On 6 January 2017, Mondelēz International, Inc. ("Mondelēz") entered into a settlement with the SEC to resolve charges under the books and records and internal control provisions of the Foreign Corrupt Practices Act ("FCPA") related to the actions of an India subsidiary of Cadbury Limited ("Cadbury"), before being acquired by Mondelēz in 2010. Mondelēz, which neither admitted nor denied the SEC's findings, agreed to pay a $13 million civil monetary penalty to settle the SEC's claims.

Mondelēz, a US-based food, beverage, and snack manufacturer formerly known as Kraft Foods, Inc., purchased Cadbury for $19 billion in February 2010. The SEC alleged that shortly before the acquisition, in January 2010, a Cadbury subsidiary in India ("Cadbury India") engaged an agent to help it obtain licenses and approvals to expand the company's operations at a chocolate factory there. Cadbury India allegedly retained the agent after a single meeting, without performing any other diligence on the agent. Between February and July 2010, the agent allegedly submitted five invoices totaling $110,446 to Cadbury India for work related to the application for government licenses. According to the SEC, the agent did not provide adequate documentary support for this work and did not have a written contract with Cadbury India. The license applications at issue were allegedly prepared by Cadbury India employees rather than the agent. After receiving payments from Cadbury India totaling approximately $91,000 (after the deduction of withholding taxes), the agent allegedly withdrew most of the funds in cash. During the time that Cadbury India engaged this agent, it received some of the licenses that it was seeking. As a result of this arrangement, Cadbury India's books allegedly did not reflect the agent's services adequately and the company's inadequate internal controls created a risk that the funds paid to the agent might be used for improper purposes.

Mondelēz did not have the opportunity to conduct complete due diligence, including anti-corruption due diligence, prior to its acquisition of Cadbury. While Mondelēz conducted extensive post-acquisition diligence between April and December 2010 that covered Cadbury's activities in India, this diligence allegedly failed to identify the relationship between Cadbury India and the agent until an internal investigation in October 2010 related to the agent. Mondelēz then required Cadbury India to terminate its relationship with the agent, cooperated with the SEC, and undertook extensive remedial actions, including implementing its global compliance programme at Cadbury and reviewing services provided by third parties to Cadbury India.

Mondelēz was held accountable for Cadbury India's activities here as a result of Mondelēz's acquisition of Cadbury. In addition, the SEC sought the sanctions here even though it alleged only books and records and internal control violations, but not that the funds were actually used for any improper purpose. This matter highlights the SEC's vigilance in pursuing FCPA violations of all kinds, and the need for sufficient anti-corruption due diligence in advance of a corporate merger or acquisition.

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