b'SEC ResolutionHerbalife admitted that the ChineseHerbalife agreed to pay an $58.6 million in disgorge-ment, plus prejudgment interest of $8.6 million. officials helped Herbalife China to: Substantial future compensationincluding reports to i) obtain licenses to sell its product inthe SEC for three years about the effectiveness of its China; ii) influence Chinese officials remediation effortswas also imposed on Herbalife.during investigations by ChineseUnited States v. Sargeant Marine Inc.,authorities into its operations; and No. 20-CR-00363 (E.D.N.Y.)iii) remove negative reports aboutOn September 22, 2020, Sargeant Marine Inc. Herbalife China from government(Sargeant), a former asphalt company located in Boca controlled media. Herbalife ChinaRaton, Florida, pleaded guilty to conspiracy to violate the anti-bribery provisions of the FCPA by paying admitted to falsely recording the bribesbribes to foreign officials in Brazil, Venezuela, and as travel and entertainment expenses. Ecuador. Pursuant to its plea deal, Sargeant agreed to pay criminal fines of $16.6 million.Sargeant admitted to paying millions of dollars to foreign officials in Brazil, Venezuela, and Ecuador According to texts, emails, and telephone transcriptsbetween 2010 and 2018 to obtain contracts to collected by the DOJ, Herbalife Chinas payments tookpurchase or sell asphalt to the countries state-owned various forms. For example, a Herbalife China executiveand state-controlled oil companies. As a result of the discussed providing red envelopescontainingbribery schemes, Sargeant and its affiliated companies cashto a certain Chinese official. This same Herbalifeearned profits in excess of $38 million. China executive also provided gift cards to variousIn Brazil, Sargeant admitted to bribing a Minister in the Chinese government officials. These payments weregovernment, a high-ranking member of the Brazilian falsely labelled travel and entertainment expensesCongress, and senior executives at Petrleo Brasileiro on Herbalifes books. During one six month period,S.A. (Petrobras) to enter into valuable contracts to sell Herbalife China approved approximately $772,433 toasphalt. Sargeant also admitted to entering into fake be spent on 4,312 government officials and govern- consulting agreements with bribe intermediaries to ment-controlled media personnel. In another scheme,execute the scheme and conceal the payments. As part Herbalife China had made cash payments to govern- of the scheme, Sargeant would create fake invoices ment officials totaling hundreds of thousands of dollarsfrom the bribe intermediaries and then wire money in but booked them as purchases of fruits and vegetables;offshore bank accounts to the shell companies of the had produce actually been purchased, it would havebribe intermediaries. totaled more than 30 tons. DOJ ResolutionLikewise, in Venezuela, Sargeant admitted to utilizing Under the terms of the DPA, Herbalife agreed to pay afake consultants to bribe four Petroleos de Venezuela criminal penalty of more than $55.7 million for the FCPAS.A. officials in exchange for inside information and misconduct. Herbalife also agreed to cooperate withsecuring contracts to purchase asphalt. The DOJ the U.S. authorities in any ongoing or future criminaluncovered emails and texts during the investigation investigations, to enhance its compliance program, andthat revealed that Sargeant used code names for the to monitor and report on the status of its complianceofficials and inside information to execute the scheme, program for three years. The DOJ press release notedsuch as referring to the inside information as choc-that Herbalife received a 25% reduction off the bottomolates. Sargeant admitted to using the same tactics of the U.S. Sentencing Guidelines fine range becauseto participate in its scheme in Ecuador by bribing an the DOJ found that it had fully cooperated with itsofficial at Ecuadors state-owned oil company, EP investigation and engaged in remedial measures, Petroecuador. such as terminating and disciplining the individualsAs part of the plea deal, in addition to paying the involved in the bribery scheme, adopting enhancedcriminal fine, Sargeant agreed to continue to conduct anti-corruption policies, and increasing its compliancereviews of its existing internal controls, policies, and resources.procedures, and to adopt new policies where neces-sary. Sargeant also agreed to self-report for three years to the DOJ, including submitting an initial report and two follow-up reviews over the three years. 18'