Oct. 27 (UPI) -- A Chicago-based distillery that makes Jim Beam agreed to pay a $19.5 million penalty after federal investigators accused it of bribing officials to sell alcoholic beverages in India and crafting company policies to account for "grease/facilitation payments."
Beam Suntory, Inc., which also makes Maker's Mark Bourbon, Skinnygirl Cocktails and Calico Jack Rum, agreed to pay $19,572,885 as part of a deferred prosecution agreement for violating the Foreign Corrupt Practices Act. The 1977 act makes it illegal for U.S. citizens and companies to bribe foreign government officials to benefit their business interests.
"U.S. companies that attempt to gain the upper hand in foreign business ventures by engaging in corruption must be held accountable," said U.S. Attorney John Lausch Jr. for the Northern District of Illinois, in a statement on Tuesday. "The Foreign Corrupt Practices Act has a long reach, and for good reason. It is critical that our global economy remain on a fair playing field."
In July, 2018, Beam, which is a publicly traded company, also paid an $8 million fine to the Securities Exchange Commission for accounting practices which disguised bribes as commissions, violating the Sarbanes-Oxley Act of 2002.
Between 2006 and 2012, Beam and its Indian subsidiaries Beam Global Spirits & Wine headquartered in Gurgaon, India, paid at least one bribe of 1 million rupees, or $18,000 to an Indian official, prosecutors said. The company, which already distilled Teachers Scotch in India, paid the bribe to acquire approval for a license to break into a highly restricted Indian alcohol market to bottle a new line of "Ready-to-Drink" products.
The company also implemented a pass-through method to overpay third-party distributors who could then bribe local officials. Prosecutors accused Beam of passing through overpayments totalling $2 million.
Federal prosecutors said the company looked the other way and fudged accounting to hide the pass throughs, which were referred to in company documents as "grease/facilitation payments." Independent auditors described the accounting irregularities as "red flags" for corruption, and recommended more internal accounting controls.
But executives excused the bribes in memos, saying that in a compliance review, "a U.S. regulatory regime should not be imposed" in a way that "would acknowledge India customs and ways of doing business," the federal complaint said.
Todd Bloomquist, Beam's general counsel, said the company cooperated with the U.S. government in 2012 and temporarily suspended its India operations and fired employees, the Chicago Tribune reported.
The penalty payment is 10 percent less than the minimum U.S. Sentencing Guidelines fine range because The company agreed to cooperate with federal prosecutors in the investigation, federal prosecutors said.
"Companies that use corrupt influence instead of competing in a fair, ethical, and honest manner should take note of today's agreement," said Brian C. Rabbitt, acting assistant attorney general of the Justice Department's Criminal Division. "Paying bribes to obtain and retain business is not business as usual, it is a crime," he added.