Is Kraft working for Cadbury? - Business, Innovation and Skills Committee Contents

2  Kraft representation before the Committee

7.  When our predecessor Committee held its inquiry into the Cadbury takeover, it wanted to hear evidence from Irene Rosenfeld, the Chairman and CEO of Kraft. However, Ms Rosenfeld declined to appear before that Committee. In its Report the Committee regretted that decision,

"not least because the statements regarding Somerdale's future […] were made and announced by her. Irene Rosenfeld's attendance would have given an appropriate signal of Kraft's commitment to Cadbury in the United Kingdom and provided the necessary authority in respect of the specific assurances offered to us during our evidence session."[16]

8.   At the start of our inquiry we again invited Irene Rosenfeld to appear before the Committee.[17] Our initial invitation made it clear that such an appearance would be arranged to accommodate her many work commitments. The response, from Marc Firestone, Executive Vice President, Corporate and Legal Affairs for Kraft, stated that Kraft would be:

pleased to provide an update to the Business, Innovation and Skills Committee on progress since my colleagues and I first appeared before the Committee in March 2010

and that

Ms Rosenfeld will ensure that the most appropriate people from Kraft Foods are available to supply the information you have requested.[18]

9.  He further said that he would again lead the team appearing before the Committee, arguing that such a team would combine "the seniority and knowledge needed to answer questions authoritatively and to the level of detail that will be most helpful to the Committee's deliberations." The response did not, however, address the fact that the invitation had been extended to Ms Rosenfeld. Mr Firestone would have been welcome to give evidence alongside Ms Rosenfeld, as together they would have been in a position to provide the maximum level of authority without compromising on the depth of available information.

10.  In the Committee's response, we expressed our disappointment at the continued refusal of Kraft's CEO to appear. The reply, this time from Ms Rosenfeld herself, said that she shared a "desire to reinforce Kraft's commitment to Cadbury and its heritage with the Committee." However, she again declined to appear, saying that the appropriate representatives were those "closest to the market and to [Kraft's] business plans" and that Mr Firestone and Mr Bond would provide continuity from the previous session.[19]

11.  Our final invitation offered Ms Rosenfeld the option of an evidence session by video-link. The reply from Kraft failed to address the offer of a video-link appearance, and expressed disappointment at the further request, stating that "the repeated demands for Ms Rosenfeld to appear in person are regrettable." It continued:

Based on the experience of last year's hearing and recent comments by some Committee members, there seems to be a desire to have a 'star witness' towards whom ill-founded allegations and insults can be made, with little or no attempt to discuss the facts and look rationally into the evidence. Indeed, a review of the transcript from last year's hearing shows that it went far beyond spirited debate to a remarkable level of rancor. (For example, please see Questions 189 and 199.)[20]

12.  This was a total misrepresentation of the Committee's reasons for inviting Ms Rosenfeld, which were based on her capacity as Chairman and Chief Executive Officer to speak with maximum authority for the company. It also omitted to address our offer of evidence by video link. The description of the Committee's "motive" for inviting Ms Rosenfeld in our view fell short of an explicit contempt of the House, but not by much. The manner and tone of the letter was unacceptable and showed a distinct lack of judgement by Mr Firestone. Considering the poor handling of the takeover of Cadbury by Kraft, we believe that our predecessor Committee, far from descending into rancour, showed great restraint in its examination of Kraft executives.

13.  When Kraft's witnesses came before the Committee, they again suggested that our invitation to Ms Rosenfeld was based on a desire to personalise the issues.[21] This simply was not the case. Our reason for wanting her to appear before us was based entirely on the authority which comes with her position as Chairman and CEO of the company. As Mr Firestone conceded, the authority to close factories—including those in the UK—rested not with him but primarily with Ms Rosenfeld.[22]

14.  In a BBC news interview after her visit to Bournville in October 2010, reported in the Daily Telegraph, Ms Rosenfeld was asked whether she was unable to make more of a commitment on manufacturing beyond the two-year commitment offered in March 2010, to which she reportedly said, "That's correct."[23] According to the Daily Telegraph report, "she added that it was hard to say whether, overall, the merger of the two companies would result in a net loss or a net gain in jobs. 'It will vary from area to area. I think most importantly though, we do expect that the combination will enable the combined company to deliver growth on both the top line and the bottom line that is well in excess of the growth of any of our peers.'"

15.  This is precisely the type of comment on which we would have wanted to give Ms Rosenfeld the opportunity to comment directly to us.

16.  The areas that principally concern this Committee in relation to Cadbury are Kraft's company strategy and its intentions with regard to UK jobs, and it is Irene Rosenfeld, as its Chief Executive Officer and Chairman, in whom Kraft has invested the principal authority to make announcements on such matters. For that reason, we believe that she should have made herself available as her company's principal witness. The manner of her repeated refusal to appear before a committee of Parliament demonstrates a regrettably dismissive attitude to a National Parliament—an attitude which we trust Kraft will rapidly take action to shed.

17.  It was deeply frustrating that so much time was spent on the issue of Ms Rosenfeld's non-attendance which ultimately overshadowed some of the positive developments in Cadbury. That situation could have been avoided had Kraft taken a more positive role in its engagement with the Committee. If Kraft's decision was driven by advice on public relations, that decision backfired.

16   Conclusion 1 Back

17   The full correspondence has been published on the Committee website at: Back

18   Ev 25 Back

19   Ev 26 Back

20   Ev 26 Back

21   See in particular Qq 39-40 Back

22   Q 14 Back

23   Daily Telegraph, 9 October 2010, 'Kraft chief refuses to rule out further cuts' Back

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Prepared 23 May 2011