Health supplement maker Herbalife bribed Chinese government officials for a decade to grow its overseas business and falsified accounting records to cover up the payments, US prosecutors said on Friday in announcing corruption charges against the publicly traded company.
Herbalife agreed to pay combined penalties of more than $123 million (Dh451 million) to resolve the charges, federal prosecutors said.
The company admitted to the conspiracy as part of a deferred prosecution agreement it reached with the US Justice Department and the US Attorney's Office in Manhattan.
The charges were brought under the Foreign Corrupt Practices Act, which prohibits bribery of foreign government officials or company executives to secure or retain business.
Herbalife bribed the officials to obtain direct selling licenses, reduce government scrutiny, and suppress negative coverage by state-controlled media.
The company began paying off Chinese government officials in 2007 in a bid to obtain licenses from national and local authorities the company needed to sell health and nutrition products.
They also bribed a state-owned media outlet "for the purpose of removing negative media reports about Herbalife China," and falsely recorded the improper payments as "travel and entertainment expenses," prosecutors said.
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The case appears to be tied to a settlement the company disclosed in May with the Justice Department and Securities and Exchange Commission over similar charges, Bloomberg reported.
Herbalife has long been embroiled in litigation and regulatory actions over its business practices.
Prosecutors said the company also agreed to pay more than $67 million in disgorgement — repayment of ill-gotten gains — and prejudgment interest to the Securities and Exchange Commission.
A spokesman for Herbalife did not immediately have a comment on the case.
Activist investor Carl Icahn remains Herbalife's largest shareholder, according to data compiled by Bloomberg.
The billionaire said he owns about 15.5 per cent of the company after selling roughly 40 per cent of his stake earlier this month for portfolio management purposes. He said at the time that he continues to "strongly believe in the great future of the company".
Mr Icahn has long been a public supporter of Herbalife and famously battled short-seller Bill Ackman, who called the company a pyramid scheme.