US prosecutors have criminally charged two former executives of Herbalife Nutrition Ltd’s Chinese unit with running a decade-long scheme to bribe Chinese government officials to win business and evade regulatory scrutiny, a person familiar with the matter said.
Herbalife was not criminally charged and the multilevel marketing company was not identified by name in Thursday’s indictment against Jerry Li (李延亮) and Mary Yang (楊紅薇).
Herbalife was their employer, the person said.
Li, the former head of Herbalife’s Chinese unit, and Yang, who led its external affairs department and reported to Li, were charged by the US Department of Justice with conspiring to contravene the Foreign Corrupt Practices Act by orchestrating the bribes and circumventing Herbalife’s accounting controls.
Prosecutors also charged Li with perjury for lying under oath when the US Securities and Exchange Commission questioned him about the alleged bribes, and for destroying evidence.
Both defendants remain at large.
The commission filed related civil charges against Li.
Lawyers for the defendants could not immediately be identified. Herbalife did not immediately respond to requests for comment.
The charges were announced six weeks after Herbalife agreed to pay US$20 million to settle civil charges that it misled investors from 2012 to last year about how its Chinese business operated, without admitting wrongdoing.
US Attorney for the Southern District of New York Geoffrey Berman said that Li and Yang approved “extensive and systematic payments of bribes” to Chinese government officials.
Authorities said the bribes included cash, entertainment, meals and travel, and Yang’s department reimbursed employees more than US$25 million for entertaining and gift-giving.
The bribes were intended to help Los Angeles-based Herbalife obtain direct selling licenses, reduce government scrutiny of its Chinese operations and suppress negative coverage by state-controlled media, authorities said.
By 2016, China accounted for 19 percent, or US$869 million, of Herbalife’s US$4.49 billion of net sales, up from 7 percent in 2006, regulatory filings showed.
The US$20 million agreement resolved charges that Herbalife told investors it paid distributors in China differently from those elsewhere, because the multilevel marketing it normally uses is illegal in that nation, when in fact the compensation methods were similar.
Pershing Square Capital Management chief executive Bill Ackman made a US$1 billion bet against Herbalife in 2012 and accused the company of being a pyramid scheme, which it denied.
The hedge fund manager later unwound his position as Herbalife’s share price kept rising.
‘BIG LOSS’: This year might see the last generation of Huawei’s Kirin chips, as their production would stop next month because they are made using US technology Chinese tech giant Huawei Technologies Co (華為) is running out of processor chips to make smartphones due to US sanctions and would be forced to stop production of its own most advanced chips, a company executive has said, in a sign of growing damage to Huawei’s business from US pressure. Huawei, one of the biggest producers of smartphones and network equipment, is at the center of US-Chinese tension over technology and security. Washington last year cut off Huawei’s access to US components and technology, and those penalties were tightened in May, when the White House barred vendors worldwide from using US
CORPORATE SCANDAL: Cathay Life has invested NT$13.3 billion in Bank Mayapada since 2015, but the latest loss of NT$8.8 billion has completely written off its investment Cathay Life Insurance Co (國泰人壽) yesterday said it would recognize an investment loss of NT$8.8 billion (US$298.1 million) in Indonesia’s Bank Mayapada Internasional Tbk PT due to concerns about the lender’s operations amid a corporate scandal. The company said it would revise its earnings result for June, from a net profit of NT$6.52 billion to a net loss of NT$520 million, its first monthly loss over the past 17 months. After booking an investment loss of NT$5.2 billion in Bank Mayapada earlier this year, Cathay Life has so far recognized total investment losses of NT$14 billion in the lender, executive vice president
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported that revenue last month expanded 25 percent annually, but fell 12.8 percent month-on-month to NT$105.96 billion (US$3.59 billion). In the first seven months of this year, the chipmaker’s revenue surged 33.6 percent to NT$727.26 billion, compared with NT$544.46 billion a year earlier. TSMC has said it aims to grow its revenue by more than 20 percent this year. The company has since May 15 stopped taking new orders from Huawei Technologies Co (華為), its second-biggest customer after Apple Inc, due to the US’ restrictions on exports containing US technologies. TSMC has no plans to
The US stock market has been on a tear, yet the country’s economy is in the dumps. So why do so many people believe — undoubtedly incorrectly — that the stock market has decoupled from reality? The economy many people experience, while bleak, is local, personal and, for the most part, either not publicly traded or plays only a small part in the stock market’s moves. To explain why these personal experiences have so little effect on equity markets, we must look more closely at the market role of the weakest industry sectors. The surprising conclusion: The most visible and economically vulnerable