Chicago-based spirits maker Beam Suntory Inc. agreed Tuesday to pay the DOJ $19.6 million to resolve Foreign Corrupt Practices Act charges for improper payments by its Indian subsidiary.
The company entered into a three-year deferred prosecution agreement with the Department of Justice to settle charges that it conspired to violate the anti-bribery, internal controls, and accounting provisions of the FCPA.
According to the DOJ, Beam paid bribes to Indian government officials from 2006 to 2012, mostly through third-party promotors and distributors, to secure business at government-controlled depots and stores.
The scheme included three high-level Beam executives, including one in the legal department, the DOJ said.
During the bribery scheme, Beam falsely recorded expenses, including bribes disguised as commission expenses. It also falsified certification letters submitted under the Sarbanes-Oxley Act, the DOJ said.
According to the DOJ, Beam was cautioned by outside advisors regarding the need to implement “sufficient internal accounting controls” relating to risks associated with improper activities by third parties in India.
At the time of the misconduct, Beam lacked an effective compliance program, the DOJ said.
In one instance, Beam paid an Indian official $18,000 to approve a bottling license. A high-ranking executive at Beam’s Asia Pacific/South America business unit authorized the bribe and to conceal it instructed payment through Beam India’s third-party bottler, according to the DOJ.
Beam India conspired to hamper internal accounting controls so it could continue the “longstanding practice of making corrupt payments to Indian government officials,” the DOJ said.
According to the DOJ, the company failed to fully cooperate with the investigation and didn’t accept responsibility for several years, delaying the resolution.
The company also failed to discipline certain individuals involved in the misconduct, the DOJ said Tuesday.
In July 2018, Beam paid the SEC $8.2 million to settle related civil charges without admitting or denying the allegations.
The SEC said in the 2018 settlement, “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.”
In Tuesday’s resolution, however, the DOJ said it wasn’t crediting any part of Beam’s settlement with the SEC because “Beam did not seek to coordinate a parallel resolution with the department.”
Although the DOJ said in the DPA that it gave “partial credit” for cooperation during the investigation, it also said Beam Suntory didn’t “receive full credit for its cooperation due to its inconsistent and, at times, inadequate cooperation, including positions taken by the Company that were not consistent with full cooperation, as well as significant delays caused by the Company in reaching a timely resolution and its refusal to accept responsibility for several years.”
Todd Bloomquist, general counsel of Beam Suntory, said in a statement the company emailed to the FCPA Blog, “We are pleased to move past this matter. 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.”
Beam Suntory Inc., a subsidiary of Suntory Holdings of Osaka, Japan, was created in 2014 when Suntory bought Beam Inc.
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.