Chicago-based spirits maker Beam Suntory Inc. agreed Monday to pay more than $8 million to resolve Foreign Corrupt Practices Act charges for improper payments by its Indian subsidiary.
Beam resolved the SEC’s civil charges without admitting or denying the allegations.
The SEC settled the enforcement action through an internal administrative order (pdf) and didn’t go to court.
According to the SEC’s order, from 2006 through 2012 Beam’s Indian subsidiary “used third-party sales promoters and distributors to make illicit payments to government employees.”
The purpose was to “increase sales orders, process license and label registrations, and facilitate the distribution of Beam’s distilled spirit products.”
The SEC said the Indian subsidiary reimbursed the third-parties for the illegal payments through fabricated or inflated invoices, and then falsely recorded the expenses at the subsidiary level.
The expenses were then consolidated into Beam’s books and records.
Beam also failed to devise and maintain a sufficient system of internal accounting controls, the SEC said.
The $8 million penalty consisted of disgorgement of $5.26 million, prejudgment interest of about $917,000, and a civil penalty of $2 million.
In 2011, London-based liquor giant Diageo plc paid the SEC more than $16 million to resolve FCPA offenses that stretched over six years and involved bribes to foreign officials in India, Thailand, and South Korea.
According to data provided by FCPA Tracker, two other spirits makers have ongoing FCPA-related investigations — AMBEV S.A., the Brazilian unit of Anheuser-Busch InBev, and New Jersey-based Central European Distribution Corporation.
Beam Suntory Inc., a subsidiary of Suntory Holdings of Osaka, Japan, was created in 2014 when Suntory bought Beam Inc.
Among Beam Suntory’s brands are Jim Beam, Maker’s Mark, Sauza, Courvoisier, Canadian Club, and Teachers.
Beam Inc. first disclosed the FCPA investigation in November 2012. The investigation was triggered by whistleblower complaints.
The company said in its first disclosure that it had “voluntarily notified” the SEC and DOJ.
The SEC’s order Monday didn’t mention the DOJ.
The SEC said Beam “timely shared the facts developed during the course of an internal investigation by a special committee of its board.”
“Beam also cooperated by voluntarily producing documents, summarizing its factual findings, translating numerous key documents, providing timely reports on witness interviews, and making current or former employees available . . . including those that needed to travel to the United States or elsewhere for interviews,” the SEC said.
The FCPA Blog | July 2, 2018