The Securities and Exchange Commission (SEC), the US regulator, is probing Kraft Foods Inc’s takeover of Cadbury Plc’s Indian subsidiary for a possible violation of foreign bribery laws.

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SEC is investigating under the US Foreign Corrupt Practices Act, or FCPA.

Kraft acquired the global business of the British confectioner Cadbury for $19.7 billion in January 2010.

Following this, Cadbury’s Indian subsidiary, Cadbury India, became a wholly owned subsidiary of Kraft.

The SEC sent a subpoena (court summon) to Kraft on February 1, 2011, which charges Kraft with contravening the FCPA, which prohibits payment of bribes to foreign officials to retain or obtain businesses. The regulator is seeking information about an Indian facility that Kraft got with the buyout.

But there is no clarity as to which of the five facilities (two in Maharashtra, one each in Himachal Pradesh, Karnataka, and Madhya Pradesh) are under the scanner.

In a recent SEC filing, Kraft has said it is cooperating with the US government in the investigations.

“On February 1, 2011, we received a subpoena from the SEC. The subpoena, issued in connection with an investigation under the FCPA, 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. We are cooperating with the U.S. government in its investigation of these matters,” Kraft said in the filing.

Cadbury India and Kraft Foods did not respond to email queries.

Another email sent to Anand Kripalu, president - South Asia and Indo-China and managing director, Cadbury India, also remained answered as did an email sent to Kraft Foods Inc.

Giving details of the acquisition, Kraft said in the filing, “Under the terms of our final offer and the subsequent offer, we agreed to pay Cadbury shareholders 500 pence in cash and 0.1874 shares of Kraft Foods Common Stock per Cadbury ordinary share validly tendered and 2,000 pence in cash and 0.7496 shares of Kraft Foods common stock per Cadbury ADS validly tendered. This valued Cadbury at $18.5 billion, or approximately £11.6 billion (based on the average price of $28.36 for a share of Kraft Foods Common Stock on February 2, 2010 and an exchange rate of $1.595 per £1.00).

“On February 2, 2010, we acquired 71.73% of Cadbury Shares for $13.1 billion and the value attributed to non-controlling interests was $5.4 billion. From February 2, 2010 through June 1, 2010, we acquired the remaining 28.27% of Cadbury Shares for $5.4 billion. We had a $38 million gain on non-controlling interest acquired and recorded it within additional paid in capital. “

The company is paranoid about its image in the business. “Legal claims or other regulatory enforcement actions could subject us to civil and criminal penalties that affect our product sales, reputation and profitability,” the company said in the filing.

Closer home, in January 2011, the income tax department wrote to Cadbury India seeking information on its global acquisition by the US-based Kraft Foods Inc.

The department sought a copy of the sale and purchase agreement or share purchase agreement between Kraft and Cadbury, to ascertain tax evasion in the acquisition, if any, was made. A public interest litigation sought to know whether Kraft had escaped payment of taxes while acquiring Cadbury’s India business.

Some of Kraft’s well-known brands include Oreo, Toblerone, Tang, Milka, Chips Ahoy, Halls and others. Cadbury India sells Dairy Milk, 5-Star, Perk and Bournvita brand of products.