Reports from another global consulting firm, also seen by Reuters and not previously reported, revealed other shortcomings at Carlsberg India Pvt Ltd in 2018, including child labor.
An investigation into suspected illegal practices in Carlsberg, India, revealed “potential abusive payments” to government officials and other regulatory failures, its former auditor said in a document seen by Reuters.
Reports from another global consultancy, also seen by Reuters and not previously reported, revealed other shortcomings at Carlsberg India Pvt Ltd in 2018, including child labor.
The results cast a cool shadow over the operations and compliance practices of the Indian joint venture of Danish brewer Carlsberg A / S, which IWSR Drinks Market Analysis says holds 17% of India’s $ 7 billion market.
Carlsberg polls and a board dispute sit in the midst of other challenges: An antitrust investigation last year found Carlsberg India colluded for years on pricing with rivals, though ‘a final decision is pending.
An Indian affiliate of the Price Waterhouse Coopers (PwC) network recently resigned as financial auditor of Carlsberg India after refusing for two consecutive years to give an opinion on the brewer’s finances, amid boardroom wrangling and internal investigations into local practices, Reuters reported in November. .
Since at least 2019, Carlsberg had been investigating allegations made by some past and current employees regarding the promotion of alcohol in no-go areas, bribery and corruption, according to regulatory filings and the document prepared by PwCaffiliate Price. Waterhouse Chartered Accountants LLP.
The investigation “concluded that there were weaknesses in internal control … potential overpayments to government officials / other persons and a possibility of embezzlement of company funds in recent years by some customers, “says the PwC document, which details the basis for the company’s resignation. .
“However, the amount of embezzlement and other amounts related to inappropriate practices could not be determined.”
Responding to questions from Reuters, Carlsberg said: “We cannot rule out violations of our policies and our code of conduct.” The company said it was doing everything possible to avoid such incidents.
The investigations “made it clear that the policies of the Carlsberg Group had been violated in the period up to 2018” and the polls identified the need to further strengthen controls, the company said.
“Carlsberg India has taken several steps following the findings, including … dismissal and official warnings to employees,” he said.
PwC declined to comment.
Carlsberg told Reuters in November that the auditor had resigned due to “very disruptive side effects” of a trade dispute with its joint venture partner in India, the Nepal-based Khetan Group. Three appointed directors of Khetan declined to approve the last two annual results.
In a filing for the 2018-2019 fiscal year, PwC said it agreed to issue an opinion due to “differing opinions” among board members, ongoing forensic examinations and the possible impact these could have on legal compliance.
Results for the year through March 2020 have not been released, but the PwC document states that the “Complainant Directors” had differing views on the scope, manner and conclusions of the practice investigation. local Carlsberg.
CP Khetan, who manages the Carlsberg India partnership for the Khetan Group, did not respond to a request for comment.
Other audits, child labor
Separately, three Ernst & Young (EY) documents in Indi revealed regulatory breaches in 2018, including child labor at awarehouse.
An internal EY report from May 2018 on an audit of two Carlsberg warehouses found underage workers at a site in Jharkhand state, eastern India. Calling this a “high” risk finding, EY said 24 of the country’s 41 workers were under 21 – the minimum legal employment age for those engaged in the sale of alcohol in the state – some being only 16 to 18 years old.
The report also showed an apparent violation of environmental rules, such as improper waste disposal.
A draft of this report contained two images – a young boy carrying a box of Carlsberg Tuborg beer on his head, and another of a smiling boy sitting on cartons of beer with packing material in his hand. It also contained photos of workers at work wearing slippers rather than safety shoes.
Regarding child labor, Carlsberg told Reuters: “The third-party supplier was laid off immediately in 2018 following the findings of the internal report.”
EY declined to comment.
Another EY audit, which analyzed Carlsberg’s logistics operations in 2018, found failures in transportation, revealing there were more than 22,000 cases of truck overloading.