Federal regulators announced that Kraft Heinz has agreed to pay $62 million to settle improper accounting charges. Two former senior executives have also agreed to pay civil penalties.
Kathy Krenger, global chief communications officer, The Kraft Heinz Co., issued this staement following the settlement annoucement:
“Kraft Heinz reached a settlement with the U.S. Securities and Exchange Commission on September 3, concluding and resolving in its entirety the previously disclosed SEC investigation relating to activities in our procurement area prior to 2019. As reflected in the SEC’s order, those activities included misconduct by certain procurement employees who engaged in manipulation of supplier agreements in order to achieve group and individual performance targets tied to bonuses. The impact of the 59 transactions at issue in the Order did not affect the company’s reported adjusted EBITDA by more than 1% in any reporting period. Under the terms of the settlement, we have agreed to pay a civil penalty of US$62 million without admitting or denying the findings in the SEC’s administrative order. We recorded an accrual for the full amount of this penalty in the second quarter of 2021, which was reflected in our 10-Q financial results. We have also agreed to refrain from future violations of specified provisions of federal securities laws and rules.
“We have fully cooperated with the SEC throughout its investigation and took prompt and extensive remedial action and proactive steps to improve our internal policies, procedures, and internal controls over financial reporting. The internal control weaknesses we identified and disclosed in 2019 were fully remediated in 2020. Kraft Heinz is much stronger today because of the actions we took and embedded into our company culture.”