Smirnoff and Johnnie Walker drinks giant Diageo is reportedly being investigated by the Securities and Exchange Commission over allegations it tried to artificially boost sales figures by shipping excess inventory to distributors.
Sending more cases to distributors than they have ordered could potentially have allowed Diageo to report increased sales and shipments.
The British company, the world's largest producer of spirits, confirmed to the Wall Street Journal, which first reported the story, that it was cooperating with the SEC on an investigation. "Diageo has received an inquiry from the US Securities and Exchange Commission regarding its distribution in the United States. Diageo is working to respond fully to the SEC's requests for information in this matter," the company said in a statement. The SEC declined to comment.
The inquiry comes at a sensitive moment for Diageo. Last month the company's shares soared after reports that Brazil's richest man, billionaire deal-maker Jorge Paulo Lemann, was considering a takeover. Lemann has led a series of ever larger brewery takeovers culminating in 2004's merger of Brazil's AmBev with Belgium's Interbrew to create the world's largest beer company. Diageo owns Guinness as well as its portfolio of spirits and wine brands.
The takeover rumour coincided with the announcement that North American president Larry Schwartz would be retiring by the end of the year. Diageo has since announced the departures of its chief marketing officer for North America and a president of national accounts in the US.
North America accounts for about a third of Diageo's $17.58bn in sales and around 45% of operating profit. Sales have been in decline in the region since 2011. Next week the company will release its second-quarter results and is likely to be quizzed further by shareholders and analysts about the SEC inquiry.