In a recent filing with the Securities and Exchange Commission (SEC), Avon Products, Inc. has reported that its 2013 financial results and share price were “significantly” affected by an “additional accrual” related to the potential settlement of U.S. Department of Justice (DOJ) and SEC investigations into its alleged violations of the Foreign Corrupt Practices Act (FCPA). According to the company, the settlements could reach $132 million.
Avon reportedly instituted an internal investigation in June 2008, concerned that employees had violated the FCPA, and informed DOJ and SEC of the internal probe a few months later. The company has apparently terminated a number of employees, specifically those heading corporate affairs and finance for its China operations and its former head of global internal audit and security. Avon offered to settle the FCPA investigation for $12 million, but the government rejected the proposed settlement and made a counterproposal “that included monetary penalties of a magnitude significantly greater than [the company’s] earlier offer.” The Wall Street Journal reported on February 14, 2014, that Avon has already spent $340 million in legal and other costs associ- ated with its internal probe and the government investigation. Avon’s CFO has reportedly indicated that company has sufficient funds to cover financial penalties. See Law360, February 13, 2014.