Note: Mondelez India was erstwhile known as Cadbury India.
“A civil settlement,
also termed a civil settlement, occurs when the plaintiff in a civil case
agrees to stop legal action and the right to pursue recourse in exchange for
agreed upon terms. The terms in a civil settlement may include payment or
an agreement to perform or cease actions.”
Business Standard
(January 10, 2017): “Mondelez, Cadbury to pay $13 mn to settle with SEC in
India bribery probe”
According to SEC:
SECURITIES EXCHANGE
ACT OF 1934 Release No. 79753 / January 6, 2017 and ACCOUNTING AND AUDITING
ENFORCEMENT Release No. 3841 / January 6, 2017.
Respondent I.e.
Modelez, Cadbury have submitted Offers of Settlement (without denying /
admitting the finding) with SEC and SEC have accepted it.
SEC Release states
Mondelez / Cadbury paid Agent for obtaining licenses and approvals for
production expansion of chocolate factory at Baddi , Himachal Pradesh, India.
It is believed that the agent may have paid to obtain in a improper way, licenses
and approval from Government.
The amount involved
and paid to the agent was USD 90,666 (after Withholding tax deduction).
Queries and Action
from Indian Regulatory Bodies
This method of payment
to contractor is adopted by MNC, to avoid getting mentioned under Foreign
Corrupt Practices Act.
Some questions remain
unanswered:
If agent paid part
amount to Government authorities then Mondelez India / Cadbury should be forced
to divulge the Agent Name / Government representative and the Amount paid to
Government Officer, if any.
Indian regulatory body
should impose penal sanction on Cadbury India for such dubious payments and
should ask them to disclose it in their Annual Report / Website that they
entered into Settlement of USD 13 million for reasons mentioned in the SEC
Release.
Is it a bribe payment?
It appears bribe
payment since SEC release states:
“Agent No. 1 formed a
sole proprietorship on January 1, 2010, located on the same premises as the
tile and marble business. On February 25, 2010, Agent No. 1 opened a bank
account for his new business at the State Bank of India.”
“From February 2010 to
July 2010, Agent No. 1 submitted five invoices totaling $110,446 to Cadbury
India for “providing consultation, arrange statutory/government prescribed
formats of applications to be filed for the various statutory clearances,
documentation, preparation of files and the submission of the same with govt.
authorities”
Conclusion
It seems India
have a long way to go when it comes to identification of such payments and take action on it.
Hope our regulators
Securities and Exchange Board of India, Company Law Board takes action on Mondelez
India.
Reference:
Civil Settlement
definition: https://www.reference.com/government-politics/civil-settlement-3afca5387f6c89d
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