Yesterday, on National Drink Beer Day, no less, the SEC filed a cease and desist order against Anheuser-Busch InBev for violating the FCPA’s books and records and internal controls provisions.
The action is related to improper payments by an AB InBev Indian joint venture “to Indian government officials to obtain beer orders and to increase brewery hours.” AB InBev held a minority interest in the joint venture which marketed and distributed the beer of AB InBev’s wholly-owned Indian subsidiary.
The SEC also found that AB InBev entered into a separation agreement with a former employee that violated an SEC Rule implementing Dodd-Frank’s whistleblower provisions. All in all, Anheuser-Busch InBev coughed up $6 million to resolve the action.
Here are the key takeaways from this FCPA enforcement action:
1. The AB InBev enforcement action represents yet another FCPA enforcement action against a foreign company based on the company having shares traded on a U.S. exchange.
2. The improper conduct at issue was engaged in by a joint venture in which AB InBev held a minority interest. In short, joint ventures (in addition to traditional third-party relationships such as agents, representatives and distributors) present FCPA risk.
3. The root causes of FCPA violations are often foreign trade barriers or distortions. For instance, in India the company was limited to operating its brewery for only 8 hours per day. If the company wanted to run the brewery longer, it needed the permission of an alleged 'foreign official." In short, but for this trade barrier / distortion, the company would not have had contact with a "foreign official" and the FCPA enforcement action would likely not have occurred.
Read more about this FCPA enforcement action on the FCPA Professor Blog.