Anheuser-Busch InBev has agreed to pay $6 million to settle U.S. charges that it made improper payments to government officials in India to boost its beer business there and chilled a whistleblower who had reported misconduct.
After the merger that formed AB InBev in 2008, the company operated in India through a wholly-owned subsidiary, Crown Beers India Private Limited, and a joint venture, InBev India International Private Limited, that managed the marketing and distribution of Crown beer.
According to the U.S. Securities and Exchange Commission, IIIPL used third-party sales promoters to make improper payments to Indian government officials to obtain beer orders and increase Crown’s brewery hours.
Crown Beer, which reimbursed IIIPL for its expenses, allegedly had inadequate internal accounting controls to detect and prevent the payments and improperly recorded the transactions as legitimate expenses.
The SEC also accused AB InBev in an administrative order of violating the whistleblower protections of the Dodd-Frank Act by entered into a nondisclosure agreement with a former Crown employee containing language that prevented the employee from speaking to the commission.
“Threat of financial punishment for whistleblowing is unacceptable,” Jane Norberg, acting chief of the SEC’s Office of the Whistleblower, said in a news release. “We will continue to take a hard look at these types of provisions and fact patterns.”
To settle the charges, the beermaker will pay $2.7 million in disgorgement, prejudgment interest of $292,381, and a civil penalty of $3 million.
As The Wall Street Journal reports, AB InBev is the fourth company in the past 18 months to be penalized by the SEC for restrictiong would-be whistleblowers. The commission’s whistleblower program has paid out more than $100 million to more than 30 whistleblowers since its inception in 2011.
The SEC said IIIPL’s CEO conceived a plan in early 2009 to increase Crown’s market share in the Indian state of Andhra Pradesh by providing improper payments to government officials through sales promoters.
One promoter, the SEC said, used his local connections to almost double Crown’s daily brewing hours in Andhra Pradesh.