Kraft Heinz will pay $62 million to settle the charges.


When Kraft merged with Heinz In 2015, there had to be another chance for private equity firm 3G Capital to apply the same brutal cost savings that it has already implemented at Heinz and used in the consumer goods industry. But federal regulators said the strategy was pushed too far at Kraft Heinz.

On Friday, the Securities and Exchange Commission said it accused the packaged food giant and two former executives of a “plan” to inflate these cost savings. Kraft Heinz will pay $62 million to settle the case.

“Kraft and its former executives have been accused of engaging in improper expense management practices spanning many years, which included numerous misleading transactions, fraudulent cost savings of millions, and a widespread failure in accounting controls,” said Anita Bandy, deputy director of the SEC’s enforcement division. , in a statement.

“Kraft and its former executives are held accountable for putting the pursuit of cost savings above compliance with the law,” he added.

Kathy Krenger, spokesperson for the company, said Kraft Heinz was “fully cooperating” with the SEC investigation.

“The internal control weaknesses we identified and disclosed in 2019 were fully remedied in 2020,” Ms Krenger said. “Kraft Heinz is much stronger today thanks to the actions we took and built into our company culture.”

The company neither acknowledged nor denied the SEC’s findings.

Kraft Heinz set performance goals For its acquisition division, the SEC said the company is committed to delivering the cost savings it promised investors after the merger. in his case. But by 2017, Kraft Heinz had “largely exhausted” its ability to save even more from the 2015 merger, just as it was facing inflationary headwinds.

Eduardo Pelleissone, former chief operating officer of Kraft Heinz, continued to push for “unreasonable” cost savings, litigation claims and chapter 59 recognizing the transaction as inappropriate.

The lawsuit accuses Mr Pelleissone of ignoring the warning signs of accounting misconduct and of failing to devise effective accounting controls, Klaus Hofmann, the company’s former purchasing manager.

Mr Pelleissone agreed to a total fine of $314,211. Mr. Hofmann agreed to a $100,000 fine and be barred from serving as an officer or director of a public company for five years.

Mr. Pelleissone and Mr. Hofmann’s lawyers did not immediately respond to requests for comment. No man admitted he had done wrong.

Kraft Heinz first announced its SEC investigation in early 2019, the same day it announced that it would write the Kraft and Oscar Mayer brands worth more than $15 billion and send their shares in a queue. As the company tries to resolve issues with regulators, Postponed its annual report twice and announced more grades of its well-known brands.

Warren Buffett, who worked with 3G in Berkshire Hathaway’s 2015 merger, has since “overpayment” for the packaged food giant. Berkshire owns just over a quarter of the company.

A number of senior executives have left Kraft Heinz since its 2019 announcement. Bernardo Hees, David Knopf, who served as CEO and was previously responsible for finance.


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