NEW YORK/WASHINGTON (Reuters) - The China unit of Avon Products Inc pleaded guilty on Wednesday in connection with a bribery scheme and Avon agreed to pay $135 million to resolve related civil and criminal charges.
U.S. District Judge George Daniels accepted the plea and approved an agreement to defer the charges, which the direct seller of beauty products had disclosed it had reached earlier this year to resolve a multiyear foreign bribery investigation.
Half of the settlement amount covers a criminal fine, and the other half covers civil charges from the U.S. Securities and Exchange Commission.
Avon’s general counsel Jeff Benjamin admitted at the Manhattan federal court hearing that from 2004 through 2008, Avon China executives and employees provided gifts to Chinese government officials, and inaccurately represented the expenses on its books.
“Avon China’s conduct in this regard was wrong and violated its own policies and the policies of Avon Products Inc,” Benjamin said.
According to the SEC complaint, Avon paid Chinese officials who could help it obtain a direct sales business license, avoid fines, and suppress negative news stories in state-owned media.
The SEC said Avon made 9,600 payments totaling $1.65 million for the officials.
It said one 2007 expense report listed $8,100 in entertainment for government officials in the same two months that Avon China was negotiating a certification of apparel for sale there.
Avon also provided officials tens of thousands of dollars in tickets to the China Open tennis tournament, and provided gifts that included Louis Vuitton merchandise, Gucci bags, and Tiffany pens, according to the complaint.