wellfounded" 



Read more at:
http://economictimes.indiatimes.com/articleshow/58287616.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst



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