The
State Liquor Authority (SLA) today announced the acceptance of a
conditional no contest offer from Southern Glazer Wine & Spirits
(SGWS) to
settle charges that SGWS engaged in “pay-to-play” by providing illegal
gifts and services to business to influence their purchasing decisions,
for permitting incomplete, inaccurate, and inadequate recordkeeping
practices, and for engaging in discriminatory
sales.
Some of these violations constitute serious and systemic
violations of the 2006 Wholesale Consent Order and Decree, and this is
the first time the SLA has brought and settled charges pursuant to that
Order.
The offer was accepted by the
Members of the SLA, Chairman Vincent Bradley
and Commissioner Greeley Ford, at a meeting of the Full Board on
Wednesday, December 20, 2017. Southern has agreed to
pay $3.5 million in civil penalties, the
largest fine ever imposed by the SLA, as well as one of the largest
fines imposed by any state liquor administrator.
In addition, Southern
and the SLA will continue their cooperation moving forward, and the SLA
will enter into an industry-leading Corporate
Compliance Agreement, allowing the SLA to obtain information on
systemic and systematic practice violations moving forward.
“Pay-to-Play” & Illegal Gifts and Services
In
the Summer of 2017, and during the course of other investigations into
SGWS, the SLA became aware of evidence that SGWS solicitors and managers
were engaging in sales practices in direct violation of the New York
State’s Alcoholic Beverage Control (ABC) Law’s prohibition on offering
“gifts & services” to induce retail sales. Illegal gifts and
services, commonly referred to as “pay-to-play” schemes,
include providing compensation, either in cash or goods, to licensed
establishments to secure the right to sell alcoholic beverages, often to
the exclusion of competitors. The practice is illegal under the Consent
Order and Decree of 2006, Federal Alcohol
and Tobacco Tax and Trade Bureau (TTB) regulations, as well as under
the ABC Law.
Specifically,
SGWS salespersons were running up large expenses on their corporate
credit cards at favored retailer’s establishments, without receiving
anything in return, to influence their purchasing decisions, an illegal
practice commonly known as “credit card swipes.” On September 26,
2017, SLA Wholesale Investigators interviewed an SGWS District Manager
for the Capital Region regarding the questionable
charges. When confronted with the evidence assembled by the SLA’s
investigators, the District Manager admitted to running his credit card
at favored establishments to artificially lower the retailers’ costs for
alcohol purchases and incentivize additional
purchases. SGWS’ Albany District Manager ultimately admitted to making
several illegal transactions from January 1, 2017 to June 30, 2017,
ranging from $50 to over $1,000 in credit card swipes.
Click here for the full report.
Source: The
State Liquor Authority
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