Federal prosecutors in Manhattan have questioned several former Avon employees as part of a probe into allegations that the company bribed foreign officials. Prosecutors are looking into the role of employees, including some former senior officials, at the New York headquarters may have played in possible violations of the FCPA.
On a related matter, in its own ongoing internal investigation into compliance issues at its China operations, Avon has extended its probe into corruption to other countries. The company has apparently uncovered evidence of millions of dollars of questionable payments to officials in Brazil, Mexico, Argentina, India and Japan that may have violated the FCPA.
According to an SEC filing made last month, Avon is conducting compliance reviews “in a number of other countries selected to represent each of the company’s international geographic segments.” The reviews and internal investigation are focused on, among other things, expenses for entertainment and gifts “in connection with our business dealings, directly or indirectly, with foreign governments.”
The company also revealed that it fired four executives placed on administrative leave in April 2010 as a result of its investigations in China. The fired executives are the former general manager for China, the China chief financial officer, the former head of corporate affairs for China, and the former head of global internal audit and security.
According to a February 24, 2011 SEC filing, Avon previously hired outside counsel to conduct the internal investigation and compliance reviews focused on the FCPA and related U.S. and foreign laws in China and other countries. The investigation, which is being conducted under the oversight of Avon’s audit committee, began in June 2008. Citing an earlier regulatory filing, Avon said it disclosed in October 2008 that it had reported its internal probe to the SEC and the DOJ.