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Foreign Corrupt Practices Act Case Study

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Avon Products Inc.
The Foreign Corrupt Practices Act (FCPA), enacted in 1977, generally prohibits the payment of bribes to foreign officials to assist in obtaining or retaining business (SEC Emblem 2017). On December 17, 2014, the Securities and Exchange Commission decided to charge Avon Products Inc. with the violation of the Foreign Corrupt Practices Act. Avon Products Inc. dishonored the FCPA by doing what the FCPA says not to do, they failed to put in controls to detect and prevent gifts or payments to the Chinese government officials. Avon did this because after becoming the first company to be able to get a direct selling license in China they were trying to prevent China from fining them and also trying to prevent from having damaging articles written about them in the news. The SEC found that Avon’s subsidiary was giving travel, cash, and other offerings …show more content…

When they found it, Avon’s management decided to consult with a law firm about what they had found and decided to send out an audit team to check up on the subsidiaries in China to comply with the FCPA. It was never a thorough investigation until the CEO was sent a letter by a whistleblower that Avon decided to do a complete internal investigation in 2008. However, after the completion of the internal audit, the damage to the company had already been done. After all the evidence was found against Avon China, the company ended up pleading guilty to the charges the SEC filed against them. The charges they plead guilty to were knowingly engaging in bribery to retain all the contracts as well as violating the records requirements of the FCPA. The way the company issue was resolved was by making a payment of $135 million for the violation, Avon also has to enter a three-year agreement with the Department of Justice and retain a compliance monitor for at least 18

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