Avon Assesses Bribery Settlement Cost at up to US$132m
Avon Products, the US group famous for door-to-door sales of cosmetics and beauty products, assesses the cost of settling a bribery investigation into its efforts to develop new overseas markets at up to US$132m.
The US Securities and Exchange Commission (SEC) and the Department of Justice (DoJ) launched an investigation into the company’s policies in 2011, following an internal probe by Avon that started three years earlier into allegations of improper payments in China.
Avon’s own internal investigation has already cost the company about US$300m. It believes that any deal that is reached to settle the Foreign Corrupt Practices Act (FCPA) investigation could range from US$89m and US$132m.
Avon’s chief executive officer (CEO), Sheri McCoy, said that negotiations with both authorities had made ‘significant’ progress, but warned that reaching a settlement was not guaranteed and even if a deal was reached, the company could not estimate its timing.
Chief financial officer (CFO), Kimberly Ross, said Avon has enough liquidity to cover the financial penalties. The investigation has centred on whether Avon breached the US anti-bribery law by providing gifts or making payments to government officials to secure licences to sell its products.
Last October, Avon said that it had sought to settle the US probe with an offer to pay a penalty of US$12m, but regulators wanted a ‘significantly greater’ amount.