Avon Products fires former CFO in investigation

Avon Products Inc. has fired its vice chairman and former chief financial officer in the latest move related to a long-running investigation involving possible bribes overseas and its disclosures to Wall Street analysts.

The beauty products seller said in a regulatory filing late Monday that Charles W. Cramb was let go in connection with the company's probe into possible violations of the Foreign Corrupt Practices Act involving payments made overseas. Cramb is highest ranking executive to be affected by the investigation.

Cramb joined Avon as CFO in 2005 and stepped down in May 2011, although he continued to serve as vice chairman.

Avon said the matters are ongoing and declined further comment. It didn't respond to a request for comment from Cramb.

Avon has been beset by regulatory woes since 2008, when it started to investigate possible bribery in China related to travel, entertainment and other expenses, and soon widened the probe to other countries.

The direct seller, known for its door-to-door "Avon Ladies," said in May 2011 that it had fired four employees, including its former general manager for China; its former head of corporate affairs for China; its former head of finance for China; and its former head of global internal audit and security as part of the investigation.

The probe widened in October 2011 when the U.S. Securities and Exchange Commission began investigating New York-based Avon's contact with financial analysts in 2010 and 2011.

Meanwhile, Avon's financials have been erratic. The company reported in October that its net income fell and missed market expectations. It also said it is reviewing all aspects of its business and withdrew its revenue forecast for the year.

In December, the company said it would seek a new CEO to replace 12-year veteran Andrea Jung, who would remain as chairman.

Investors and analysts have long criticized Avon for being slow to react to declining results and slow to wrap up the bribery investigation. But Cramb's firing seems to indicate Avon's board is getting more aggressive, analysts said.

"From the start of the bribery investigation, Avon has consistently maintained that neither CFO Cramb nor CEO Andrea Jung were implicated in the investigation," said Citi Investment Research analyst Wendy Nicholson. "Our interpretation of today's news is that as far as Cramb is concerned, perhaps that message was in error."

BMO Capital Markets analyst Connie Maneaty said the move was "one of many Avon will take to reestablish management credibility and return the company to firm financial footing."

Avon shares fell 20 cents, or 1.1 percent, to $17.78 in midday trading Tuesday.

(Published by WSJ - January 31, 2012)