Southern Glazer's to Pay $12.5 Million to Resolve Bribery Case

Southern Glazer’s Wine & Spirits agreed to pay $12.5 million as part of a non-prosecution agreement (NPA) with the U.S. Justice Department for bribing employees of alcohol retailers, including chain grocery stores, to induce them to purchase alcohol distributed by SGWS.

Several Southern Glazer’s executives, including several Vice Presidents, were directly involved in the bribery scheme and participated in falsification of documents to conceal it. The scheme, which used third-party vendors to generate false invoices to conceal the flow of money from Southern Glazer’s included cash, prepaid gift cards, flights, golf trips, resort stays, and luxury goods.

In the agreement, Southern Glazer’s admitted to and acknowledged responsibility for the acts of individuals employed by the company, which included years of improper payments and benefits to various alcohol retailer employees in connection with the promotion, purchase, maintenance, and placement of certain alcohol products distributed by Southern Glazer’s, and the use of third-party vendors and false invoices generated to conceal the practice.  

Several Southern Glazer’s executives based in California, including several Vice Presidents, were directly involved in the conduct, which included substantial cash payments, prepaid gift cards, flights, golf trips, resort stays, and luxury goods, along with participation in the falsification of documents.

In addition to Southern Glazer’s monetary payment of $12.5 million to the United States, the company agreed to implement robust steps to enhance compliance with federal and state laws prohibiting bribery and other improper payments. It also agreed to continue to cooperate with the government in connection with any criminal prosecutions related to the matter, including against current or former employees of the company.

In a statement, Wayne E. Chaplin, SGWS president/CEO, said:

"This conduct does not reflect Southern Glazer's values, culture, or standards and it will not be tolerated. Our success has always been built on winning the right way. We are gratified to resolve the investigation in this fashion, and to be able to focus on earning the trust of our customers, supplier partners, and employees through ethical business practices, strong compliance oversight, and accountability at every level of the organization.” 

The 42-page agreement explicitly credits the actions and investments SGWS made to strengthen its compliance program over the past several years. These efforts included augmented and reorganized staff, new procedures and policies, proactive monitoring and auditing, and strong internal enforcement. 

"This case serves as an important reminder that industry members are accountable not only for their own conduct, but also for the actions taken on their behalf by third-party affiliates," Alcohol & Tobacco Tax & Trade Bureau said in a statement. "Third parties, likewise, are responsible for any illegal activities they carry out on behalf of an industry member.

"TTB takes trade practice enforcement seriously and will continue to actively pursue trade practice violations to ensure that law-abiding businesses do not lose competitive ground because of the illegal actions of a few. No one should have to pay to play." TTB invited anyone aware of unlawful trade practices to report them by email at TradePractices@ttb.gov

"One of government’s top jobs is to ensure a level playing field for American business. 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,” said U.S. Attorney Craig Missakian. He added:

“Our office takes this kind of conduct seriously and we are committed to making sure everyone plays by the same rules, which will mean lower prices and more choices for the California consumer. By refusing to compete honestly, the company didn’t just harm its competitors and consumers — it struck at the heart of the American tradition of fair and open competition.”

The prosecution is the result of a joint investigation by TTB, and the Internal Revenue Service – Criminal Investigation service with support from the Treasury Executive Office for Asset Forfeiture.