Ralph Lauren Corporation paid bribes in Argentina.
Do they get criminally prosecuted under the Foreign Corrupt Practices Act (FCPA)?
No.
Instead, they get non prosecution agreements.
Not agreement.
But agreements.
Not just one, but in a first — two non prosecution agreements.
One from the Department of Justice.
And, a second one from the Securities and Exchange Commission (SEC).
The SEC non prosecution agreement is the first that the SEC has entered involving FCPA misconduct.
Non prosecution agreements are part of the SEC Enforcement Division’s Cooperation Initiative, which rewards cooperation in SEC investigations.
The company was represented by Thomas Hanusik of Crowell & Morning in Washington, D.C.
On May 3 at the National Press Club, Hanusik will be moderating a panel on SEC settlements at a Corporate Crime Reporter sponsored conference titled Neither Admit Nor Deny: Corporate Crime in the Age of Deferred Prosecutions, Consent Decrees, Whistleblowers & Monitors.
The SEC said that Ralph Lauren Corporation’s Argentine subsidiary paid bribes to government and customs officials to improperly secure the importation of Ralph Lauren Corporation’s products in Argentina.
The purpose of the bribes, paid through its customs broker, was to obtain entry of Ralph Lauren Corporation’s products into the country without necessary paperwork, to avoid inspection of prohibited products, and to avoid inspection by customs officials.
The bribe payments and gifts to Argentine officials totaled $593,000 during a four-year period.
Under the SEC’s non prosecution agreement, the company will disgorge more than $700,000 in illicit profits and interest obtained in connection with bribes paid by a subsidiary to government officials in Argentina from 2005 to 2009.
The bribery was uncovered in an internal review undertaken by the company and reported to the SEC..
The SEC said it decided not to charge Ralph Lauren Corporation with violations of the Foreign Corrupt Practices Act (FCPA) due to the company’s prompt reporting of the violations on its own initiative, the completeness of the information it provided, and its extensive, thorough, and real-time cooperation with the SEC’s investigation.
Ralph Lauren Corporation’s cooperation saved the agency substantial time and resources ordinarily consumed in investigations of comparable conduct, the SEC said in a statement.
In parallel criminal proceedings, the Justice Department entered into an non prosecution with Ralph Lauren Corporation in which the company will pay an $882,000 penalty.
“When they found a problem, Ralph Lauren Corporation did the right thing by immediately reporting it to the SEC and providing exceptional assistance in our investigation,” said George S. Canellos, Acting Director of the SEC’s Division of Enforcement. “The NPA in this matter makes clear that we will confer substantial and tangible benefits on companies that respond appropriately to violations and cooperate fully with the SEC.”
The SEC said the company reported preliminary findings of its internal investigation to the staff within two weeks of discovering the illegal payments and gifts, voluntarily and expeditiously produced documents, provided English language translations of documents to the staff, summarized witness interviews that the company’s investigators conducted overseas, and made overseas witnesses available for staff interviews and bringing witnesses to the U.S.
The SEC said the bribes occurred during a period when Ralph Lauren Corporation lacked meaningful anti-corruption compliance and control mechanisms over its Argentine subsidiary.
The misconduct came to light as a result of the company adopting measures to improve its worldwide internal controls and compliance efforts, including implementation of an FCPA compliance training program in Argentina, the SEC said.
Under the NPA, Ralph Lauren Corporation agreed to pay $593,000 in disgorgement and $141,845.79 in prejudgment interest.
Ralph Lauren Corporation has ceased operations in Argentina.