U.S. firm fined in Canteen Stores Department bribe case

Beam Suntory Inc. has admitted its Indian subsidiary paid bribes to promote its brand in military canteens

Teachers and Jim Beam have for some time been among the most popular whisky brands in military canteens. Besides their reputation among tipplers, an unsavoury strategy by the U.S. spirits manufacturer Beam Suntory Inc. which sells the brands may have contributed to their surge in popularity, according to a report from the U.S. Securities and Exchange Commission.

Beam Suntory Inc. has admitted that its Indian subsidiary paid bribes to Canteen Stores Department (CSD) officials to promote its brand in military canteens between 2006 and 2012. The Commission imposed a penalty of over $8 million (₹560 crore)approximately) on Beam to be paid within 10 days to settle the case.

Indian defence officials, however, said no action was taken against anyone in India. “We are not aware of the investigation which happened in the U.S. some time back. We have institutional mechanisms in place. But the final enforcing depends on the people supervising on the ground,” a defence source said.

A report of the USSEC released on July 2, said, “From at least 2006 through 2012, Beam’s Indian subsidiary, Beam India, made improper payments to various government officials in connection with obtaining or retaining business in the Indian market.”

The dealings came to light after Beam conducted an internal investigation and voluntarily made the disclosure before the Commission.

“From 2006 through the end of the third quarter 2012, Beam India paid more than $1.5 million to its promoter in the CSD channel and over $550 thousand to its promoter in the state of Delhi to make improper payments to government officials at government-controlled retail stores and depots in those markets,” the report stated.

Product launch stalled

In another instance, Beam sought to introduce a new product in India which was stalled by Indian excise official who had the discretion to issue the registration and asked for a “an improper payment of one million Rupees (approximately his yearly salary or $18,000).” The report says that the payment was made by a third-party bottler and within weeks the label registration was approved.

The report states that Beam took several remedial actions, including ceasing business operations at Beam India until Beam was satisfied it could operate Beam India compliantly, terminating certain Beam India employees who were involved in the misconduct and terminating third-party sales promoters in government markets in India.