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FCPA Investigates Actions Against Ralph Lauren

By Sarah Robertson, Susan Progoff, and Fara Sunderji

On April 22, 2013, the U.S. Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC) each announced that Ralph Lauren had resolved parallel investigation actions brought against it under the Foreign Corrupt Practices Act (FCPA). Ralph Lauren's pro-active self reporting and cooperating with the SEC made the process go as smoothly as possible.

The charges stemmed from alleged actions taken by Ralph Lauren's indirect, wholly-owned, subsidiary in Argentina. Over a five-year period beginning in 2003, the subsidiary allegedly retained a customs broker to assist with clearing its merchandise. During that period the General Manager of the subsidiary allegedly approved the payment of bribes to permit clearance of items without the necessary paperwork, of prohibited goods and to avoid inspections.

Ralph Lauren learned about the conduct in 2010 when implementing a new FCPA policy under the direction of its board of directors. After employees reviewed the new policy, they informed company officials. The company then terminated its custom broker and took a series of steps which included: 1) amending its anti-corruption policy; 2) enhancing due diligence procedures for third parties; 3) enhancing its commission policy; 4) amending its gift policy; 5) conducting in-person anti-corruption training for certain employees; and 6) eventually terminating its retail operations in Argentina.

Ralph Lauren also cooperated with regulators. The company self-reported, produced all documents, voluntarily furnished translations of documents, made witnesses available for interview, and conducted a world-wide risk assessment.

Under the terms of the DOJ non-prosecution agreement, Ralph Lauren agreed to pay a penalty of $882,000. Under the terms of the SEC agreement, the company agreed to pay disgorgement of $593,000 and prejudgment interest.

While the DOJ frequently resolves anti-corruption actions under non-prosecution agreements, this represents the SEC's first ever non-prosecution agreement in the FCPA context.

Following the investigations, Argentinean tax authorities asked for the names of the Argentinean government officials involved to assist with their own criminal investigation, thus indicating the FCPA's global impact.

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This page contains a single entry from the blog posted on July 18, 2013 1:47 PM.

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