Irresponsible. Misleading. Unwise… a Business, Innovation & Skills Committee was unsparing in its criticism of Kraft this week in a report over the handling of its £11.5bn takeover of Cadbury 15 months ago.

But it reserved particular scorn for Irene Rosenfeld, singling the Kraft CEO out for her “regrettably dismissive attitude” in refusing to show up to the committee’s inquiry.

Assessing, one year on, the impact of Kraft’s acquisition on Cadbury’s UK business and employees, the committee interviewed a panel of three senior Kraft executives: Kraft Foods Europe president Trevor Bond; UK & Ireland president Nick Bunker; and US-based corporate and legal affairs chief Marc Firestone.

But the report appeared to obsess over another no-show from Rosenfeld. She had “fallen short of an explicit contempt of the House”, said the committee, “but not by much”. (For context, the last time this happened was in 1957.)

Kraft’s decision not to include Rosenfeld in its delegation had been based on concerns, expressed in correspondence from Firestone, that Rosenfeld would be made a whipping boy, following “a remarkable level of rancor… in last year’s [BIS committee] hearing”. “There seems to be a desire to have a ‘star witness’ towards whom ill-founded allegations and insults can be made,” the correspondence added.

The committee insists this was a “total misrepresentation” of the committee’s motives, and showed “a distinct lack of judgement” by Firestone. “Considering the poor handling of Kraft’s takeover of Cadbury, we believe [the previous committee], showed great restraint in its [cross]-examination of Kraft.”

Yet the report acknowledges that Rosenfeld’s refusal to appear before the committee overshadowed any positive developments at Cadbury, including the fact that it has not only met but exceeded some of its key commitments, notably transferring its global centre of excellence for confectionery from Munich to Bournville, creating an extra 50 UK R&D jobs.

For some observers, Rosenfeld’s censure smacks of sour grapes. “The parliamentary committee seems fed up simply because the CEO of Kraft didn’t turn up to a couple of meetings,” says Mark Lynch, a partner at Oghma Partners. “It’s not like Kraft didn’t send anybody it did. I think there is a little bit of sour grapes about this.”

But the report does voice other concerns. And these, too, appeared to be drowned out by the clamour for Rosenfeld’s appearance. “Kraft’s behaviour during the takeover process was disgraceful,” Adrian Bailey, chairman of the BIS Committee, told The Grocer this week, referring to Kraft’s u-turn after promising to reverse Cadbury’s decision to shutter the Somerdale plant, only to close the facility within a matter of days.

“If a company trying to take over a British company makes assurances about policies it will put in place, it’s perfectly reasonable for those assurances to be made binding. Otherwise companies can spin any old story to get support,” he added, in support of recommendations from the Takeover Panel last May.

There are also concerns over “pay harmonisation” plans revealed to the committee, and Kraft’s failure to inform unions of its plans, contrary to its pledge “to engage in genuine union consultation”.

“They refused to share information,” Jennie Formby, Unite’s national officer for the food and drinks sector told The Grocer. “It’s not good enough to be patted on the head and told to go away and work harder. It’s not going to wash.”


Kraft: in hot water

Jan 2010 The Kraft board approves the takeover of Cadbury for £11.5bn, after making assurances it wouldn’t close the Somerdale plant
Feb 2010 Kraft says it will in fact close the Somerdale plant
April 2010 The previous BIS committee censures Kraft for “souring its relationship” with Cadbury staff. Kraft makes further assurances over UK jobs
May 2010 The Takeover Panel publishes its investigation into Kraft’s u-turn on Somerdale and announces proposals to make pre-takeover statements binding for defined periods in the future
December 2010 A new BIS committee decides to review Kraft’s performance in sticking to the assurances made to the previous committee
March 2011 Kraft’s Marc Firestone, Trevor Bond and Nick Bunker give oral evidence to the committee

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