Diageo to Pay $16 Million to Settle Bribery Lawsuit
Diageo has agreed to pay $16m to settle an investigation by the US Securities and Exchange Commission (SEC) into bribery allegations in South Korea, India and Thailand. The SEC claims that Diageo’s subsidiaries in India, South Korea and Thailand paid more than $2.7 million in bribes from 2003 to 2009 in order to gain sales and tax benefits. Diageo made about $11m in profits from these actions, according to the SEC.
“For years, Diageo’s subsidiaries made hundreds of illicit payments to foreign government officials,” explains Scott Friestad, associate director in the SEC’s enforcement division. “As a result of Diageo’s lax oversight and deficient controls, the subsidiaries routinely used third parties, inflated invoices, and other deceptive devices to disguise the true nature of the payments.”
Diageo has agreed to settle the Foreign Corrupt Practices Act (FCPA) lawsuit without admitting or denying wrongdoing.
Under the settlement Diageo will pay $13.4m to the SEC in disgorgement of profits and pre-judgment interest, plus a $3m penalty to the SEC. Diageo has also agreed to cease and desist from committing any further violations of the books and records and internal controls provisions of the FCPA.
Diageo says it takes the SEC’s findings seriously and regrets the matter. The global drinks group says that its systems and controls have been enhanced in an effort to prevent the future occurrence of such issues and to reinforce, everywhere the company operates, a culture of compliance and commitment to the principles embodied in Diageo’s Code of Business Conduct.
