Ralph Lauren Pays Fine to SEC Following Argentinian Bribery Scandal

Polo Ralph Lauren S/S 2013 campaign | Source: Ralph Lauren

NEW YORK, United States — Ralph Lauren Corp., the retailer of its namesake brand clothing, will pay about $1.6 million to resolve U.S. regulatory and criminal claims that a subsidiary paid bribes to officials in Argentina from 2005 to 2009.

The apparel company reported violations of the Foreign Corrupt Practices Act to regulators after discovering it in a 2010 internal review, the Securities and Exchange Commission said yesterday in a statement. New York-based Ralph Lauren signed a non-prosecution agreement to settle the cases.

Ralph Lauren agreed to pay $593,000 in disgorgement and $141,845.79 in prejudgment interest, the SEC said. The company will pay an $882,000 penalty in parallel criminal proceedings by the U.S. Justice Department, the SEC said.

Ralph Lauren’s subsidiary RLC Argentina used a so-called customs broker to funnel about $568,000 in bribes to ensure the clearance of prohibited goods, avoid inspections and to import certain items without the necessary paperwork, the SEC said.

To disguise the illegal payments, the customs broker submitted invoices with phony claims for expenses, according to the agreement. In addition to the bribes, RLC Argentina’s general manager directly provided or authorized improper gifts to government officials.

Under the criminal accord, the Justice Department won’t bring charges as long as Ralph Lauren cooperates with an ongoing investigation, implements certain compliance measures and makes periodic reports.

The company discovered the violations after disseminating a new FCPA compliance policy in February 2010, the SEC said. Later that year, RLC Argentina employees reviewed the policy and raised concerns about the customs broker’s work. Within two weeks of uncovering the payments and gifts, RLC reported its preliminary findings to both the SEC and Justice Department.

“Ralph Lauren did all the right things in this situation: we investigated, reported, cooperated with authorities, conducted a worldwide assessment and implemented a series of remedial measures,” Tom Hanusik, the company’s attorney at Crowell & Moring LLP, said in an interview. “The unprecedented use of non-prosecution agreements by both agencies reflects that.”

By: Carla Main; with assistance from Richard Rubin and Joshua Gallu in Washington, Ben Moshinsky and Jim Brunsden in Brussels, Liam Vaughan and Robert Hutton in London, Brian Parkin in Berlin, Nicholas Comfort in Frankfurt and John Detrixhe in New York. Editor: Stephen Farr