Dietary supplement maker Herbalife said in a regulatory filing it has set aside $40 million in accrued liability concerning an investigation into the company’s compliance with the Foreign Corrupt Practices Act in China.
As first disclosed by the company in January 2017, Herbalife in its latest annual report said the Securities and Exchange Commission and the Department of Justice are “mainly focused on the company’s China external affairs expenditures, its China business activities, adequacy of, and compliance with, the company’s internal controls in China, and accuracy of the company’s books and records relating to its China operations.”
Herbalife said it conducted its own review and “implemented remedial and improvement measures based upon this review, including but not limited to replacement of a number of employees and enhancements of company policies and procedures in China.”
The company said it cannot predict the scope, duration, or outcome of the investigations at this time, “including whether a settlement will be reached, the amount of any potential monetary payments, or injunctive or other relief.”
Alex Amezquita, senior vice president of finance and strategic planning, expounded on this a bit more during a fourth-quarter earnings call: “The accrual that you see in the FCPA disclosure doesn’t indicate a timeline, it doesn’t indicate where we might ultimately land,” he said. “It is simply an artifact of the discussions that have continued to progress.”
Amezquita added the company continues to have discussions with the Justice Department and the SEC.