The Danish brewery Carlsberg is dismissing a number of employees and initiating a major clean-up in its Indian subsidiary, after a comprehensive audit report has revealed potential illegalities and breaches of internal guidelines in the subsidiary.
The audit report was launched in response to Berlingske's 2019 article series that revealed shady payments from Carlsberg employees in India to local key officials. Among other things, cash went to obtain the necessary permits. A number of experts found clear signs of obvious bribery.
Berlingske later reported that suspected fraud, illegal discounts and illegal marketing had also been found in Carlsberg India.
According to Carlsberg’s press officer, Kasper Elbjørn, the investigation was carried out by one of the world’s biggest auditing firms and concludes that »Carlsberg Group's policies were violated in the period until 2018«.
»Although no violations of Carlsberg Group's policies were identified in connection with current operations, the investigation identified the need to further strengthen the internal control of our policies,« the brewery's press officer wrote to Berlingske.
According to the investigation, »in the period up to 2018 evidence was found to substantiate various allegations regarding potentially unethical practices made by certain former and current employees and board members of CIPL« (Carlsberg India).
The irregularities include »promotion of the sale of CIPL products in prohibited areas and potentially incorrect payment methods«, says Kasper Elbjørn.
As a result of the conclusions, Carlsberg India has taken a number of consequences.
A number of employees have been fired or have received warnings. Others have left the company voluntarily. In addition, Carlsberg has tightened its internal controls in the Indian company substantially.
Battle with local partner
The investigation is published while Carlsberg is in the midst of a legal battle with its’ local joint venture partner, the Singapore based businessman C.P. Khetan. According to Carlsberg, the two partners cannot agree on the prize of Khetan’s share of the subsidiary and the terms of a loan from Carlsberg to Khetan.
The conflict affected the investigation Calsberg says, since Khetan’s appointed members of the local board refused to accept the procedure.
Carlsberg Indias auditor has resigned as a consequence of the conflict since the local board for two years has been unable to accept the annual report.
Carlsberg says that the Indian authorities has closed an investigation into the company without any sanctions.
C.P Khetan declined to comment.
Read more about the investigation here (in Danish)