Diageo will announce its full-year results next week

Diageo will announce its full-year results next week

It would be very easy to get carried away by the latest stirrings from Diageo over in the US. Indeed, when the country's Securities & Exchange Commission comes knocking, it would take a particularly ignorant person to not get carried away. But, is this as big a deal as it at first seems?

Late yesterday, the Wall Street Journal cited people familiar with the matter in its report that the Securities & Exchange Commission (SEC) is "investigating whether Diageo has been shipping excess inventory to distributors in an effort to boost the liquor company’s results". The firm subsequently confirmed the report, adding that it "is working to respond fully to the SEC’s requests for information in this matter".

Coming so soon before the release of Diageo's full-year results next week, yesterday's news has been enough to send some observers into the stratosphere with excitement.

Of course, there can be no denying that this is a serious matter – and one that could go so far as to spell curtains for CEO Ivan Menezes, should the suggestions be true. But, scratch the surface and there may not be as much to this matter as one might think – and some might hope.

I understand that the SEC actually contacted Diageo with the request for information back in March. What prompted the request is unclear: It could be something as tenuous as a disgruntled employee (or former employee). Allegations such as this have a high burden of proof, though, meaning that it takes a lot to find fault with the accused.

Also, since March, the SEC has not pressed Diageo further. So, here we are: No formal investigation (yet), and nothing further to add.

If this is not the end of the matter, however, then Menezes will certainly have something to worry about. Despite handing over the reins for North America in 2012, at the end of the day it is still Menezes' hand on the tiller. As one source told me: "This is potentially toxic."

Irrespective of what the SEC uncovers, Menezes will present the company's full-year numbers on Thursday, with a media roundtable session scheduled for midday. He will be hoping for respite in the shade of those results but, if they are not healthy, the storm could exacerbate.

The removal of Antony Jenkins as head of Barclays earlier this month will have rattled the windows of the CEOs of all FTSE100 (of which both Barclays and Diageo are constituents) companies. "A so-so performance in a controversial business could now get you fired," another source told me.

Jenkins was ousted when disgruntled shareholders gathered behind non-executive director Michael Rake.

I imagine Menezes will be hoping that there isn't a Brutus among his ranks.