Previously, Movendi International reported on an investigation by Danish newspaper Berlingske, which alleged Carlsberg has bribed Indian officials to ensure swifter regulatory processing time and to get better manufacturing terms for an Indian brewery.
At that time Berlingske found over 200 payments made to officials over a period of 18 months between 2015 and 2016. Though initially stating that the bribery could not be proved, Carlsberg launched an extensive audit after Berlingske approached them.
According to IWSR Drinks Market Analysis Carlsberg has a 17% share of India’s $7 billion beer market.
An India affiliate of the PricewaterhouseCoopers (PwC) network recently resigned as Carlsberg India’s financial auditor. This is after PwC declined for two consecutive years to give an opinion on Carlsberg India’s financials. For the 2018-19 financial year PwC cited “divergent views” among board members, ongoing forensic reviews and the possible impact these could have on legal compliance as reasons for withholding their opinion.
As per Reuters these divergent views are on internal probes into local practices of Carlsberg India.
Carlsberg revealed to Reuters that PwC quit due to conflict with its India joint venture partner, the Nepal-based Khetan Group. Three nominee directors from Khetan had refused to approve the last two annual results.
According to PwC’s regulatory filings and a document detailing reasons for resignation, Carlsberg has been accused by some past and current employees to engage in the promotion of alcohol in prohibited areas, kickbacks and bribery in their India operations.
“ [The investigation] concluded that there were internal control weaknesses… potential improper payments made to government officials/ other persons and possibility of misappropriation of company’s funds over past years by certain customers,” said the PwC document detailing reasons for resignation.PricewaterhouseCoopers (PwC) network
In other words, internal audits of Carlsberg India found bribing of Indian officials among other issues.
It seems board members are disagreeing with the findings.
A separate consultancy firm Ernst & Young (EY) in India exposed regulatory lapses in 2018, including child labour at a warehouse.
A May 2018 EY internal report on an audit of two Carlsberg warehouses found underage laborers at a location in the eastern Indian state of Jharkhand. According to the report 24 of 41 workers there were under 21 – the legal minimum age of employment for those engaged in alcohol sales in the state – with some as young as 16.
A draft of that report contained two images – a young boy carrying a box of Carlsberg’s Tuborg beer on his head, and another of a boy smiling while sitting atop beer cartons with packaging material in hand.
Carlsberg stated that the third-party provider was terminated immediately in 2018 following the findings in the internal report.
Probably… the worst: Other unethical practices in Carlsberg’s India operations
Child labor is only the gravest problem exposed by EY in Carlsberg’s India operations. Other issues include:
- Violation of environmental rules, such as incorrect disposal of scrap material.
- Lack of adherence to safety protocols such as wearing slippers in the warehouse instead of work boots.
- Lapses on transportation, revealing there were more than 22,000 instances of overloading trucks.
These are not the only unethical practices exposed in Carlsberg India’s operations. As Movendi International reported previously, the Competition Commission of India (CCI) launched an anti-trust investigation in 2018 into beer price cartelization by Big Alcohol giants Carlsberg, AB InBev acquired SABMiller and United Breweries (UB) in India. Their report released in December 2020 revealed that the three alcohol giants exchanged commercially sensitive information and colluded to fix beer prices in India over an 11 years period.
They also used their pricing scheme to undermine and derail alcohol policies.
Senior CCI members will consider the report as they decide on fines which could exceed $250 million.