Avon sacks executives over bribes in China
By Feng Jianmin |
00:00 UTC+8 May 6, 2011
|
Print Edition
Print Edition
FOUR executives with Avon Products Inc, the world's largest door-to-door cosmetics producer, have been fired over bribes to government officials in China.
The company said it was extending its investigation into possible corruption to other countries.
The four were S. K. Kao, former general manager for China, C. Q. Sun, former head of corporate affairs for China, Jimmy Beh, former head of finance for China, and Ian Rossetter, former head of global internal audit and security based in New York.
They were removed from their posts in April in connection with an internal investigation into possible corruption which began in July 2008, according to a filing to the United States Securities and Exchange Commission on Tuesday.
They were put on administrative leave last year during the investigation which focused on entertainment, gifts, and other items "in connection with our business dealings, directly or indirectly, with foreign governments and their employees," the filing said.
"The allegation that triggered our investigation was in China," the company said, and it was conducting the probe "in a number of other countries selected to represent each of the company's international geographic segments."
As part of the internal investigation, Avon discovered millions of dollars in questionable payments to officials in Brazil, Mexico, Argentina, India and Japan, The Wall Street Journal reported yesterday, citing an unidentified source.
The investigation was sparked by an employee who wrote a letter to Andrea Jung, Avon's chief executive, alleging improper spending related to travel with Chinese government officials.
In 2008, Deng Zhan, an official with China's Ministry of Commerce and a supporter of restoring direct selling to China, was arrested and removed from his post for taking bribes.
Two years earlier, Avon acquired the first business license to conduct door-to-door sales on Chinese mainland.
Avon declined to comment on a connection.
Avon entered the Chinese mainland in 1990 but was unable to conduct direct selling for regulatory issues. In 1998, China banned direct selling and pyramid selling over concern for frauds that were damaging participants' rights and disturbing the market.
Since 2006, the company has been involved in disputes with its retailers as it attempted to shift from retailing to direct selling.
Last July, some retailers protested against a new contract which allowed the company to shut a shop when sales failed to meet a certain standard.
Avon's first quarter revenue in China fell 32 percent, reflecting the transition to direct selling, the company said.
The company said it was extending its investigation into possible corruption to other countries.
The four were S. K. Kao, former general manager for China, C. Q. Sun, former head of corporate affairs for China, Jimmy Beh, former head of finance for China, and Ian Rossetter, former head of global internal audit and security based in New York.
They were removed from their posts in April in connection with an internal investigation into possible corruption which began in July 2008, according to a filing to the United States Securities and Exchange Commission on Tuesday.
They were put on administrative leave last year during the investigation which focused on entertainment, gifts, and other items "in connection with our business dealings, directly or indirectly, with foreign governments and their employees," the filing said.
"The allegation that triggered our investigation was in China," the company said, and it was conducting the probe "in a number of other countries selected to represent each of the company's international geographic segments."
As part of the internal investigation, Avon discovered millions of dollars in questionable payments to officials in Brazil, Mexico, Argentina, India and Japan, The Wall Street Journal reported yesterday, citing an unidentified source.
The investigation was sparked by an employee who wrote a letter to Andrea Jung, Avon's chief executive, alleging improper spending related to travel with Chinese government officials.
In 2008, Deng Zhan, an official with China's Ministry of Commerce and a supporter of restoring direct selling to China, was arrested and removed from his post for taking bribes.
Two years earlier, Avon acquired the first business license to conduct door-to-door sales on Chinese mainland.
Avon declined to comment on a connection.
Avon entered the Chinese mainland in 1990 but was unable to conduct direct selling for regulatory issues. In 1998, China banned direct selling and pyramid selling over concern for frauds that were damaging participants' rights and disturbing the market.
Since 2006, the company has been involved in disputes with its retailers as it attempted to shift from retailing to direct selling.
Last July, some retailers protested against a new contract which allowed the company to shut a shop when sales failed to meet a certain standard.
Avon's first quarter revenue in China fell 32 percent, reflecting the transition to direct selling, the company said.
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