1. Top Executives Jump Out After Audit
Five top executives at the Indian unit of American company Bunge have resigned amid
an internal audit into possible financial irregularities at the world’s largest oilseeds
processor and owner of domestic edible oils brands Dalda and Amrit.
The company’s director Ashish Saxena and chief financial officer Anand Vora has quit
over what two senior executives with direct knowledge of the development described as
“management differences” arising out of the outcome of the audit. Two other directors of
the company — Sudhakar Rao Desai and Sanjay Jain — along with human resources
head Sangram Chavan have quit for better prospects, the senior executives said.
“The company recently completed a compliance audit and found some irregularities in
the setting up of the new oil processing plant at Kandla, Gujarat,” said one of the
persons quoted above. The person said the parent company had objected to the
manner in which its Indian subsidiary paid for the factory land in Kandla. Bunge was of
the view that the transaction may not be compliant with the US Foreign Corrupt
Practices Act (FCPA), an anticorruption law. There’ve Been Many Recent Cases
Saxena, the director, and Vora, the company’s chief financial officer, did not agree with
this analysis of the transaction, the person said.
Asked if some of the exits were an outcome of the investigation under the FCPA,
Bunge’s global spokesperson said the company does not comment publicly on the
reasons for employee departures or other personnel matters.
“All of Bunge’s operations are held to the highest ethical and financial reporting
standards… Bunge maintains transparent and accessible corporate governance

2. processes. The company considers any allegation of impropriety as serious, and
responds accordingly, taking necessary and responsible steps to investigate and
address issues. This is true in India, where we are investing to build a business for the
long term,” said the spokesperson. The problem arose because of a difference in
opinion on whether processes had been followed and not because of any allegation of
wrongdoing, both executives quoted earlier said. The FCPA prohibits US companies,
their subsidiaries and employees from bribing officials in the US and other countries to
enhance business. It also requires companies to keep books and records reflecting all
transactions.
There have been several instances of Indian units of US headquartered companies
coming under scrutiny because of suspicion of lack of compliance with the FCPA. In
March this year, the world’s largest brewery Anheuser-Busch InBev said it is
investigating its joint venture in India for possible FCPA violations. Last year,
Bourbonmaker Beam Inc too said it was reviewing whether its business in India was in
compliance with the FCPA.
Famously, the world’s largest retailer Walmart too disclosed last November that it is
investigating possible violations of the anti-bribery law in India, Mexico and other
countries. In India, the probe resulted in the suspension of its chief financial officer and
the entire legal team as well as a freeze on expansion plans.
In a survey by Ernst & Young in 2012, nearly three-fifths of respondents had said their
companies had been subjected to fraud during the course of the previous year. “With
more than 75% of the respondents working in MNCs, less than half of them were aware
of global ant graft legislations, such as the FCPA and the UK Bribery Act,” said the

3. report, titled ‘Fraud & Corporate Governance: Changing Paradigm in India’.
“Kickbacks are given to win or retain business, to obtain approvals from government
agencies, and to influence people to make favorable decisions,” said Arpinder Singh,
partner & national director (fraud investigation & dispute service) at E&Y, who authored
the report. A senior executive of a large American MNC, on the condition of anonymity,
said in India, MNCs especially American companies cannot buy themselves out of
trouble. They can only avoid trouble by spending more on high-integrity employees and
high-quality plants and processes. “Patience is another thing we have to factor in our
costs, because we just can’t afford to pay speed money to expedite permissions.”
Giving an example of how rigorously American companies follow rules, the executive
says, “If the Indian law says vanaspati has to melt at 41 degrees Centigrade, an
American company has to adhere to it. There are no two ways about it.”
India is one of the largest markets for vegetable oil, and its consumers are shifting
increasingly to branded products for quality and food safety reasons. More than a
decade old in India, Bunge entered the market by acquiring Dalda Vanaspati from
Hindustan Unilever in 2003.
Bunge, among the top sugar and ethanol producers, also bought the edible oils
business of Amrit Banaspati Company for Rs. 320 crore two years ago, which gave it
brands such as Gagan and Ginni. The Amrit acquisition also added over 200,000
distribution points in the north and northeast regions. Bunge has edible oil
manufacturing and refining plants at Bundi in Rajasthan and Trichy in Tamil Nadu.
While Bunge has been importing crude soya oil from its crushing operations in the US
and South America for the Indian market, this year it completed setting up a new plant

4. with 1,200 tonnes per day capacity at Kandla in Gujarat.
White Plains, New York-based Bunge clocked Rs. 26,342 crore in sales of edible oils,
bakery fats and vanaspati, or hydrogenated vegetable cooking oils, during the fiscal
ended March 2012, growing 77% with a net profit of Rs. 80 crore.
CREATED BY TEAM PGC
PROGLOBAL CORP
WWW.PROGLOBALCORP.COM
Proglobalcorp.wordpress.com
Email:proglobalcorp@gmail.com