U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21156 / July 28, 2009
Accounting and Auditing Enforcement Release No. 3020 / July 28, 2009
Securities and Exchange Commission v. Avery Dennison Corporation, United States District Court for the Central District of California, Civil Action No. CV09-5493 DSF (CWx)
SEC FILES SETTLED CHARGES AGAINST AVERY DENNISON CORPORATION FOR VIOLATING THE BOOKS AND RECORDS AND INTERNAL CONTROLS PROVISIONS OF THE FOREIGN CORRUPT PRACTICES ACT
The Securities and Exchange Commission today filed two settled enforcement proceedings against Avery Dennison Corporation (“Avery”), a Pasadena, California-based multinational corporation, alleging violations of the Foreign Corrupt Practices Act (“FCPA”) in connection with improper payments and promises of improper payments to foreign officials by Avery’s Chinese subsidiary and several entities Avery acquired.
The SEC filed a civil action in the United States District Court for the Central District of California charging Avery with violations of the books and records and internal controls provisions of the FCPA and seeking a civil penalty. The SEC also issued an administrative order finding that Avery violated the same provisions of the FCPA. In the administrative proceeding, the SEC ordered Avery to cease and desist from such violations, and to disgorge $273,213, together with $45,257 in prejudgment interest. In the federal civil action, Avery agreed to the entry of a final judgment requiring it to pay a civil penalty in the amount of $200,000.
The SEC’s complaint and administrative order charge that, from 2002 through 2005, the Reflectives Division of Avery (China) Co. Ltd. (“Avery China”) paid or authorized the payments of kickbacks, sightseeing trips, and gifts to Chinese government officials. The amount of illegal payments actually paid amounted to approximately $30,000. In one transaction, Avery China secured a sale to a state-owned end user by agreeing to pay a Chinese official a kickback of nearly $25,000 through a distributor. Avery China realized $273,213 in profit from this transaction, which it inaccurately booked as a sale to the distributor rather than to the end user. In addition, after Avery acquired a company in June 2007, employees of the acquired company continued their pre-acquisition practice of making illegal petty cash payments to customs or other officials in several foreign countries, resulting in illegal payments of approximately $51,000. Avery failed to accurately record these payments and gifts in the company’s books and records, and failed to implement or maintain a system of internal accounting controls sufficient to detect and prevent such illegal payments or promises of illegal payments.
As a result of the conduct described above, the SEC charged that Avery violated Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934. Avery consented to the ordered relief without admitting or denying either the findings contained in the SEC’s administrative order, or the allegations of the SEC’s complaint.
The SEC acknowledges the assistance of the United States Department of Justice.