Ralph Lauren is finally out of hot water with the U.S. Department of Justice and Securities and Exchange Commission--and all it took was paying a $1.6 million fine.
The retailer was accused of violating the Foreign Corrupt Practices Act when a manager at its subsidiary in Argentina bribed government officials in order to avoid inspection and customs requirements between 2005 and 2009, New York Times is reporting. The bribes, sometimes in the form of gifts like perfume, dresses, and handbags, bought the paperwork--faked by a customs clearance agency--needed to clear customs and, at times, to avoid inspection altogether. The bribes eventually totaled $593,000.
To settle those claims, Ralph Lauren has paid $882,000 to the U.S. Department of Justice and nearly $735,000 to the Securities and Exchange Commission--or around $1.6 million in total.
It sounds like a lot of money, but actually it's kind of a plum deal for Ralph Lauren since it was able to avoid prosecution altogether. According to WWD this is the first time the SEC and the Justice Department (in the eastern district of New York) has struck a non-prosecution deal with an entity found in violation of the Foreign Corrupt Practices Act.
The leniency comes as a reward to Ralph Lauren for cooperating with the investigation--even though the company had a notable absence of any sort of anticorruption program and failed to train its Argentinian subsidiary on anticorruption standards. It also helps that Ralph Lauren was actually the one to notify the agencies.
“When these issues surfaced at our subsidiary in Argentina, we took immediate action to hire outside counsel and forensic specialists to conduct an internal investigation and reported the matter directly to both the U.S. Department of Justice and the Securities and Exchange Commission,” said a spokesman for Ralph Lauren. “We fully cooperated in the ensuing investigations and conducted a worldwide risk assessment.…There was no evidence that the improper activity in Argentina was known or authorized by anyone outside of Argentina or that similar practices were occurring at other foreign operations.”
In addition to the fines, the retailer has beefed up its "compliance program and training and severed relationships with all responsible vendors.” According to Times, the retailer has closed its operations in Argentina, a country which is known for its unusually strict import controls.
“I’m pleasantly surprised and impressed that RLC got ahead of this and headed off far more serious consequences,” Jonathan Fee, a Washington-based international trade law specialist with the law firm of Alston & Bird, told WWD. “Other FCPA targets haven’t been as good at stemming the bleeding."