NEW YORK CITY (dpa-AFX) - Beauty products maker Avon Products, Inc. (AVP) said Wednesday that it has reached a $135 million settlement with the U.S. Department of Justice (DoJ) and the U.S. Securities and Exchange Commission (SEC) for violating the accounting provisions of the Foreign Corrupt Practices Act.
The company is charged of concealing more than $8 million in gifts, cash and non-business meals, travel and entertainment it gave to Chinese government officials in order to obtain and retain business benefits for Avon China between 2004 and 2008.
'Companies that cook their books to hide improper payments will face criminal penalties, as Avon China's guilty plea demonstrates. Public companies that discover bribes paid to foreign officials, fail to stop them, and cover them up do so at their own peril,' said Assistant Attorney General Leslie Caldwell.
Avon and Avon China pleaded guilty and admitted the improper accounting and payments as well as Avon entered into a deferred prosecution agreement to resolve the probe. The company violated the books and records and internal controls provisions of the FCP Act.
The settlement will see the New York-based world's largest door-to-door cosmetics seller paying $68 million in fines to the DOJ and $67 million in disgorgement and prejudgment interest to the SEC to settle the probe.
Avon has also now agreed to implement rigorous internal controls and to appoint a compliance monitor for at least 18 months to ensure that reforms are instituted and maintained. Meanwhile, the DoJ will defer criminal prosecution of the company for a period of three years in connection with the alleged violations of the FCP Act.
However, the settlement with the SEC is still subject to approval by the U.S. District Court for the Southern District of New York.
'For years in China it was 'Avon calling,' as Avon bestowed millions of dollars in gifts and other things on Chinese government officials in return for business benefits. Avon China was in the door-to-door influence-peddling business, and for years its corporate parent, rather than putting an end to the practice, conspired to cover it up,' said U.S. Attorney Preet Bharara.
AVP closed Wednesday's regular trading session at $9.33, up $0.22 or 2.41% on a volume of 7.92 million shares.
Copyright RTT News/dpa-AFX