Cadbury under fire on US schools deal

CADBURY Schweppes faces an ethics audit by New York's chief financial regulator over what he calls an 'unfair and tainted' contract to place the company's Snapple juices at 1,200 schools in the city.

City comptroller William C. Thompson Jr has urged New York Mayor Michael Bloomberg to cancel the £94 million five-year deal negotiated on behalf of the city by the Octagon Group - a marketing consultant that also represents Cadbury Schweppes and is owned by the company's advertising agency.

Thompson, who is conducting an audit of the bid process, is almost certain to try to block the deal, paving the way for a long and costly court case.

Cadbury Schweppes, Octagon and the city officials in charge of the contract process all deny wrongdoing and claim that the deal was open to all bidders.

This assertion is disputed by about 100 firms, which are reportedly preparing to sue.

But that lawsuit would take a backseat to any legal challenge by Thompson, who has said that the contract was never publicly advertised, it shortchanged the city and raised 'serious conflict of interest questions'.

In a letter to Bloomberg on December 3 in which Thompson demanded to see documents concerning the awarding of the contract, Thompson alleged that Octagon did not follow legally required guidelines that would have put Cadbury on an equal footing with other bidders.