Friday 21st June, 2019
Procurement practices at the food giant Kraft Heinz are being investigated by the US Securities and Exchange Commission (SEC). In the company’s latest annual report Kraft Heinz said “multiple employees in the procurement area engaged in misconduct”.
As part of the investigation Kraft Heinz was required to restate financial reports for the years 2016, 2017 and the first nine months of 2018 relating to supplier contracts in the procurement area.
“Certain employees in our procurement organisation engaged in misconduct and circumvented controls that included withholding information or directing others to withhold information related to supplier contracts that affected the accounting for certain supplier rebates, incentives, and pricing arrangements, in an attempt to influence the achievement of internal financial targets that became or were perceived to have become increasingly difficult to attain due to changes in our business environment,” said the company, as quoted in Supply Management.
This resulted in an understatement of the cost of products sold totalling $208m, said Kraft Heinz. An internal investigation is now complete.”
Reuters reported,“The company is taking action to improve our policies and procedures and will continue to strengthen our internal financial controls,” Kraft Heinz spokesman Michael Mullen said.