Johnnie Walker Addict- thank Indian Babus?

Johnnie Walker maker in India bribery bottle
SAUMITRA DASGUPTA
Mumbai, July 28: Diageo, the world’s largest liquor maker, has been charged by the US market regulator with paying bribes worth more than $1.7 million (almost Rs 7.5 crore) to government officials in India between 2003 and 2009 to push sales of its famed Johnnie Walker Scotch whisky.
The SEC investigators detected improper payments by Diageo worth more than $2.7 million to government officials in India, Thailand and South Korea — with more than 60 per cent of those illicit payments going to mostly small-time Indian babus.
In an order issued tonight to settle administrative proceedings against the liquor giant, the SEC said Diageo had made the payments to obtain lucrative sales and tax benefits relating to its Johnnie Walker and Windsor Scotch whiskies, among other brands. Johnnie Walker is the biggest-selling Scotch whisky brand in India.
Diageo has agreed to pay more than $16 million to settle the SEC’s charges.
Without admitting or denying the findings, Diageo agreed to cease and desist from further violations and pay $11,306,081 in disgorgement, a pre-judgment interest of $2,067,739, and a financial penalty of $3 million.
Diageo, which operates in 180 countries, has brands like Johnnie Walker, Smirnoff, J&B, Baileys, Captain Morgan, Tanqueray and Guinness in its product portfolio.
“For years, Diageo’s subsidiaries made hundreds of illicit payments to foreign government officials,” said Scott W. Friestad, associate director of the SEC’s division of enforcement. “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.”
The SEC order says the Indian officials were responsible for purchasing or authorising the sale of alcoholic beverages in India.
The order said Diageo and its subsidiaries had failed properly to account for these illicit payments in their books and records. Instead, they concealed the payments to government officials by recording them as legitimate expenses for third-party vendors or private customers, or categorising them in false or overly vague terms.
In some instances, they failed to record them at all. Diageo lacked sufficient internal controls to detect and prevent the wrongful payments and improper accounting.
In India, the illicit payments were made through Diageo’s wholly owned indirect subsidiary called Diageo India Pvt Ltd, which is based in Mumbai.
The SEC investigators found that Diageo — through Diageo India — engaged in a “pervasive practice of making illicit direct and indirect payments to government officials through India to obtain and retain liquor sales”.
Between 2003 and June 2009, Diageo India paid an estimated $792,310 in improper cash payments through its third-party distributors to 900 or more employees of government liquor stores in and around Delhi.
Johnnie Walker maker in India bribery bottle