Cargill Fined for "Understating Income"

The international grain-trading firm Cargill Inc. was fined $10,000-the maximum penalty -by a federal judge in midNovember for understating its taxable income by a total of $7.2 million in 1975 and 1976. Cargill, which last year declared profits of around $120 million on sales of around $13 billion, according to The New York Times, will also pay approximately $4 million in back taxes and a civil penalty of about $1.5 million.

Cargill fraudulently neglected to report about $5 million in "dividends" from overseas subsidiaries which were disguised in the firm's books as overcharges on the sale of grain from one subsidiary to another, according to Daniel Schermer, Assistant U.S. Attorney in Minneapolis. Although a Cargill spokesperson called the case the result of a "complex series of transactions involving affiliated firms abroad." Schermer pointed out, "We don't bring people into court on bookkeeping errors."

A special grand jury investigation of Cargill's tax returns for 1972 through 1976, launched when the income understatements just came to light in 1977, will now be dropped and will result in no further charges being brought against Cargill or its employees, under the terms of the firm's plea agreement with federal officials.

Schermer would not comment on whether the investigation had uncovered other misdeeds, or on how long the plea bargaining had gone on.