Herbalife resolves U.S. criminal case over alleged corruption in China

NEW YORK (Reuters) – Herbalife Nutrition Ltd has agreed to settle a U.S. criminal case accusing it of bribing Chinese officials, including in government agencies and media outlets, to boost its business in China.

The multi-level marketing company, whose products include dietary supplements, entered a deferred prosecution agreement to resolve a charge it conspired to violate the federal Foreign Corrupt Practices Act, an anti-bribery law.

Herbalife’s deferred prosecution agreement was disclosed by a federal prosecutor and a lawyer for the company at a Friday hearing in Manhattan federal court.

It was not immediately clear how much Herbalife would pay in connection with the settlement.

Authorities had been investigating Herbalife’s alleged involvement in a decade-long scheme to bribe Chinese officials with cash, entertainment, meals and travel in order to obtain direct selling licenses, reduce government scrutiny and suppress negative coverage by state-controlled media.

The prosecutor said Herbalife’s alleged wrongful conduct occurred between 2007 and 2016.

China accounted for 19% of Herbalife’s $4.49 billion of net sales in 2016, up from 7% in 2006, regulatory filings show.

Last November, U.S. prosecutors criminally charged Yanliang Li, the former head of Herbalife’s Chinese unit, and Hongwei Yang, who led its external affairs department, with corruption. Both are Chinese citizens and remain at large.

Six weeks earlier, Herbalife agreed to pay $20 million to settle U.S. Securities and Exchange Commission civil charges it misled investors about its Chinese business.

In morning trading, Herbalife shares were down $1.57, or 3.2%, at $48.11.

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