Avon CEO Sheri McCoy stated that she was “pleased” with the settlement in an official press releases that confirmed $68 million of the fines would be payable to the DOJ and the remaining would be payable to the SEC.
The company has stated that it has already accrued $135 million in anticipation of the fines, in an early press announcement.
Split fine payment
"The agreements include aggregate payments of $135 million to the two U.S. government agencies, with $68 million in fines payable to the DOJ and $67 million in disgorgement and prejudgment interest payable to the SEC, in connection with charges that the company violated the books and records and internal controls provisions of the FCPA (Foreign Corrupt Practices Act)", the company said in a statement.
The settlement has been agreed upon as a deferred prosecution agreement, and under the terms the DOJ will defer criminal prosecution of the company in relation to the foreign corrupt practices for a period of three years.
The settlement follows the admission in a Manhattan court this week that the company’s China division essentially disguised $8 million in gifts that its employees gave to Chinese government officials during the period 2004 to 2008.
Luxury gifts and corporate event tickets
The gifts were targeted at officials who oversaw the country’s strict direct selling regulations, with cash, non-business meals, travel and entertainments being disguised in an effort to obtain business benefits.
The SEC case brought against Avon’s China division listed Louis Vuitton, Gucci and Tiffany gift items, as well as corporate box tickets to leading sports events.
However, in Avon’s favor, the settlement papers also noted the company’s “extensive remediation” efforts which resulted in “important compliance and internal controls improvement”.
The final resolution of the SEC case is still subject to the Manhattan District Court approval, and Avon has noted that the courts are still to approve the SEC settlement