Herbalife’s downtown Los Angeles headquarters.

Herbalife’s downtown Los Angeles headquarters. Photo by Ringo Chiu.

Downtown-based Herbalife Nutrition Ltd. has agreed to pay about $123 million to settle federal charges that it bribed Chinese officials to obtain licenses to sell products in the country and then concealed the bribes.
 
 The U.S. Securities and Exchange Commission and Department of Justice jointly announced the settlement by the nutrition supplements company on Aug. 28.
 
 According to the agencies, Herbalife over the course of a decade made payments and provided meals, gifts, and other benefits to Chinese officials and state-owned companies in exchange for sales licenses to operate and expand its multilevel marketing business.
 
 The company was also alleged to have made payments to Chinese officials to block investigations into, and media coverage of, its operations in the country, the SEC and DOJ said in a joint announcement.
 
The agencies also said that when senior-level executives with Herbalife were alerted to some of these actions, they failed to record the actions in the company's financial disclosures.
 
All of these alleged actions were in violation of the U.S. Foreign Corrupt Practices Act, which prohibits companies from making bribes or other inappropriate payments to foreign officials and requires companies to accurately record all business expenditures in foreign countries.
 
"By engaging in a decade-long scheme to falsify its books and records to conceal corrupt and other improper payments to Chinese officials and state-owned entities, Herbalife misrepresented important information made available to investors," Acting Assistant Attorney General Brian Rabbitt of the Justice Department's criminal division said in the DOJ announcement.
 
A spokesman for Herbalife did not reply to a request for comment.
 
According to the federal announcement, Herbalife has agreed to pay a criminal fine of more than $55 million to settle bribery allegations and a civil penalty of more than $67 million to settle bookkeeping violations, for a total of approximately $123 million.

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