Beam Suntory fined US$19.6 million in bribery probe

American spirits group Beam Suntory has been ordered to pay out US$19.6 million to settle a bribery investigation.

The Chicago-based company, which makes Jim Beam and Maker’s Mark whiskeys, is to pay more than $19 million to resolve the Department of Justice’s investigation into supposed violations of the Foreign Corrupt Practices Act (FCPA) by its Indian subsidiary.

Beam Suntory bribed an Indian government official to gain a license to bottle a line of products that the company wanted to sell in the country. The bribes predate US group Beam’s sale to Suntory Holdings for US$16 billion in 2014.

“Beam and its Indian subsidiary not only paid bribes to Indian government officials, they intentionally failed to implement internal controls to prevent bribery and falsified their books and records to conceal the corrupt activity,” acting assistant attorney general Brian C. Rabbitt said in a statement.

“Companies that use corrupt influence instead of competing in a fair, ethical, and honest manner should take note of today’s agreement: paying bribes to obtain and retain business is not business as usual, it is a crime.”

Beam, according to its own admission in the probe, conspired to violate the FCPA by bribing of one million Indian Rupees (US$18,000 at the the exchange rate of the time) to an unnamed senior Indian government official in exchange for that official’s approval of a license to bottle Ready-to-Drink (RTD) products sold by Beam Global Spirits & Wine (India) Private Ltd. (Beam India).

The Department of Justice also said the company had a long history of paying bribes in India.

Beam acquired the Indian business in 2006, and admitted to the US lawmakers that from this time to the end of the third quarter of 2012, Beam India paid bribes and “made other improper payments” to a number of government officials, including corrupt payments to obtain or retain business in the Indian market.

Beam, according to the DOJ, also concealed corrupt payments as expenses and falsified certification letters submitted under the Sarbanes-Oxley Act of 2002.

The company agreed to pay $19,572,885 to the DOJ, which had reduced the fine by 10% in recognition of the spirits group’s cooperation.

In July 2018, in a related matter with the U.S. Securities and Exchange Commission (SEC), Beam agreed to pay the US Securities and Exchange Commission a $2 million penalty and interest of $6 million, which the spirits group said recognised the company’s self-disclosure, cooperation and remedial efforts.

Responding to the announcement, Beam said it fired employees who were involved in the bribery and cover-up allegations.

The prosecution agreement was deferred by three years and was unsealed yesterday (27 October).

As part of the deferred prosecution agreement, Beam agreed to continue to cooperate with the department in any ongoing or future criminal investigations concerning Beam, its executives, employees, or agents, and also agreed to increase its compliance program and to report to the DOJ on its implementation.

“We are pleased to move past this matter,” Todd Bloomquist, general counsel of Beam Suntory, said in a statement.

“Our company is committed to doing business the right way, and we take pride in our approach to resolving these issues, with integrity and transparency at every step of the process. Our company in 2012 initiated and publicly disclosed a thorough and independent investigation in cooperation with the U.S. government and took decisive corrective action. We’re confident in our ambitious growth plans in India, which are built on a business that has become a model example of success through sustainable and compliant business practices.”