AB InBev to pay US regulator $6 mn to settle India bribery charges

Anheuser-Busch InBev S.A. (AB InBev) yesterday agreed to pay $6 million (Rs28.8 crore) to the US Securities and Exchange Commission (SEC) to settle charges that it violated the US Foreign Corrupt Practices Act (FCPA) and chilled a whistleblower who reported the bribery.

The SEC said that its investigation found that one of its minority-owned joint venture in India used third-party sales promoters to make improper payments to officials in India from 2009 to 2012 to increase sales and production in the country.

AB InBev, through its wholly owned Indian subsidiary, Crown Beers India Private Limited (Crown) held a 49-per cent interest in the joint venture InBev India International Private Limited (IIIPL) to manage the marketing and distribution of Crown beer.

Gurgaon-based Ravi Jaipuria-owned RJ Corp held 51 per cent of IIIPL. This JV was disbanded in February 2016.

Despite repeated complaints from employees, Anheuser-Busch InBev had inadequate internal accounting controls to detect and prevent the improper payments, and the company failed to ensure that transactions involving the promoters were recorded properly in its books and records.

The SEC's order further finds that AB InBev entered into a separation agreement with a former Crown employee prohibiting the person from communicating with the SEC about potential anti-bribery violations due to a substantial financial penalty that would be imposed for violating strict non-disclosure terms.

''Anheuser-Busch InBev 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 FCPA 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.''

AB InBev agreed to pay disgorgement of $2,712,955, prejudgment interest of $292,381, and a civil penalty of $3,002,955, for a total payment of $6,008,291 to the SEC.