Ralph Lauren and its Non-Prosecution Agreement reflected FCPA trends
In April 2013, Ralph Lauren Corporation (RLC), the renowned American designer company, entered into a Non-Prosecution Agreement (NPA)[1] to resolve allegations of Foreign Corrupt Practices Act (FCPA) violations. These allegations pertained to purported bribes paid to customs officials in Argentina to obtain improper customs clearance of merchandise. The NPA, with both the United States Department of Justice and the United States Securities and Exchange Commission, resulted in an $882,000 monetary penalty, a $734,846 disgorgement and prejudgment interest, and RLC’s agreement to cooperate with the DOJ to self-report compliance efforts, implement an enhanced compliance program, and improve internal management to prevent and detect FCPA violations.
According to the agreement, RLC’s manager of its subsidiary in Argentina bribed customs officials to circumvent inspection and clearance for five years, during which RLC offered no anti-corruption program or training to its employees in Argentina. RLC undertook remediation including comprehensive training and protocols for global employees and third-party agents, which might have helped prevent the costly litigation if these policies had been enforced before the alleged bribery conduct took place.
RLC’s settlement serves as a cautionary tale in navigating the precarious balance between profitability and compliance, as well as internal accounting and decentralization. In today’s globalized commercial landscape, many multinational corporations might find themselves in a vulnerable position if they overlook training and compliance within their overseas subsidiaries. It is especially challenging yet necessary for production-oriented industries with local suppliers and vendors across the world.
With consumers increasingly advocating for supply chain transparency and ethical production, noncompliance with ethical business standards can severely tarnish a company's reputation and erode stakeholder confidence. Therefore, not only is prioritizing compliance measures a legal imperative, but it is also an overall strategy to achieve business longevity.
J.D. Candidate, Class of 2026, The George Washington University Law School
[1] Ralph Lauren Corporation Resolves Foreign Corrupt Practices Act Investigation and Agrees to Pay $882,000 Monetary Penalty. https://www.justice.gov/opa/pr/ralph-lauren-corporation-resolves-foreign-corrupt-practices-act-investigation-and-agrees-pay
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