Yesterday, Anheuser-Busch entered into a Cease and Desist Order with the Securities and Exchange Commission, in which it agreed to pay $6 million to the U.S. Treasury (of which $3 million was a fine) for some bad things that happened in India. $6 million is a lot of money. But since we’re talking about bad things happening in India let’s have a bit of fun and instead note that the total payment is approximately ₹401 million. That’s a lot of rupees. And at the current going rate for Budweiser in Mumbai (about ₹110 per bottle), it is also a lot (about 3.6 million bottles) of beer. So what did AB do to find itself in this predicament? Three things: bribery, retaliation against a whistleblower and failing to keep up with a change in law.

A little explanation is in order. In 1977, Congress enacted the Foreign Corrupt Practices Act –which generally makes it illegal for any company with a U.S. presence to make an improper payment to a foreign official in the course of its business. There’s a common belief that the FCPA only applies to public companies. This belief is mistaken; the anti-bribery provisions of the FCPA apply whether you’re public or private. There are additional recordkeeping requirements that are applicable only to companies filing periodic reports with the Securities and Exchange Commission.

With that as background, we turn to what actually happened. From 2009 to 2012, AB owned a 49% interested in an Indian joint venture (the “JV”) – the purpose of which was to manage the marketing and distribution of Crown Beer in India and Nepal. The primary financial officer for AB’s subsidiary – Crown Beers India Private Limited – served as the highest financial officer for the JV, and Crown’s in-house lawyer also served as the JV’s in-house lawyer.

The JV took its responsibility to push Crown’s results very seriously. In fact, they took that obligation so seriously that they crafted a plan to increase sales through what were improper benefits and payments (i.e., bribes) to government officials. But the JV wasn’t so brazen as to be comfortable with paying those officials directly. After all, that might raise suspicion.

Rather than pay the officials directly, the JV worked with two promoters (each of whom had essentially no prior experience in the alcohol industry). They paid the promoters – ostensibly for services – and the promoters turned around and made payments to government officials. And with the benefit of that arrangement, the JV was able to accomplish quite a bit – both in terms of obtaining additional sales of beer and also obtaining regulatory permission to increase production.

All of this raised some suspicion in the mind of one of the Crown employees and in 2010 and 2011, the employee did the right thing by reporting these concerns to his supervisors. But in early 2012, Crown did the wrong thing; it fired the employee.

When his employment was terminated, the employee reasonably concluded that he had a legal claim against Crown. Following mediation, Crown and the employee entered into an agreement resolving his claims against Crown. That agreement contained what for many years was reasonably standard language requiring confidentiality regarding the settlement and releasing claims. But of course what was commonplace for years may not be so forever. And in this case the standard language ran afoul of the whistleblower protections enacted in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. In other words, Crown compounded the FCPA violation by violating another federal law. Bad news.

What are the key lessons for Hooch companies here? First of all, if you’re distributing products overseas don’t use a distributor that you think is going to do something illegal. Do some diligence about the distributor and make sure that it has a reputation not only for being good at selling the products it distributes but also for acting with integrity and in compliance with the law.

Secondly, if someone within your organization reports concerns that your business may not be operating in compliance with law, take those reports seriously and do not take any adverse employment action against that individual. If you retaliate against the employee, you’re probably giving the employee (or former employee) a decent cause of action against you.

Third, take a look at any confidentiality provisions you may have in your standard form documents relative to employees, contractors or other third parties. If they contain language that could be interpreted to prevent that third party from talking with the government about your criminal misdeeds you’ve got a potential problem.