(Reuters) – Herbalife Nutrition Ltd. will pay $ 123.1 million to resolve criminal and civil charges it ordered Chinese officials in government and media to increase its operations in China, the US Department of Justice said on Friday.
The multilevel marketing company, whose products include dietary supplements, entered into a three-year deferred indictment in which it admitted to conspiring to violate the provisions on foreign corruption practices, a law to combat bribery.
Authorities said Herbalife planned from 2007 to 2016 to bribe Chinese officials with cash, entertainment, meals and travel to obtain direct sales permits, reduce government scrutiny and suppress negative state-controlled media coverage.
China accounted for 1
Herbalife Approved 'Extensive and Systematic Corrupt Payments' to Chinese Officers While falsifying records to obtain bribes appeared to be legitimate business expenses, U.S. Attorney General Audrey Strauss said in a statement.
The company will pay a $ 55.74 million fine, plus $ 67.31 million in disgorgement and interest in resolving a related U.S. Securities and Exchange Commission civil case.
Herbalife, which has offices in Los Angeles, said it had previously set aside funds for liquidation, which also requires it to upgrade compliance procedures.
In November last year, US prosecutors filed related allegations of corruption against Yanliang Li, who led Herbalife's Chinese unit, and Hongwei Yang, who headed its foreign affairs department. Both are Chinese citizens and remain largely so.
Six weeks earlier, Herbalife agreed to pay $ 20 million to settle SEC charges that they misled investors about their Chinese operations.
Carl Icahn, the activist investor, owns 15.5% of Herbalife.
Hedge fund manager William Ackman invested $ 1 billion against Herbalife as of 2012, saying it violated Chinese direct sales laws and was a pyramid scheme. He wound up his position as Herbalife's share price continued to rise.
Herbalife's shares fell 1.2% to $ 49.10 early on Friday afternoon.