Herbalife to Pay $123 Million to Resolve China Bribery Cases

Herbalife to Pay $123 Million to Resolve China Bribery Cases

(Bloomberg) — Health supplement maker Herbalife agreed to pay $123 million to resolve U.S. criminal and civil charges that it paid bribes to Chinese officials.

The company said in securities filing that a criminal case announced Friday was related to a settlement the company disclosed in May with the Justice Department and Securities and Exchange Commission. A spokesman for Herbalife didn’t immediately have a comment on the matter.

Federal prosecutors in Manhattan said Herbalife agreed to pay a criminal penalty of nearly $56 million and a civil penalty of roughly $67 million to resolve a government investigation into possible violations of the U.S. Foreign Corrupt Practices Act. The company said in May it was setting aside that amount to resolve the FCPA investigation.

Prosecutors unsealed charges Friday at a remote proceeding before U.S. District Judge Gregory Woods in Manhattan, alleging that Herbalife from 2007 to 2016 provided corrupt benefits to Chinese officials, including those with government agencies and media outlets, to increase its business in that country.

The government said it had reached a deferred prosecution agreement with Herbalife relating to one count of conspiracy to violate the FCPA. Herbalife pleaded not guilty, and the parties agreed to suspend proceedings for 3 1/2 years to give Herbalife a chance to demonstrate its good conduct.

The SEC also announced a case against Herbalife on Friday but the company had agreed to the penalty and to cease and desist from future FCPA violations.

Activist investor Carl Icahn remains Herbalife’s largest shareholder, according to data compiled by Bloomberg. The billionaire said he owns about 15.5% of the company after selling roughly 40% of his stake earlier this month for portfolio management purposes. He said at the time that he continues to “strongly believe in the great future of the company.”

Icahn has long been a public supporter of Herbalife and famously battled short-seller Bill Ackman, who called the company a pyramid scheme. Ackman, meanwhile, admitted defeat in the fight and sold off his position in the company more than two years ago.

(Updates with Herbalife’s securities filing, financial penalties and SEC action)

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="For more articles like this, please visit us at bloomberg.com” data-reactid=”25″>For more articles like this, please visit us at bloomberg.com

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Subscribe now to stay ahead with the most trusted business news source.” data-reactid=”26″>Subscribe now to stay ahead with the most trusted business news source.

©2020 Bloomberg L.P.

Leave a Reply

Your email address will not be published. Required fields are marked *