Ralph Lauren Agrees to Pay More than $1.5 Million for Alleged Bribery Charges
Ralph Lauren Corporation agreed to pay more than $1.5 million in penalties and disgorgement to the Justice Department and Securities and Exchange Commission on allegations the company bribed Argentinean government officials to obtain improper customs clearance of merchandise, the two federal agencies announced April 22.
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The New York-based company agreed to pay $882,000 to the DOJ to cover allegations of Foreign Corrupt Practices Act violations. According to the agreement, the manager of Ralph Lauren’s subsidiary in Argentina bribed customs officials in that country over five years, sidestepping customs procedures to push merchandise through. The company obtained paperwork necessary for the goods to clear customs, permit clearance of items without necessary paperwork, clearance of prohibited items and even occasionally avoided inspection entirely, DOJ said in a release (here). Ralph Lauren’s employee disguised the bribe payments by funneling them through a customs clearance agency. That agency created fake invoices which justified the illegal payments.
During the five years of bribery, Ralph Lauren did not have an anti-corruption program or provide any anti-corruption training or oversight for its Argentinean subsidiary. The Foreign Corrupt Practices Act (FCPA) outlaws bribery to foreign government officials for certain classes of U.S. persons or entities (here).
The related SEC charge also stems from the bribes, which were paid through Ralph Lauren’s customs broker, the SEC said in a statement (here). The bribe payments and gifts to Argentine officials totaled $593,000 over a four-year period, SEC said. The company agreed to pay that amount in disgorgement -- a forced give-back of illegally obtained profits -- as well as $141,845.79 in prejudgment interest, SEC said. The agency did not charge Ralph Lauren with violations of FCPA, instead signing a Non Prosecution Agreement, “… 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,” SEC said. “Ralph Lauren Corporation's cooperation saved the agency substantial time and resources ordinarily consumed in investigations of comparable conduct.” This NPA is the first the SEC has entered involving FCPA misconduct, the agency said. NPAs are part of the SEC Enforcement Division's Cooperation Initiative, which rewards cooperation in SEC investigations.
DOJ also commended Ralph Lauren’s “extensive, thorough, and timely cooperation.” The company voluntarily disclosed documents, made employees available for interviews, and presented internal investigations to the Department, DOJ said. The company also conduced FCPA training for employees worldwide and enhanced existing FCPA policy.