Southern Glazer’s Wine and Spirits will pay $12.5 million to the U.S. Treasury to close a federal investigation into bribes paid to alcohol retailers. The company admitted that its employees spent years handing out cash, gift cards, luxury goods, resort stays, golf trips and airfare in exchange for favourable placement of its products.
The deal is a non-prosecution agreement, signed on a Thursday by company representatives and the U.S. Attorney’s Office for the Northern District of California. Southern Glazer’s, the country’s largest wine and spirits distributor and headquartered in Florida, also promised to tighten its compliance with federal and state law. In return, the Alcohol and Tobacco Tax and Trade Bureau agreed to take no action over the conduct in question.
How the scheme worked
The mechanics were not subtle. Employees concealed the payments through third-party vendors and false invoices, so a bribe could pass in the books as ordinary business. California is the company’s biggest market, and the agreement says the scheme drew in several California-based executives, among them multiple vice presidents.
“Southern Glazer’s employees tried to distort the wine and spirits market in California through bribes and other improper conduct and in the end it was the consumer that lost out,” U.S. Attorney Craig Missakian said in a statement.
Chief executive Wayne E. Chaplin, the company’s president, said the conduct “does not reflect Southern Glazer’s values, culture, or standards and it will not be tolerated.” The company has also agreed to keep cooperating with the government in related criminal prosecutions.
The people still facing charges
The settlement binds the company, not the individuals. In March a federal grand jury indicted five former Southern Glazer’s employees on charges of conspiracy to commit bribery and obstruction. Prosecutors allege they bribed grocery store alcohol buyers and covered their tracks with falsified financial records. A salesman for a Napa winery was also accused of bribing the head alcohol buyer for a large national grocery chain.
The case has a precedent from the year before. A wine buyer for Albertsons was charged with commercial bribery and conspiracy, accused of accepting lavish vacations, luxury watches and gift cards in return for stocking certain wines. Two executives at the supplier Deutsch Family Wine & Spirits, who supplied kickbacks to that buyer, pleaded guilty to commercial bribery in a scheme worth $360,000.
