US watchdog questions Smirnoff maker Diageo's US distribution

July 24, 2015 13:12

British spirits maker Diageo is under scrutiny in the United States, where the US Securities and Exchange Commission (SEC) has asked for information to see whether it shipped excess inventory to US distributors, a practice known as "channel stuffing."

A spokeswoman for Diageo, the world's biggest spirits company with brands including Smirnoff vodka and Johnnie Walker whiskey, confirmed the company received an inquiry from the SEC and was responding to its questions.

It was unclear if a full-scale investigation will follow.

Channel stuffing allows a company to book sales ahead of actual orders. US drug company Bristol Myers Squibb paid $150 million in 2004 to settle SEC charges that the company booked $1.5 billion of excess revenue that way.

"Diageo has received an inquiry from the SEC regarding its distribution in the United States," the spokeswoman said. "Diageo is working to respond fully to the SEC's requests for information in this matter."

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