According to the SEC, from 2004 to 2008 Avon’s Chinese subsidiary obtained a direct selling license by paying $8m.
The gifts bought included expensive gifts from Gucci, Tiffany and Louis Vuitton and plane tickets for officials.
Avon is the world’s largest direct seller of beauty products.
All businesses are banned from giving any gifts or paying money to foreign officials to retain or obtain business under the US Foreign Corrupt Practises Act.
Avon has been struggling with growth in its major markets, but according to its website it still makes $10bn annual revenue.
Avon became the first business to obtain a license for direct selling after the ban on direct selling was lifted in 2006.
Gifts from Gucci, Tiffany, Louis Vuitton
The SEC stated that to “gain access to Chinese officials implementing and overseeing direct selling regulations,” Avon made payments in gifts, cash, entertainment and travel.
It also used these payments to “avoid fines or negative news articles that could have impacted Avon’s clean corporate image” to help obtain and retain their license.
The payments for gifts were recorded as business expenses, reimbursements to vendors or recorded with “almost no detail at all”.
The SEC said that Avon’s HQ were alerted to this as early as 2005 and were said to be implementing reforms to rectify the situation, “ultimately, however, no such reforms were instituted at the Chinese subsidiary”.
It wasn’t until 2008 after a tip off from a whistleblower that a full investigation was launched.
Avon said the fine they received was “in line with the expected terms the company previously reported”.