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Avon Fires Vice Chairman Over FCPA Investigation

Jaclyn Jaeger | January 31, 2012

Avon Products has ousted its vice chairman of developed markets, Charles Cramb, in connection with an investigation into possible bribery that occurred overseas, the global beauty company disclosed in a recent regulatory filing.

In October 2008, Avon said in a press release that it had alerted the Securities and Exchange Commission and the Department of Justice that it was voluntarily conducting an internal investigation of its China operations over possible violations of the Foreign Corrupt Practices Act, which prohibits the bribery of foreign officials. Avon said, under the oversight of the audit committee, that it commenced the investigation in June 2008 after receiving allegations that certain travel, entertainment and other expenses may have been improperly incurred in connection with the company's China operations.

In July 2009, Avon said it widened its investigations into possible FCPA violations into other countries, including Latin America. Avon also disclosed in a September 2011 quarterly filing that the SEC opened a formal investigation over the allegations of overseas bribery. The company also said it received a subpoena from the SEC in October 2011 over an investigation into whether the company improperly disclosed material information to financial analysts in 2010 and 2011.

In its latest regulatory filing dated Jan. 29, Avon said these matters are “ongoing” and no final determinations can be made at this time.

Cramb was formerly Avon's chief financial officer until the end of November, when he was fired over allegations that he had been aware for quite some time of the overseas bribery in China. He was replaced by Kimberly Ross at the end of November.

Additional firings at Avon include Ian Rossetter, former head of global internal audit and security, and Bennett Gallina, senior vice president for much of the company's global operations. In its China operations, Avon also ousted S.K. Kao, the former general manager of Avon's Chinese unit; Chief Financial Officer Jimmy Beh; and C.Q. Sun, China's former head of corporate affairs.