Business

Maker of Jim Beam Whisky Coughs Up $8M Over Allegations of Bribing Indian Officials

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.

New Delhi: The US Securities and Exchange Commission has said that Beam Suntory, maker of Jim Beam bourbon and Teacher’s scotch whisky, has agreed to pay more than $8 million as penalty for settling a case involving bribery by its India subsidiary of government officials to increase sales, process licences and facilitate distribution of distilled spirit products.

The NYSE-listed Beam has a fully-owned subsidiary in India and its Teacher’s brand is the largest selling scotch here.

Charges against Beam Suntory were framed under the Foreign Corrupt Practices Act (FCPA), which applies to any person who has a certain degree of connection to the US and engages in foreign corrupt practices. The idea behind the law is to make it illegal for US companies and their supervisors to influence foreign officials with any personal payments or rewards.

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 to increase sales orders, process licenses and label registrations, and facilitate the distribution of Beam’s distilled spirit products.

The order also found that the Indian subsidiary reimbursed the third parties for the illicit payments through the use of 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. The SEC’s order also found that during this period, Beam failed to devise and maintain a sufficient system of internal accounting controls.

Specifically, the SEC’s order found that Beam Suntory violated Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934.

However, Beam Suntory neither accepted nor denied charges pressed against it.

Earlier in 2012, the US drinks giant had initiated investigations into whistleblower allegations of financial misdemeanour at its India unit.

In 2011, Beam Suntory’s rival Diageo paid $16 million as fines to settle bribery charges at some of its Asian operations, including India.

In the same year, Bharti Walmart, Walmart’s joint venture with India’s Bharti Enterprises, had to suspend a few associates and commit to conduct a complete and thorough investigation as part of an exercise launched by Walmart to review compliance of its global operations with the FCPA. The joint venture also had to put on hold its plan to open new cash-and-carry wholesale stores.