Carlsberg India probes find child labour, lapses
NEW DELHI: An investigation of alleged unlawful practices at Carlsberg India found “potential improper payments” to government officials and regulatory lapses, its former auditor said in a document seen by Reuters.
Reports by a different global consultancy, also seen by Reuters and previously unreported, disclosed other lapses at Carlsberg India Pvt. Ltd in 2018, including child labour. The findings cast a fresh shadow on operations and compliance practices at the Indian joint venture of Danish brewer Carlsberg A/S, which according to IWSR Drinks Market Analysis has a 17% share of India’s $7 billion beer market.
Carlsberg’s probes and a boardroom dispute come amid other challenges: an antitrust investigation last year concluded Carlsberg India colluded for years on prices with rivals, though a final ruling is pending.
An India affiliate of the PricewaterhouseCoopers (PwC) network recently resigned as Carlsberg India’s financial auditor after declining for two years in a row to give an opinion on the brewer’s financials, amid boardroom tussles and internal probes into local practices, Reuters reported in November.
Since at least 2019, Carlsberg had been probing allegations levelled by past and current employees around promotion of alcohol in prohibited areas, kickbacks and bribery, according to regulatory filings and the document prepared by local PwC affiliate Price Waterhouse Chartered Accountants LLP.
The probe “concluded that there were internal control weaknesses... potential improper payments made to government officials/other persons and possibility of misappropriation of company’s funds over past years by certain customers,” says the
PwC document, which details the basis of firm’s resignation. “However, the amount of misappropriation and other amounts relating to inappropriate practices could not be ascertained.”
Responding to questions from Reuters, Carlsberg said, “We cannot rule out breaches of our policies and code of conduct.” The company said it does everything possible to prevent such incidents. The investigations “specified that Carlsberg Group’s policies were breached in the period until 2018” and the probes identified the need for strengthening of controls, the company said.
“Carlsberg India has taken several actions as a consequence of the findings, including ... dismissal of and formal warnings to employees,” it said.
Separately, three documents by Ernst & Young in India showed lapses in 2018, including child labour at a warehouse.
A May 2018 EY internal report on an audit of two Carlsberg warehouses found underage labourers at a location in Jharkhand. Calling it a “high” risk finding, EY said 24 of 41 workers there were under 21—the legal minimum age of employment for those engaged in alcohol sales in the state—with some as young as 16 to 18.