Avon CEO Andrea Jung discusses company’s probe of bribery allegations in China

On the Call: Avon CEO discusses its bribery probe

After Avon Products Inc., reported its first-quarter results Friday, CEO Andrea Jung talked with analysts on a conference call about a bribery investigation in China that began in 2008.

The company had previously said little about its internal investigation, which led it to suspend four executives this spring, though Avon has said it has expanded its probe to other countries.

QUESTION: Can you discuss the investigation in China?

RESPONSE: Avon disclosed in October 2008 that an allegation had been made about possible FCPA (Foreign Corrupt Practices Act) allegations in our China business, relating to travel, entertainment and other expenses. The allegation came in the form of a letter written (by an undisclosed correspondent) directly to me.

As you would expect I immediately turned the information over for proper handling, and we began an internal investigation under the oversight of our audit committee and conducted by outside counsel. Most importantly we voluntarily self-reported the allegations to the U.S. Securities and Exchange Commission as well as the Department of Justice.

China is a unique and highly regulated market with its own specific requirements. Nevertheless, as a company that holds leadership positions in developing and emerging markets, we are also conducting compliance reviews related to SCPA in additional countries. …

I want to clarify we are conducting these compliance reviews in a selection of markets representing each of our four international business units outside of China. I also want to emphasize again the allegation that triggered our investigation was in China only. Conducting compliance reviews in these additional markets is the appropriate thing to do in investigations of this type, and as we stated we’ve been cooperating with both governmental agencies. …

The decision to put people on administrative leave does not reflect any outcome from the investigation. Given this, and given that the associates are not senior, executive-level officers of this company, we did not file a disclosure and name the names. So that’s where we are in terms of FCPA, no conclusions can be drawn at this time, and as I said the investigation has been going on since 2008.