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Beam sees possible ‘material impact’ from FCPA investigation

Illinois-based spirits maker Beam Inc. said this week it is ‘reasonably possible that [FCPA] liabilities could have a material impact on . . . results of operations, cash flows or financial condition.’

The company launched an internal investigation in November last year.

It has self reported to the SEC and DOJ, it said.

Potential fines and penalties can’t yet be estimated, Beam said, and accruals haven’t been set aside.

The investigation was triggered by whistleblower complaints.

The initial focus was on potential import duty violations, invoicing and sales practices, according to press reports.

                                                           *     *     *

Here’s the complete disclosure from Beam Inc.’s Form 10-K filed with the SEC on February 26:

As previously disclosed, we are performing an investigation into whether our business in India has been conducted in compliance with Company policies and applicable law, including the Foreign Corrupt Practices Act. We commenced the investigation as a result of information obtained through our internal compliance procedures and an internal audit of the India business. We voluntarily notified the U.S. Department of Justice (“DOJ”) and the SEC of our investigation and are providing the DOJ and SEC updates on our progress.

We are presently unable to predict the duration, scope, result or related costs of the internal investigation or of any potential investigations by the DOJ, SEC or any other authority. At this time, we also cannot reasonably estimate the potential liabilities that may result from the DOJ’s or SEC’s review, and no accruals for such potential liabilities were established as of December 31, 2012. However, it is reasonably possible that such liabilities could have a material impact on our results of operations, cash flows or financial condition. In addition, the ongoing conduct of the investigation and our implementation of remedial measures have had, and will likely continue to have over the near term, a disruptive effect on our India business.

The India business accounted for approximately 2% of our consolidated net sales (approximately 9% of APSA net sales) for the twelve months ended December 31, 2012 and a smaller percentage of our consolidated operating income.

ethiXbase’s comprehensive India report includes an analysis of Beam’s ongoing investigation in the context of risks within India’s liquor industry.

Order the report here.

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