Kraft gets SEC summons over Cadbury's ways

Kraft Foods has said it is facing investigation by the Securities and Exchange Commission (SEC) for possible corrupt practices in India by its arm, Cadbury.

In a regulatory filing, the company said it received an SEC summons relating to an investigation under the Foreign Corrupt Practices Act. “The subpoena...primarily relates to a Cadbury facility in India that we acquired in the Cadbury acquisition, and primarily requests information regarding dealings with Indian governmental agencies and officials to obtain approvals related to the operation of that facility,” the filing said. While it did not elaborate, Kraft Foods said, “We are cooperating with the US government in its investigation of these matters.”

Kraft Foods had last year acquired Cadbury, including its Indian operations, for $19.6 billion. In India, Cadbury has five factories in Maharashtra, Karnataka, Andhra Pradesh and Madhya Pradesh. A Cadbury India spokesperson declined to comment on the developments and referred the queries to his counterpart in Chicago, from where there was no immediate response.

In its SEC filing, Kraft Foods said after it acquired Cadbury in February, 2010, the firm began reviewing and aligning Cadbury’s operations with US and international standards, as well as Kraft Foods’ policies and practices. “Through our reviews, we determined that in certain jurisdictions, including India, there appeared to be facts and circumstances warranting further investigation. We have undertaken these investigations, which are ongoing,” the filing said. “While we cannot predict with certainty the results of these or any other legal matters in which we are currently involved, we do not expect that the ultimate costs to resolve any of these matters will have effect on our financial results,” it added.