Herbalife, the nutritional supplements company, has agreed to pay penalties of more than $123 million to resolve charges that it conspired to bribe to Chinese officials and falsify its books to boost its business in China, according to the Department of Justice.
US officials charged Herbalife (HLF) with making corrupt payments over nearly a decade to Chinese government officials and state-owned media outlets. The payments, according to prosecutors, were used to obtain licenses to sell products and to influence investigations and coverage of the company. To conceal the payments, the company maintained false accounting records; for example, recording improper payments as “travel and entertainment expenses,” court documents say.
As part of the settlement, Herbalife has admitted to the charges and agreed to pay a criminal fine of $55.7 million. Its total combined penalties in the case will top $123 million.
Herbalife did not immediately respond to a request for comment, but said in its agreement with US officials that it “admits, accepts, and acknowledges that it is responsible … for the acts of its officers, directors, employees, and agents” as charged. Court documents also state that the company cooperated with US officials’ investigation.
Herbalife is headquartered in Los Angeles but has operations in more than 90 countries. Last year, China contributed about 16% of the company’s total net sales.
“By engaging in a decade-long scheme to falsify its books and records to conceal corrupt and other improper expenditures, Herbalife misrepresented the information available to investors,” Brian Rabbitt, acting assistant attorney general for the US Department of Justice’s criminal division, said in a press release Friday.
This isn’t the first controversy Herbalife has been involved in.
In 2016, the company paid the US Federal Trade Commission $200 million to settle claims that consumers looking to sell Herbalife’s products had lost money.
In late 2012, hedge fund manager Bill Ackman accused Herbalife of being a pyramid scheme because of its multilevel marketing strategy, and famously made a failed $1 billion short bet against the company. The FTC later determined as part of the settlement that Herbalife is not a pyramid scheme.