As part of the non-prosecution agreement with the US Department of Justice, the American fashion house will pay an 882,000 dollar penalty, and disgorge 734,846 dollars in illicit profits and interest to the US Securities and Exchange Commission.
The investigations by the DOJ and the SEC were prompted by the New York-based fashion house after its employees in Argentina raised concerns internally following the company's adoption in 2010 of a new policy related to the 1977 Foreign Corrupt Practices Act, which prohibits American companies and companies listed on U.S. stock exchanges from paying bribes to foreign government officials.
Ralph Lauren enters into a non-prosecution agreement with U.S. authorities
In reporting the agreement, the SEC acknowledged the company’s “prompt reporting of the violations” and its “extensive, thorough, and real-time cooperation” in the investigation, which contributed to the apparel company not being charged with violating the Foreign Corrupt Practices Act.
"When they found a problem, Ralph Lauren Corporation did the right thing by immediately reporting it to the SEC and providing exceptional assistance in our investigation," said George S. Canellos, Acting Director of the SEC's Division of Enforcement. "The non-prosecution agreement in this matter makes clear that we will confer substantial and tangible benefits on companies that respond appropriately to violations and cooperate fully with the SEC."
Additionally, U.S. authorities also pointed out that the company “lacked meaningful anti-corruption compliance and control mechanisms over its Argentine subsidiary”, and that the misconduct came to light as a result of the company adopting measures to improve its worldwide internal controls and compliance efforts, including implementation of an FCPA compliance training program in Argentina.
Ralph Lauren, which ceased operations in Argentina last year, has agreed to continue to a implement comprehensive new compliance program throughout its operations, and strengthening its internal controls and its procedures for third party due diligence.