Avon Products Inc, the world's largest door-to-door seller of cosmetics , said it may spend as much as $132 million (€96.4 million)to resolve criminal and civil inquiries into whether it paid bribes in China and other countries.
About $77 million was added to a reserve for the potential settlements with the US Securities and Exchange Commission and Department of Justice in the fourth quarter, bringing the total set aside for the matter to $89 million, New York-based Avon said yesterday.
Potential settlements may exceed that amount by as much as $43 million, the company said.
While the final settlement probably will be lower than the 10 largest fines ever paid by companies to resolve possible violations of the Foreign Corrupt Practices Act, the five-year- old probe has cast a pall over Avon, which has struggled with slowing growth, posted net losses for two years and undergone changes in the executive suite during the inquiry.
Chief executive Sheri McCoy, who took the helm in April 2012 from Andrea Jung, has been trying to reach a settlement with the government while also working to reduce Avon's costs and abandon unprofitable markets such as South Korea, Vietnam and Ireland.
Avon's revenue in China has plunged during the investigation, which a person familiar with the inquiry told Bloomberg News this week is close to being resolved. "We've made significant progress," Ms McCoy said about the prospects for resolving the probe during an earnings call yesterday.
She said negotiations with the government are continuing and “while differences remain, our team is working hard to bring these matters to a close.”
The company has spent more than $300 million over the past five years on an internal investigation and compliance reviews amid the probe, making the case one of the most expensive investigations under the FCPA, which bars payment of money or anything of value to foreign officials to obtain or retain business.
Avon sought last year to end the SEC probe by offering to pay $12 million, and regulators sought a “significantly greater” amount, according to company filings.
Bloomberg
