Consumer Fraud

Anheuser-Busch Pays $6 Million SEC Penalty For ‘Chilling’ Whistleblower

SEC Office of the Whistleblower wikipedia image 342x210 Anheuser Busch Pays $6 Million SEC Penalty For Chilling WhistleblowerAnheuser-Busch InBev agreed last week to pay a $6 million penalty to settle allegations that it made improper financial arrangements with officials of the Indian government to boost beer sales and then threatened a whistleblower into silence for reporting the illegal activity.

The agreement marks the fourth time the U.S. Securities and Exchange Commission (SEC) has penalized a company for muzzling would-be whistleblowers by using strict agreements that bar them from communicating with the SEC and other government officials.

An SEC investigation found the Leuven, Belgium-based multinational company used third-party sales promoters to make improper payments to Indian officials with the intention of boosting production and sales in India.

Despite repeated complaints from employees, Anheuser-Busch InBev maintained inadequate internal accounting controls that would have prevented the improper payments, and the company failed to ensure that transactions involving the promoters were recorded properly in its books and records, the SEC alleged.

The SEC also said Anheuser-Busch InBev effectively used a separation agreement to stop an employee from continuing to communicate with the SEC about potential Foreign Corrupt Practices Act (FCPA) violations.

The SEC launched its whistleblower program in 2011 after it was established by the Dodd-Frank Act of 2010 in an effort to combat rampant securities fraud. To incentivize tipsters with inside knowledge of fraud, the agency awards whistleblowers between 10 percent and 30 percent of total penalties in excess of $1 million that the SEC collects from offenders.

Last year, the SEC made it a priority to stop companies from using agreements to force employees to forfeit their whistleblower rights. The agency contacted numerous corporations requesting non-disclosure agreements, employment contracts, and other documents that could be used to gag employees.

“Anheuser-Busch InBev recorded improper payments by its sales promoters in India as legitimate expenses in its financial accounting, and then exacerbated the problem by including language in a separation agreement that chilled an employee from communicating with the SEC,” said Kara Brockmeyer, Chief of the SEC Enforcement Division’s FCPA Unit.

Sources:
U.S. Securities and Exchange Commission
Wall Street Journal