Mondelez India, part of American confectionery company Mondelez International is being investigated by the Central Bureau of Investigation, the country's foremost investigative police agency. Known for its Cadbury brand of chocolates, Mondelez India is being probed to verify whether it paid bribes to government officials and politicians.
The company, formerly known as Cadbury India is alleged to have paid bribes to officials to help save taxes to the tune of almost £60m (€77.43m, $84.9m) by allegedly showing that it ran a "phantom factory" in the northern state of Himachal Pradesh.
In January 2016, the CBI is understood to have sent letters to people in connection with the investigations and these people could be questioned with regards to the ghost factory. This is not the first time the Indian subsidiary is being pulled up for the alleged factory. In March 2015, India's tax authorities had slapped the confectioner with a hefty bill after accusing it of claiming excise benefits for the factory. However, this is the first time that the bribery angle is being investigated.
According to reports, sources said that the CBI's anti-corruption department initiated the probe after the US government submitted letters rogatory seeking help from Indian authorities. Meanwhile, a Mondelez spokesperson in response said, "A compliant and ethical corporate culture, which includes adhering to laws and industry regulations in all jurisdictions in which we do business, is integral to our success. This pertains to an issue that relates back to 2010-11.
"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 will cooperate with all authorities to address this matter through the administrative and judicial process."
"It would be inappropriate for us to comment at this time since the matter is in the legal domain. For information on the issue, please consult our most recent 10-K disclosure. We do not have anything further to share'', the spokesperson said, according to the Economic Times.
This enquiry comes at a time, when the US Securities Exchange Commission and Department of Justice, is probing the parent, Mondelez International for breaching the Foreign Corrupt Practices Act in India. On 11 February the parent company was issued a Wells notice, indicating that an enforcement action could be initiated for "violations of the books and records and internal controls provisions.