Pasadena-based label maker Avery Dennison last week agreed to pay $518,000 to settle charges that one of its subsidiaries gave kickbacks, gifts and trips to Chinese officials in return for lucrative government contracts.
The kickbacks began in 2002 as Avery China’s Reflectives Division began courting influential Chinese officials with some $30,000 in illegal payments to gain contracts installing new reflective graphics on 15,400 police vehicles in China.
Avery also sealed a deal to buy a state-run entity by paying a Chinese official $25,000 through a distributor. Avery profited $273,000 from the sale, which was improperly recorded in the company’s ledger, according to SEC investigators.
The company also failed to record $51,000 in illegal petty cash payments that employees at the acquired company made to foreign customs officials.
Avery spokesman David Frail would not comment on the appropriateness of the fine.
“We encourage our employees to do the right thing, because we think it is critical not just to our reputation, but our business success,” he said.
Avery officials approached the SEC after uncovering the improper payments. The company did not admit or deny wrongdoing as part of the settlement.
Frail and SEC Associate Regional Director Andrew Petillon both said the kickbacks in China had nothing to do with Avery’s sponsorship of a float representing the People’s Republic of China in the 2008 Rose Parade, which mired the year’s festivities with protests by civil rights activists.