Avon beauty firm pays $176m to settle China bribe probe

Avon beauty firm pays $176m to settle China bribe probe

NEW YORK - US authorities on Wednesday fined the international cosmetics seller Avon Products US$135 million (S$176 million) to settle a corruption probe in China.

The global beauty supplier, known for its door-to-door and catalogue sales, bribed local officials with foreign travel and expensive trinkets such as Gucci bags and Louis Vuitton merchandise, the Securities and Exchange Commission said in a statement.

The SEC said Avon had violated the Foreign Corrupt Practices Act (FCPA) by failing to stop bribes to Chinese officials.

"The SEC alleges that Avon's subsidiary in China made US$8 million worth of payments in cash, gifts, travel, and entertainment to gain access to Chinese officials implementing and overseeing direct selling regulations in China," the SEC said.

Avon was trying to be among the first to test the regulations, and eventually received the first direct selling business license in China in March 2006, the SEC said.

"Avon missed an opportunity to correct potential FCPA problems at its subsidiary, resulting in years of additional misconduct that could have been avoided," said Scott Friestad, an associate director in the SEC's enforcement division.

US media reported that Avon, founded in 1886, pleaded guilty at a federal court in New York on Wednesday to conspiring to violate the FCPA.

In reaching the proposed settlement, the SEC considered Avon's "cooperation and significant remedial measures," the SEC said.

In addition to the financial penalty, Avon is required to retain an independent monitor to review its compliance programme with the FCPA for 18 months.

Avon is struggling in the wake of the economic slowdown in Brazil and Russia, its two main markets.

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