Mondelez International is to pay a fine as part of a settlement with the US Securities and Exchange Commission over the snack giant’s internal controls – although the deal carries no admission what is now a subsidiary in India paid a consultant to bribe local officials to secure approval for a plant in the country.

The Oreo and Cadbury owner is to pay a civil fine of US$13m to settle a probe into the expansion of a factory in the northern state of Himachal Pradesh.

Under the terms of the settlement with the SEC, Mondelez has neither admitted nor denied charges its Cadbury India subsidiary paid a consultant who was suspected to have bribed government officials and possibly top state politicians to obtain licenses and approvals for the project at the factory.

“Mondelez International Inc. and Cadbury Limited are pleased to have reached an agreement with the SEC to settle charges related to internal controls and books-and-records provisions of the Foreign Corrupt Practices Act, without admitting or denying the charges. As part of the settlement, Mondelez International Inc. has agreed to pay a civil penalty of $13m to resolve the investigation,” the company said in a statement.

The affair dates back to early 2010 and centres on a plant in Baddi in Himachal Pradesh.

In a so-called “consent order” posted on the SEC’s website, the regulator said Cadbury India had failed to set up adequate controls to monitor an agent employed to secure licences for work at the plant – and said Mondelez, which subsequently bought the UK-based confectioner, was responsible for the poor controls.

The order stated “in early 2010” Cadbury India had “retained an agent to interact with Indian government officials to obtain licenses and approvals for a chocolate factory” in Baddi.

The SEC said Cadbury India failed “to conduct appropriate due diligence on, and monitor the activities of” the agent and “created the risk” that funds paid to the agent “could be used for improper or unauthorised purposes”.

The SEC also said Cadbury India’s books “did not accurately and fairly reflect the nature of the services” rendered by the agent. Moreover, it said the company “did not devise and maintain an adequate system of internal accounting controls” that would have been “sufficient to provide reasonable assurances that access to assets and transactions were
executed in accordance with management’s authorisation and specifically to detect and prevent payments that may be used for improper or unauthorised purposes”.

The SEC added: “As a result, Cadbury violated Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934.  As a result of Mondelez’s subsequent acquisition of Cadbury’s stock, Mondelez is also responsible for Cadbury’s violations.”

Mondelez forerunner Kraft Foods Inc acquired Cadbury in February 2010. Kraft Foods spun off its North American grocery business into a separate business in 2012 and renamed itself Mondelez International.

However, the details of the consent order used the company’s current name of Mondelez to detail the fine, the agreement and the company’s actions after it acquired Cadbury. The order stated between April 2010 and December 2010, Mondelez “engaged in substantial, risk-based, post-acquisition compliance-related due diligence reviews” of Cadbury’s business. The reviews took in 24 countries, including India. However, the order said the reviews “did not identify the relationship” between the agent and Cadbury India.

However, in October 2010, after an internal investigation on the agent, Mondelez ended the relationship with the agent.