Herbalife Admits Bribing Chinese Officials to Grow Business

The company acknowledged paying off Chinese officials for a decade to secure licenses to sell its products

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Scott Eells/Bloomberg via Getty Images

Herbalife, a Los Angeles-based health and nutrition company, bribed Chinese government officials for a decade to grow its overseas business and falsified accounting records to cover up the payments, U.S. prosecutors said Friday in announcing corruption charges against the publicly traded company.

Herbalife agreed to pay combined penalties of more than $123 million to resolve the charges, federal prosecutors said.

The company admitted to the conspiracy as part of a deferred prosecution agreement it reached with the U.S. Justice Department and the U.S. Attorney's Office in Manhattan.

The charges were brought under the Foreign Corrupt Practices Act, which prohibits bribery of foreign government officials or company executives to secure or retain business.

Herbalife did not immediately respond to a message seeking comment.

Company officials began paying off Chinese government officials in 2007 in a bid to obtain licenses from national and local authorities the company needed to sell health and nutrition products.

They also bribed a state-owned media outlet “for the purpose of removing negative media reports about Herbalife China,” prosecutors said.

Herbalife falsely recorded the improper payments as “travel and entertainment expenses,” prosecutors said.

Herbalife has long been embroiled in litigation and regulatory actions over its business practices, which have been compared by some to a pyramid scheme.

Prosecutors said the company also agreed to pay more than $67 million in disgorgement — repayment of ill-gotten gains — and prejudgment interest to the Securities and Exchange Commission.

Copyright AP - Associated Press
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