April 23, 2013
On April 22, 2013, the Securities and Exchange Commission ("SEC")
announced that he had decided not to charge Ralph Lauren Corporation with
violations of the Foreign Corrupt Practices Act ("FCPA"). This Non-Prosecution
Agreement ("NPA") entailed the SEC's recognition that Ralph Lauren
Corporation had saved the SEC substantial time and resources that would ordinarily have been consumed in an investigation.
Pursuant to the NPA, Ralph Lauren Corporation will disgorge
more than $700,000 in illicit profits and interest obtained in connection with
bribes paid by a subsidiary to government officials in Argentina from 2005 to
The alleged misconduct was uncovered in a Ralph Lauren Corporation internal review undertaken by the
company and promptly reported to the SEC. In opting the NPA route, the SEC noted the company's:
- prompt reporting of the violations on its own
- providing extensive and meaningful information
it provided, and
- extensive, thorough, and real-time cooperation
with the SEC's investigation.
Among the specific manifestations of the company's
cooperation cited by the SEC were
- Reporting preliminary findings of its internal
investigation to the staff within two weeks of discovering the illegal payments
- Voluntarily and expeditiously producing
- Providing English language translations of
documents to the staff.
- Summarizing witness interviews that the
company's investigators conducted overseas.
- Making overseas witnesses available for staff
interviews and bringing witnesses to the U.S.
The Ralph Lauren Corporation NPA is the first that the SEC
has entered involving FCPA misconduct. In parallel criminal proceedings, the
Justice Department entered into an NPA with Ralph Lauren Corporation in which
the company will pay an $882,000 penalty.
In some contrast to the SEC's characterizations, the criminal case handled by the United States Attorney for the Eastern District of New York sets forth the conduct at issue in less rosy and more stark terms in its Press Release:
According to the agreement, the manager of RLC's subsidiary in Argentina bribed customs officials in Argentina over the span of five years to improperly obtain paperwork necessary for goods to clear customs; permit clearance of items without the necessary paperwork and/or the clearance of prohibited items; and on occasion, to avoid inspection entirely. RLC's employee disguised the payments by funneling them through a customs clearance agency, which created fake invoices to justify the improper payments. During these five years, RLC did not have an anti-corruption program and did not provide any anti-corruption training or oversight with respect to its subsidiary in Argentina.