Avery Dennison Corporation ("Avery"), a California-based multinational corporation that develops, manufactures, and markets adhesive products, office products and labels, agreed to pay approximately $500,000 in combined fines and penalties in connection with improper payments and promises of improper payments to foreign officials by Avery’s Chinese subsidiary and several entities Avery acquired.
Pursuant to the SEC’s complaint and administrative order, Avery was charged with violations of the books and records and internal controls provisions of the FCPA. The SEC alleges that, from 2002 through 2005, the Reflectives Division of Avery (China) Co. Ltd. ("Avery China") paid or authorized the payment of kickbacks, sightseeing trips, and gifts to Chinese government officials. The amount of illegal payments totaled approximately $30,000. In one transaction, Avery China secured a sale to a state-owned end-user by agreeing to pay a kickback of approximately $25,000 to a Chinese official. The kickback and the sale were improperly recorded as a payment to a distributor, who acted as nothing more than a conduit for the illicit payment. Avery China also sponsored sightseeing trips for government officials which they later attempted to cover up by altering invoices and fabricating reimbursement forms.
Upon learning of this activity, Avery conducted an internal review and voluntarily approached the Commission staff regarding the improper payments. After this initial disclosure, Avery discovered two additional instances of possible improper payments that occurred in entities that Avery had recently acquired. These improper payments involved illegal payments to customs and tax officials in several foreign countries. The payments totaled approximately $51,000 and were inaccurately recorded in the company’s books and records.
Without admitting or denying the SEC’s allegations, Avery agreed to consent to an entry of a cease-and-desist order under which it will disgorge $273,213 in profits associated with the improper payments, together with $45,257 in prejudgment interest. Avery also agreed to pay a civil penalty of $200,000. In resolving the matter, the SEC noted the remedial acts undertaken by Avery and the cooperation of the company in the SEC’s investigation.
Copies of the administrative order and SEC Litigation Release are attached.