Avon 2011 Annual Report Download - page 22

PART I
applicable regulations. From time to time, we may receive formal and informal inquiries from various government regulatory authorities
about our business and compliance with local laws and regulations. Any determination that our operations or activities, or the activities of
our Representatives, are not in compliance with existing laws or regulations could result in the imposition of substantial fines, interruptions
of business, loss of supplier, vendor or other third party relationships, termination of necessary licenses and permits, or similar results, all of
which could potentially harm our business and/or reputation. Even if an inquiry does not result in these types of determinations, it potentially
could create negative publicity which could harm our business and/or reputation.
We are investigating Foreign Corrupt Practices Act (FCPA) and related U.S. and foreign law
matters, and from time to time we may conduct other internal investigations and compliance
reviews, the consequences of which could negatively impact our business.
From time to time, we may conduct internal investigations and compliance reviews, the consequences of which could negatively impact our
business. Any determination that our operations or activities are not, or were not, in compliance with existing United States or foreign laws
or regulations could result in the imposition of substantial fines, interruptions of business, loss of supplier, vendor or other third party
relationships, termination of necessary licenses and permits, and other legal or equitable sanctions. Other legal or regulatory proceedings, as
well as government investigations, which often involve complex legal issues and are subject to uncertainties, may also follow as a
consequence. It is our policy to cooperate with U.S. and foreign government agencies and regulators, as appropriate, in connection with our
investigations and compliance reviews.
As previously reported, we have engaged outside counsel to conduct an internal investigation and compliance reviews focused on
compliance with the FCPA and related U.S. and foreign laws in China and additional countries. The internal investigation, which is being
conducted under the oversight of our Audit Committee, began in June 2008. As we reported in October 2008, we voluntarily contacted the
United States Securities and Exchange Commission (“SEC”) and the United States Department of Justice to advise both agencies of our
internal investigation. We are continuing to cooperate with both agencies and inquiries by them, including but not limited to, signing tolling
agreements, translating and producing documents and assisting with interviews.
As previously reported in July 2009, in connection with the internal investigation, we commenced compliance reviews regarding the FCPA
and related U.S. and foreign laws in additional countries in order to evaluate our compliance efforts. We are conducting these compliance
reviews in a number of other countries selected to represent each of the Company’s international geographic segments. The internal
investigation and compliance reviews are focused on reviewing certain expenses and books and records processes, including, but not limited
to, travel, entertainment, gifts, use of third party vendors and consultants and related due diligence, joint ventures and acquisitions, and
payments to third-party agents and others, in connection with our business dealings, directly or indirectly, with foreign governments and
their employees. The internal investigation and compliance reviews of these matters are ongoing, and we continue to cooperate with both
agencies with respect to these matters. In connection with the internal investigation and compliance reviews, we continue to enhance our
ethics and compliance program, including our policies and procedures, FCPA compliance-related training, FCPA third party due diligence
program and other compliance-related resources.
On October 26, 2011, the Company received a subpoena from the SEC requesting documents and information in connection with a
Regulation FD investigation of the Company’s contacts and communications with certain financial analysts and other representatives of the
financial community during 2010 and 2011. The Company was also advised that a formal order of investigation was issued by the SEC
relating to the FCPA matters described above and the Regulation FD matters that are referenced in the subpoena. The Company intends to
cooperate fully with the SEC’s investigation. We also have commenced an internal investigation, which is being conducted by outside
counsel under the oversight of our Audit Committee, in connection with the Regulation FD matters.
In connection with the ongoing internal investigations and compliance reviews described above, certain personnel actions have been taken
and additional personnel actions may be taken in the future. At this point we are unable to predict the duration, scope, developments in,
results of, or consequences of the internal investigations and compliance reviews and the government’s investigation.
Any determination that our operations or activities, including our licenses or permits, importing or exporting, or product testing or approvals
are not, or were not, in compliance with existing laws or regulations could result in the imposition of substantial fines, civil and criminal
penalties, interruptions of business, modification of business practices and compliance programs, equitable remedies, including
disgorgement, injunctive relief and other sanctions that we may take against our personnel or that may be taken against us or our