Kraft, former executives, are paying greater than $ 62 million to pay SEC charges – company insurance
(Reuters) – Kraft Heinz Co. and two former executives have agreed to pay more than $ 62 million to settle fees they forged with supplier contracts to create cost savings in a multi-year accounting system, shared the US Securities and Exchange Commission on Friday with.
The food company committed a series of accounting misconduct from the final quarter of 2015 through the end of 2018, in which it inappropriately inflated key investor earnings, the SEC said.
The alleged wrongdoing began as a result of a "cost savings gap" that led to Heinz's merger with Kraft in 2015, and continued for years under pressure to deliver on promises that the new company would "deliver certain cost savings" according to SEC documents .
Kraft corrected its financial data in June 2019 after launching an SEC investigation and corrected $ 208 million in misappropriated cost savings from nearly 300 transactions, the regulator said.
Kraft, who neither admitted nor denied the SEC's findings, said in a statement that it fully cooperated with the agency's investigation and took "remedial and proactive steps" to strengthen its financial reporting policies and controls.
The Chicago-based company agreed to pay a civil fine of $ 62 million and not commit future violations under its agreement with the SEC. Kraft recorded the penalty in the second quarter of 2021, the statement said.
Former Chief Operating Officer Eduardo Pelleissone, accused of negligent fraud prevention and other control violations, agreed to pay a fine of $ 300,000 and an additional $ 14,000 to disgorgement.
Former Chief Procurement Officer Klaus Hofmann agreed to pay $ 100,000 and was banned from serving as an officer or director of a public company for five years in a settlement pending court approval.
None of the officers have admitted or denied the results of the SEC. Lawyers for both did not immediately respond to requests for comment.
Warren Buffett's Berkshire Hathaway Inc. owns approximately 26% of Kraft Heinz. The prices of Kraft shares hardly changed on Friday.