Avon China bribery settlement could reach $132 million

Avon Products Inc, the US cosmetics and perfumes giant, yesterday said that it might have to pay as much as $132 million to settle a US criminal and civil investigation on bribery in more than a dozen countries including China.

The New York-based company said in its 2013 earnings release that it had recorded an additional $77 million in Q4 to the $12 million already recorded in Q2 for potential settlements with the US Securities and Exchange Commission and Department of Justice, and any potential settlements with the government could exceed by up to approximately $43 million.

It also added that there can be no assurance that the company's efforts to reach settlements with the government would be successful or what the terms of such settlements would be.

The US government probe under the Foreign Corrupt Practices Act, which began in 2011 after an internal Avon investigation in 2008 revolves around alleged bribing of Chinese government officials to get licenses to promote its goods by showering gifts and funding their trips to France, New York, Canada and Hawaii.

In 2011, Avon fired four senior executives and the company has since uncovered millions of dollars in questionable payments to officials in Argentina, Brazil, India and Japan.

Avon is not the only company caught in bribery net in China and other countries.

Earlier, British defence contractor BAE paid nearly $450 million to settle charges that it had made illegal payments to officials in various countries to obtain contracts, while industrial giant Siemens paid more than $1.6 billion in fines and penalties to settle overseas corruption charges. 

British drugmaker GlaxoSmithKline is currently at the center of a Chinese government investigation for one of the biggest corruption and bribery scandals uncovered in recent years.