Avon to Resolve FCPA Allegations for $135 Million

May 13, 2014 — The U.S. Foreign Corrupt Practices Act (FCPA) helps to foster a level playing field for international businesses so that honest competition can thrive. To discourage corporations from bribing foreign government officials with gifts and travel as a way to obtain business, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 established a whistleblower program. Informants who notify the U.S. Securities and Exchange Commission (SEC) about foreign bribery enterprises may be eligible for significant rewards from the government.

Avon has finally resolved the government’s FCPA charges against it, the cosmetics company recently reported in its May Form 10-Q SEC filing. Avon will pay $67 million to the SEC and $68 million to the Justice Department in disgorgement, fines and prejudgment interest.

The FCPA charges reportedly involve the company’s operations in China. In June 2008, Avon learned that improper expenditures may have been made in China for entertainment and travel. In October 2008, Avon informed both the SEC and the Justice Department that it had initiated an internal probe. In July 2009, as a result of information gathered in the internal investigation, Avon began performing FCPA reviews in a number of countries to determine whether company personnel were in compliance with the U.S. anti-bribery statute.

Specifically, the reviews focused on record and book keeping processes for tracking gifts, entertainment and travel. The company also looked into the use of third-party agents and consultants and how these individuals were paid, particularly concerning their dealings with foreign government officials. The reviews led to Avon’s firing of a number of senior members of management.

The settlement deal will not be final until Avon’s board approves it, as well as the SEC. Avon also needs court approval. Since 2009, Avon has spent over $300 million on professional fees and expenses related to the FCPA investigation.

The qui tam attorneys at Waters & Kraus are committed to representing whistleblowers who are ready to stop foreign bribery scams by collaborating with the U.S. government. While we are not involved in this particular case, we are handling similar matters. We understand that in this economic climate, it takes courage to blow the whistle on an employer’s FCPA violations. Our experienced lawyers are devoted to safeguarding their clients’ rights during the process. Contact us by email or call our lawyers at 855.784.0268 to learn more about the Foreign Corrupt Practices Act and your role in doing the right thing.