A direct selling company headquartered in California settled DOJ and SEC charges (see here and here) for violating the Foreign Corrupt Practices Act by bribing Chinese government officials. The company sells health and personal care products in over 90 countries.
In an Order, the SEC stated that executives of the subsidiary who were responsible for obtaining licenses facilitated their approval by offering Chinese government officials cash, gifts, meals and entertainment. In addition, the SEC alleged that the executives bribed the government officials to avoid investigations into the company and reduce fines issued by the Chinese government against the company.
The SEC asserted that the executives also failed to keep accurate Sarbanes-Oxley sub-certification letters in its books and records and funded many of the gifts offered to the government officials using falsified expense reimbursements. The SEC alleged that the subsidiary's employees submitted fake invoices and expense reports in order to be refunded for the improper benefits extended to the government officials.
To settle the SEC charges, the company agreed to (i) cease and desist from further violating securities regulations, (ii) comply with undertakings outlined in the Order and (iii) a disgorgement of $58,669,993, with prejudgment interest of $8,643,504. To settle the charges with the Southern District of New York ("SDNY"), the Company agreed to pay a $55,743,093 criminal monetary fine. The SDNY noted that it considered the company's remedial efforts when imposing a monetary sanction.
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