Herbalife Nutrition Ltd., a publicly traded global nutrition company based in the US, will pay penalties of over $122 million over violations of the Foreign Corrupt Practices Act (FCPA). Herbalife falsified records and bribed Chinese government officials to boost its business in China for more than a decade. Of the total penalty amount, $55 million is the levied criminal penalty while over $67 million is to be paid to the US Securities and Exchange Commission (SEC).
Between 2007 and 2016, Herbalife falsified its books and records and provided corrupt payments and benefits to Chinese government officials. US authorities decided the resolution and associated penalties based on several factors not limited to the seriousness of this offense. These included Herbalife’s failure to timely disclose the offense and to instate an effective compliance program, among other factors.
However, since the disclosure, Herbalife has conducted several remedial activities. These have ranged from terminating the employees who perpetrated the misconduct to enhancing the company’s compliance resources. Since Herbalife agreed to fully cooperate with the investigating authorities, the financial penalty was 25 percent lower than recommended by the US Sentencing Guidelines.