United States v. Beam Suntory Inc.

Beam Suntory Inc. (Beam) (defendant) was a large alcoholic beverage company with a wholly owned subsidiary in India (Beam India). The alcoholic-beverage industry in India was subject to substantial government regulation. To facilitate the licensure of new products and the distribution of Beam products throughout India, Beam India, as alleged by the United States government, made routine payments to India government officials. These payments were made through third parties that received the funds from Beam through false or inflated invoices. The government charged Beam with corruptly paying bribes to foreign officials in excess of one million Indian rupees. The government also charged Beam with failing to implement and maintain adequate internal accounting controls. Beam’s alleged failure to implement proper accounting controls resulted in its inability to monitor compliance with anticorruption standards, including those relating to bribery. Moreover, before acquiring Beam India, Beam failed to conduct reasonable due diligence that would have detected such issues. In or around November 2010, a global accounting firm conducted a compliance review of Beam India, the results of which indicated significant probability of wrongdoing, and recommended further review. Beam failed to take any steps in response to the compliance review. In January 2011, Beam consulted with a United States law firm, which also recommended that Beam follow up with the audit recommendations. Beam failed to do so. Then, in February 2011, Beam consulted with an Indian law firm to expand upon the compliance work performed by the accounting firm. The engagement was overseen by a Beam employee who had no experience or training with anticorruption compliance issues. Communications between Beam’s United States and Indian employees indicated a concern that the compliance review avoid imposing a regulatory regime that was inconsistent with Indian customers and ways of doing business. After conducting interviews with Beam Indian senior management, the Indian law firm confirmed the accounting firm’s recommendations regarding the need for further due diligence and stronger anticorruption policies. Beam requested that its United States law firm review the Indian law firm’s report, and the United States law firm largely confirmed the findings. Beam failed to implement measures in response to these audits and investigations.