AB InBev has been fined $6 million after being caught bribing Indian officials to boost sales of its beer – and then trying to silence a whistleblower by threatening them with a $200,000 fine.
The Securities and Exchange Commission (SEC) of the United States said that AB InBev would pay $6 million to settle charges that an Indian unit of the beer giant made unethical payments to Indian government officials and then threatened a whistleblower who reported the misconduct.
Unethical, illegal business practices in India
The SEC alleges that an Indian joint venture known as AB InBev India Private Ltd., which marketed and distributed Crown beer, used third-party sales promoters to make improper payments to Indian government officials.
The allegations of bribery date back to 2009 when an Indian subsidiary of AB InBev hired a promoter for its products. SEC Investigators found the promoter was bribed through “excessive commissions” and reimbursements for “questionable promotional charges”.
The SEC investigation was conducted under the Foreign Corrupt Practices Act.
AB InBev recorded these costs as legitimate business expenses. AB InBev staff also attempted to destroy evidence of the bribery. Yesterday, US watchdog the Security and Exchange Commission fined the firm £4.6million for the offences.
In 2010 and 2011, an employee told AB InBev bosses the promoting company had been “taking care of” government officials. The employee also questioned the promoter’s lack of experience, staff and infrastructure. But instead of looking into the claims, AB InBev sacked the worker, and made them sign an agreement promising to remain silent or face a $200,000 punishment.
Anheuser-Busch recorded improper payments by its sales promoters in India as legitimate expenses in its financial accounting, and then exacerbated the problem by including language in a separation agreement that chilled an employee from communicating with the SEC,” said Kara Brockmeyer chief of the SEC Enforcement Division’s Foreign Corrupt Practices Act Unit.
Threat of financial punishment for whistleblowing is unacceptable,” added Jane Norberg, Acting Chief of the SEC’s Office of the Whistleblower.
We will continue to take a hard look at these types of provisions and fact patterns.”
The company will pay $2.7 million to give back what it allegedly gained from the actions, a prejudgment interest of $292,381 and a civil penalty of $3 million. Last year, the beer maker brought in $9.22 billion in profit.
The bribery and threatening of a whistleblower scandal hits AB InBev as it just sealed the $100 billion-plus merger with rival SABMiller.