Drinks maker Diageo faces US probe

The US regulator, the Securities and Exchange Commission (SEC), has launched an investigation into whether drinks company Diageo has been shipping excess stocks to customers to boost results.

Sending customers more cases than they had ordered would allow Diageo to report higher sales than were placed.

Diageo said it was "working to respond fully to the SEC's requests for information in this matter".

Shares in Diageo closed down 2.1% at £18.66 following the news.

The US market accounts for nearly $18bn of Diageo's annual sales.

But sales in the region have been falling since 2011.

Diageo - which makes drinks including Smirnoff vodka, Guinness and Johnnie Walker whiskey - saw its share price surge last month on reports of a possible £50bn takeover bid from the Brazilian billionaire Jorge Paulo Lemann and his private equity partners.

In the second half of last year the world's biggest distiller of Scotch whisky reported a sharp fall in sales in some of its key markets.

Diageo said profits fell by 18% to £1.7bn, while overall sales were down 1%.

Trading conditions in parts of Europe and Russia, described as "tough" at the start of the year by the company, are thought to remain difficult.