Apparel company Ralph Lauren Corp. has agreed to give up $700,000 in profits to resolve bribery allegations, marking the U.S. Securities and Exchange Commission’s first nonprosecution agreement involving Foreign Corrupt Practices Act misconduct.

Ralph Lauren, represented by Crowell & Moring, will also pay an $882,000 penalty in a nonprosecution deal with the U.S. Justice Department. Prosecutors said a subsidiary of Ralph Lauren bribed officials in Argentina for five years to obtain improper customs clearance for merchandise. The nonprosecution agreement papers do not identify any Ralph Lauren employee by name.

Prosecutors said the bribery scheme ran from 2004 to 2009. A general manager at Ralph Lauren, and others, according to government documents, disguised the bribe payments. An invoice, for instance, identified "loading and delivery expenses" and "stamp tax/ label tax." One "loading and delivery expense" in April 2009 was in the amount of $4,315. At the time, according to the SEC, the Ralph Lauren subsidiary lacked a meaningful anti-corruption program

SEC officials praised Ralph Lauren for its cooperation with investigators. Citing the company’s swift reporting of bribery violations, and the thoroughness of the information the company provided to authorities, the SEC decided not to bring a foreign-bribery action, they said.

"When they found a problem, Ralph Lauren Corporation did the right thing by immediately reporting it to the SEC and providing exceptional assistance in our investigation," George Canellos, acting director of the SEC’s enforcement division, said in a written statement. "The NPA in this matter makes clear that we will confer substantial and tangible benefits on companies that respond appropriately to violations and cooperate fully with the SEC."

The Justice Department’s legal team—including Daniel Khan of the fraud Section at Main Justice and Sarah Coyne, chief of the business and securities fraud section of the U.S. Attorney’s Office in the Eastern District of New York—said Ralph Lauren "admits, accepts and acknowledges responsibility" for the criminal conduct the government identified in the non-prosecution agreement.

Ralph Lauren agreed to conduct reviews of existing internal controls, policies and procedures, DOJ lawyers said. The company "will ensure that its directors and senior management provide strong, explicit, and visible support and commitment to its corporate policy against violations of the anti-corruption laws and its compliance code," the compliance program said. Ralph Lauren must report to the Justice Department, during a two-year term, the company’s implementation of the compliance program.

"Ralph Lauren Corporation did all of the right things when these issues surfaced: it investigated, self-reported, cooperated fully with the authorities, conducted a world-wide risk assessment and implemented a series of remedial measures, including enhanced compliance programs and training," Crowell partner Thomas Hanusik, chairman of the white-collar and regulatory group, said via email. "The unprecedented use of non-prosecution agreements by both DOJ and SEC reflects these efforts and is a direct result of the terrific tone from the top that exists at this company."

The SEC first entered into a nonprosecution agreement with a company in December 2010. Earlier that year, Robert Khuzami, then the director of the SEC enforcement division, called the planned use of nonprosecution and deferred prosecution agreements—part of the agency’s cooperation initiative—new tools for securities regulators.

"With these new tools comes a new reality for would-be wrongdoers," Khuzami said in a speech in January 2010. "That reality is that when you engage in misconduct, you now have to think even harder about the possibility of others coming forward to report to the SEC your secret conversations, your hushed plans, your schemes and deceptions."

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