Diageo has had its import licence cancelled in South Korea.

The drinks giant confirmed yesterday (26 June) that the tax authorities had made the move in light of dealing with unlicensed wholesalers in the country, and not because of tax irregularities, as was previously believed.

As well as losing its licence to import into the country, Diageo Korea was stung by a KRW290m (US$312,615) fine.

"We deeply regret that a small number of our employees have engaged in improper transactions with unlicensed wholesalers, in violation of our company's policies and the conditions of our license,' the company said, adding that, while it acknowledges responsibility for past mistakes, "we believe that the cancellation of Diageo Korea's license is a very severe penalty, which will have a disruptive and costly impact on our business".

Supply of Diageo's products should not be affected by the cancellation, however, as the company plans to use an independent third-party distributor.

"Diageo Korea will apply for a new import license as soon as it is permitted to do so," the company concluded.

Earlier reports in the country has suggested that Diageo was under investigation for tax evasion, an allegation the company denied at the time.