New York—The New York State Liquor Authority, SLA, accepted a no contest deal with Southern Glazer Wine & Spirits to pay $3.5 million in fines to settle charges the nation’s largest wholesaler engaged in “pay to play” by providing illegal gifts and services to businesses to influence purchasing decisions, permitting incomplete, inaccurate, and inadequate recordkeeping practices and for engaging in discriminatory sales.

According to a statement by the SLA, the fine is the largest ever imposed by the state agency and stems from an investigation during the summer of 2017 into other matters that revealed Southern employees were offering “gifts and services” to induce retail sales. The SLA states Southern sales staff were running up large expenses on corporate credit cards at favored retailers without receiving anything in return. The scheme is referred to as “credit card swipes” and included transactions ranging from $50 to $1,000. The SLA states it interviewed a Southern director of sales “who admitted to approving the fraudulent transactions as a matter of standard business procedure.”

The agency also reported that beginning in July 2015 it had received complaints from the owners of restaurants who discovered that had been listed for not paying on time for alcoholic beverage credit accounts even though they were certain they had paid all the accounts. The SLA reviewed Southern’s books and “identified, incomplete, inaccurate and inadequate invoicing practices.”

Another investigation stemming from a December 2015 complaint found that Southern would not process orders for beverages in the order in which they were received and “certain retainers were able to obtain discounted products, while others were routinely and unlawfully, denied the same produces in direct violation of ABC law."

SLA also reports it has compelled Southern to sign a “Corporate Compliance Agreement” that includes a code of business ethics, a corporate compliance agreement and a corporate compliance officer to monitor and address suspicious activity. Because of the agreement, $1 million of the fines have been suspended 

“The multitude of violations found during the course of these investigations is truly staggering,” said SLA chairman Vincent G. Bradley in the SLA statement. “The SLA remains committed to rooting out abuse and corruption in the alcoholic beverage control industry to ensure a level playing field for all businesses.”

The entire SLA report can be found at: www.sla.ny.gov