Beauty products company Avon Products, Inc. said in a filing Friday that its costs related to an internal inquiry into whether any Avon employees paid bribes to foreign officials increased by $18 million in the last quarter.
The company did not list the total cost of the inquiry.
In June 2008, Avon opened the internal probe into possible Foreign Corrupt Practices Act violations, after a employee alerted executives to improprieties related to spending on travel for Chinese government officials.
The company has since expanded the inquiry to include its business in other countries, the company confirmed today, and has contacted the Justice Department and the Securities and Exchange Commission about its investigation.
Last month the company suspended four executives in China. In an earnings call Friday, the company’s chairman and CEO Andrea Jung said the suspensions, which occurred three weeks ago, were not related to the outcome of the probe. The Wall Street Journal reported earlier this month that the suspensions were related to the bribery investigation, citing persons familiar with the probe.
On Friday, the company also announced that René Ordóñez would move from the company’s Latin America division to take over as manager of its China business.
“[W]e have engaged outside counsel to conduct an internal investigation and compliance reviews focused on compliance with the Foreign Corrupt Practices Act (“FCPA”) and related U.S. and foreign laws in China and additional countries,” the company said in the filing. “We are conducting these compliance reviews in a number of other countries selected to represent each of the Company’s four other international geographic segments.
Avon said it is continuing to cooperate with both the SEC and DOJ and has signed agreements with the agencies to waive the right to any statute of limitations defense if they uncover violations.
The review is focused on travel, entertainment, and gift expenses, the company said.
Other companies, most recently Daimler AG, have run into trouble doing business in a China. Because many of the country’s companies are state owned or controlled, employees of such enterprises can be considered foreign officials under the FCPA.