SEC Charges Firm with FCPA Violations

The SEC charged Avon Products, Inc. ("Avon") with violating the Foreign Corrupt Practices Act ("FCPA") by failing to put controls in place to detect and prevent payments and gifts to Chinese government officials from employees and consultants at a subsidiary.

The SEC alleges that Avon's subsidiary in China made payments in cash, gifts, travel and entertainment to gain access to Chinese officials implementing and overseeing direct selling regulations in China. Improper payments also were alleged to have been made to avoid fines or negative news articles that could have impacted on the clean corporate image that Avon required to retain the license. According to the SEC, Avon management learned about potential FCPA problems at the subsidiary through an internal audit report in late 2005. However, the SEC stated, Avon did not begin an internal investigation until 2008, after its CEO received a letter from a whistleblower.

The SEC also alleged that Avon's books and records failed accurately to record the details and purpose of the payments.

See: SEC Complaint.See also: FCPA Specialty Page (available to Cabinet subscribers only).