Diageo, the world’s largest spirits company, is close to a settlement with the US Securities and Exchange Commission under which it would pay more than $10m to end a long-running bribery investigation, people familiar with the matter say.
Diageo, the UK-based owner of the Smirnoff vodka brand and Guinness beer, has been under SEC scrutiny for several years as the agency investigated whether Diageo employees or contractors paid bribes to government officials in South Korea, India and Thailand.
The settlement talks are at an advanced stage. Diageo has agreed to pay between $10m and $20m, these people say. A pact could be announced in the next few weeks. The US Department of Justice, which often works with the SEC on bribery investigations, is not part of the settlement, according to people familiar with the matter.
The SEC and Diageo declined to comment.
The SEC investigation was triggered by a 2007 customs fraud case in South Korea. Seoul authorities brought charges against two former Diageo employees there for allegedly making improper payments to a Korean customs official.
The proposed penalty is equivalent to about half of the charitable donations the company made last year, or two days’ operating profit.
Diageo disclosed in regulatory filings that it had reported the payments to the SEC and US justice department. It has said that its own internal investigation into payments made in Korea, India, Thailand and elsewhere were continuing.
The settlement is the latest by US authorities, which have aggressively used the US Foreign Corrupt Practices Act to pursue global companies for allegedly bribing non-US government officials. Diageo is listed on the London Stock Exchange and has American depositary receipts trading on the New York Stock Exchange.
The FCPA prohibits companies with US stock listings from paying, or offering to pay, foreign officials or employees of state-owned companies to gain a business advantage. Companies can violate SEC rules by declaring bribes as expenses in their financial statements.
In recent years, US authorities have extended their reach to foreign companies by scrutinising those with stock trading on US exchanges or companies with significant operations in the US.