AVON PRODUCTS, INC.

Babasanta, Zahnezra Danielle, L.

Cialana, John Carlo
Estiala, Christelle
FACTS
 David McConnell founded Avon in 1886.

 Door-to-door or direct selling was the core element of

their business model that made the company successful.

 Andrea Jung became the CEO in 1999.

 The Chinese government banned direct selling in 1998

which forced Avon to open a Boutique.
FACTS
 Avon China was the first one to receive a license to
continue direct selling in 2005.

 More than a year passed before other foreign

companies received their license.

 Andrea Jung received a letter from a whistleblower

that disclosed the bribery between Chinese subsidiary
and the Chinese government officials.
FACTS
 Avon’s investigation and parallel investigations by SEC
and USDOJ concluded that Avon Products China had
made expenditures of approximately $8million to
improperly influence Chinese government officials; those
expenditures violated the Foreign Corrupt Practices Act
(FCPA)

 Avon paid nearly $135 million to settle the FCPA

charges and spent $350 million on its internal FCPA
investigation.

 APC executives were dismissed, and Jung was replaced

as CEO by Avon’s board.
ISSUE
 Avon China engaged in criminal misconduct by
concealing approximately $8 million worth of gifts, non-
business travel, dinners, and entertainment for Chinese
government officials in violation of the FCPA's books and
records regulations. Avon China's primary objective was
to acquire and retain business benefits.

EXPLANATION
 Avon China sought to conceal payments and perks in a
variety of ways, including by misrepresenting the nature
or purpose , or participation in, such expenses, and by
misrepresenting payments to a third party middleman as
payments for lawful consulting services.