Herbalife Agrees to Pay $123 Million to Settle Chinese Bribery Case

On August 28, the U.S. Department of Justice said multi-level marketing giant Herbalife Nutrition Ltd. has agreed to $123 million to settle federal charges that it bribed Chinese officials to advance its business in China. The department said that Herbalife, a Los Angeles-based multi-level marketing company that sells health and dietary supplements, admitted to engaging in a decade-long scheme to bribe Chinese officials and falsifying its books to conceal such payments. The company entered into a three-year deferred prosecution agreement, in which it admitted to conspiring to violate the books and records provision of the Foreign Corrupt Practices Act, an anti-bribery law. It also reached a parallel agreement with the U.S. Securities and Exchange Commission (SEC). Prosecutors said that from 2007 to 2016, Herbalife schemed to bribe Chinese officials with cash, entertainment, meals, and travel to obtain direct selling licenses for its Chinese subsidiary, reduce government scrutiny, and remove negative coverage by state-controlled media. The court documents said during that period, Herbalife obtained direct sale licenses in 28 Chinese provinces. Prosecutors said that by 2016, Herbalife’s China business accounted for about 20 percent—$860 million—of the company’s global annual net sales. The company will pay a $55 million criminal fine, as well as $67 million to the SEC in a related civil case.