On December 17, 2014, Avon and its China subsidiary resolved the DOJ’s FCPA investigation into the New York-based cosmetics company’s operations in China and agreed to pay $68 million. Avon Products (China) Co. Ltd. (Avon China), a wholly owned subsidiary of Avon, pleaded guilty to a criminal information charging it with conspiring to violate the FCPA’s books and records provisions. Avon entered into a deferred prosecution agreement (DPA) and admitted its criminal conduct, including its role in the conspiracy and failure to implement internal controls. Under the terms of the DPA, the DOJ will defer criminal prosecution of Avon for a period of three years and the company will appoint a compliance monitor.
According to the companies’ admissions, from at least 2004 through 2008, Avon and Avon China conspired to falsify Avon’s books and records by falsely describing the nature and purpose of certain Avon China transactions, including disguising $8 million in gifts, cash and non-business travel, meals and entertainment that Avon China executives and employees gave to government officials in China in order to obtain and retain business benefits for Avon China.
Also on Dec. 17 in related civil proceedings, the SEC charged Avon with violations of the Corporate books and records and internal control provisions of the FCPA and announced that Avon agreed to pay more than $67 million in disgorgement and prejudgment interest to settle the charges. The settlement has not yet been approved by the Court.