Avon China pleads guilty to bribing local officials

Avon China, the Chinese subsidiary of Avon Products Inc., has pleaded guilty to bribing local officials to sell products to the country’s consumers.

The US completed a six-year federal investigation and found the company guilty. It will have to pay $135 million in fines.

Avon China was accused of bribing local officials with luxury handbags and foreign travel.

Before the case is completely dropped Avon will be subject to a deferred prosecution agreement, making it implement “rigorous” internal controls and prevent any other violations.

The hearing was announced in Manhattan federal court on Wednesday.

Avon, the world’s number one door-to-door seller of cosmetics, said earlier this year that it would settle the probe.

The Chinese subsidiary, Avon China, pleaded guilty to the violation of a US anti-bribery law by covering up a four-year scheme which involved bribing Chinese authorities.

Manhattan U.S. Atty. Bharara said:

“For years in China it was ‘Avon calling,’ as Avon bestowed millions of dollars in gifts and other things on Chinese government officials. 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 general counsel Jeff Benjamin told U.S. District Judge George Daniels that the company has bribed officials “and falsified these transactions on its books and records,” adding that “Avon China’s conduct in this regard was wrong.”

These gifts ranged from meals to expensive gifts such as “personal luxury items like designer wallets, bags or watches.”

Four Chinese officials were offered a sightseeing trip by Avon China in 2006, visiting cities such as New York, Montreal, Las Vegas and Washington.

According to the government, these payments were hidden in company records as “business entertainment,” “employee travel” or “public relations business entertainment”.