Departure of PepsiCo Lawyer Is Focus of SEC Probe
By Andrew Ackerman, Joe Palazzolo and Jennifer Maloney
Federal securities regulators are investigating an allegation by PepsiCo Inc.'s former top lawyer that the company fired her in retaliation for the way she handled an internal probe into potential wrongdoing in Russia, according to people familiar with the matter and internal documents.
Maura Smith, who was PepsiCo's general counsel from May 2011 to June 2012, oversaw outside lawyers hired by the company to dig into business practices at Wimm-Bill-Dann, a big Russian maker of dairy products and juices that PepsiCo spent about $5 billion to acquire in 2011, the documents show.
The Securities and Exchange Commission is looking at allegations that Ms. Smith was ousted because her work on the probe rankled others at PepsiCo, people familiar with the matter said. The inquiry is at an early stage and is focused on the circumstances of Ms. Smith's dismissal, the people said, and may not lead to any enforcement action.
"PepsiCo did not engage in any retaliatory conduct and any allegations to the contrary are untrue," the company said in a statement. "The company is cooperating with the SEC investigation." PepsiCo said Ms. Smith's departure was not related to "any dispute or disagreement" over the internal investigation.
PepsiCo said it looked into allegations of misconduct at the Russian company believed to have taken place before it bought the firm. "As soon as PepsiCo became aware of the conduct, it fully investigated and remediated the issues, none of which were material to PepsiCo's financial statements," PepsiCo said.
When PepsiCo announced Ms. Smith's departure in 2012, the company said she was resigning to pursue other opportunities. Her separation agreement, signed four months after her exit, entitled her to nearly $6 million in cash payments, regulatory filings show. The agreement prevents the company and Ms. Smith from disparaging one another.
Some people familiar with Ms. Smith's tenure at PepsiCo described it as stormy and marked by conflicts with other executives. They said that Ms. Smith's employment had been in question for months leading up to her exit.
Others familiar with Ms. Smith's time at the firm said she was an experienced general counsel who quickly endeared herself to PepsiCo Chief Executive Indra Nooyi. But executives turned on her as the Russia investigation wore on, they said. Before joining the Purchase, N.Y., company, Ms. Smith served as general counsel for eight years at International Paper Co. and for five years at Owens Corning.