Wednesday, October 28, 2020

Ex-Herbalife executives in China charged with offering bribes for government business

-

U.S. prosecutors criminally charged two former executives of Herbalife Nutrition Ltd’s (HLF.N) Chinese unit with running a decade-long scheme to bribe Chinese government officials to win business and evade regulatory scrutiny, a person familiar with the matter said.

Herbalife was not criminally charged, and the multi-level marketing company was not identified by name in Thursday’s indictment against Yanliang Li, also known as Jerry Li, and Hongwei Yang, also known as Mary Yang. The person familiar said Herbalife was their employer.

Li, the former head of Herbalife’s Chinese unit, and Yang, who led its external affairs department and reported to Li, were charged by the U.S. Department of Justice with conspiring to violate the Foreign Corrupt Practices Act by orchestrating the bribes and circumventing Herbalife’s accounting controls.

Prosecutors also charged Li with perjury for lying under oath when the U.S. Securities and Exchange Commission questioned him about the alleged bribes, and for destroying evidence.

- Advertisement -

Both defendants are 51-year-old Chinese citizens and remain at large. The SEC filed related civil charges against Li.

Lawyers for the defendants could not immediately be identified. Herbalife did not immediately respond to requests for comment.

The charges were announced six weeks after Herbalife agreed to pay $20 million to settle SEC civil charges that it misled investors from 2012 to 2018 about how its Chinese business operated, without admitting wrongdoing.

U.S. Attorney Geoffrey Berman in Manhattan said Li and Yang approved “extensive and systematic payments of bribes” to Chinese government officials from roughly 2007 to 2017.

- Advertisement -

Authorities said the bribes included cash, entertainment, meals and travel, and Yang’s department reimbursed employees more than $25 million for entertaining and gift-giving.

The bribes were intended to help Los Angeles-based Herbalife obtain direct selling licenses, reduce government scrutiny of its Chinese operations, and suppress negative coverage by state-controlled media, authorities said.

By 2016, China accounted for 19%, or $869 million, of Herbalife’s $4.49 billion of net sales, up from 7% in 2006, regulatory filings show.

The $20 million SEC accord resolved charges that Herbalife told investors it paid distributors in China differently from distributors elsewhere, because the multi-level marketing it normally uses is illegal in that country, when in fact the compensation methods were similar.

William Ackman, the hedge fund manager, made a $1 billion bet against Herbalife starting in 2012, and accused the company of being a pyramid scheme, which it denied. He later unwound his position as Herbalife’s stock price kept rising.

Herbalife shares were down 30 cents, or 0.7%, at $43.50.

The criminal case is U.S. v. Li et al, U.S. District Court, Southern District of New York, No. 19-cr-00760. The SEC case is SEC v. Li in the same court, No. 19-10562.

MUST READ

Beam Suntory Inc. fined $19.6 million in foreign bribery case

Beam Suntory Inc. (Beam), a Chicago-based company that produces and sells distilled beverages, has agreed to pay a criminal monetary penalty of $19,572,885 to...

Julius Baer to deny two former CEOs their bonuses over money laundering scandal

Julius Baer will withhold millions of francs in bonuses from its former chief executives Boris Collardi and Bernhard Hodler, as a result of a...

Goldman Sachs executives to cover part payments of $3 billion fines in 1MDB scandal

Nine current or former Goldman Sachs executives, including CEO David Solomon, will have to pay back hundreds of millions of dollars in compensation over...

Goldman Sachs agrees $3 billion settlement with US DoJ over 1MDB corruption scandal

Goldman Sachs has agreed to pay nearly $3bn (£2.3bn) in the US to end a probe of its role in Malaysia's 1MDB corruption scandal. The...

Hong Kong fines Goldman Sachs $350 million over 1MDB scandal

Goldman Sachs ignored multiple red flags over the multibillion-dollar fundraisings it arranged for state fund 1Malaysia Development Berhad, Hong Kong’s financial regulator said on...

Subscribe For More

Get our daily notification on the latest financial crimes news around the World

Advertisement
Advertisement

Latest News

This Week

Former Malawi minister sentenced to six years in prison over passport corruption scandal

A court in Malawi’s capital Lilongwe on Thursday sentenced a former home minister to six years in prison after he was found guilty in...

Indonesia sentenced stockbroker to life over fraudulent investment scheme

Renowned stockbroker Benny Tjokrosaputro was sentenced to life by the Jakarta Anticorruption Court on Monday evening for his role in a major graft scandal...

Former Harris County deputy constable pleads guilty to transporting drug money and heroin

A former Harris County deputy constable and her husband pleaded guilty Wednesday to charges of conspiracy to possess with intent to distribute heroin, according...

Former Columbus mayor Eisenga charged with bank fraud

A former Columbus mayor and businessman who was once at the center of a controversial bill aimed at reducing child support payments for wealthy...
Advertisement

Adblock Detected!

Our website is made possible by displaying online advertisements to our visitors. Please consider supporting us by whitelisting our website.

Enable Notifications    Ok No thanks