Avon Products Inc. (AVP)’s Chinese subsidiary bribed local officials with Gucci bags and foreign travel in order to sell products directly to the nation’s consumers, the U.S.A. said as the company ended a six-year federal investigation with a guilty plea and $135 million in fines.
Avon is also subject to a deferred prosecution agreement requiring it to adopt “rigorous” internal controls and avoid further violations for three years before the case will be dropped. The plea, which includes an outside monitor, was announced at a hearing today in Manhattan federal court.
The world’s largest door-to-door seller of cosmetics had said in May it would settle the probe. Its Chinese unit pleaded guilty to conspiring to violate U.S. anti-bribery law by falsifying records of a four-year scheme to pay off Chinese authorities, who ended a direct sales ban in 2006.
“For years in China it was ‘Avon calling,’ as Avon bestowed millions of dollars in gifts and other things on Chinese government officials,” said Manhattan U.S. Attorney Bharara today. “Avon China was in the door-to-door influence-peddling business and for years its corporate parent, rather than putting an end to the practice, conspired to cover it up.”
Avon China provided gifts and entertainment to Chinese officials, “and falsified these