Nature's Sunshine Products admitted in 2009 to paying over $1 million in bribes to Brazilian officials during the late 1990s. The herbal supplement distributor then falsified accounting records to hide the scheme, eventually settling with the SEC for $600,000.
Gene Hughes started the company modestly in 1972, encapsulating capsicum in his kitchen for health food stores. Nature's Sunshine later adopted a direct marketing model, building a distribution network that now spans 30 countries and includes nearly 600,000 distributors. Gregory L. Probert became CEO and Chairman in October 2013, following leadership roles at Herbalife International of America, Disney, and DMX Music. He also consulted for Nature's Sunshine from 2010 to 2011.
The company's clean corporate record fractured when its Brazilian operations faced trouble. Nature's Sunshine attempted to enter the Brazilian market in the late 1990s. But regulatory changes reclassified many of its supplements as medicines, preventing legal registration and causing sales to plummet.
Instead of accepting the losses, the company's Brazilian subsidiary funneled more than $1 million in undocumented cash payments to customs brokers and government officials. These payments, made between the late 1990s and early 2000s, arrived in envelopes with no paper trail. This method bypassed import restrictions on unregistered products. Accountants labeled them "importation advances" to obscure the true nature of the transactions from federal regulators.
Nature's Sunshine did not disclose any of this to the SEC. The scheme violated the Foreign Corrupt Practices Act, which forbids U.S. companies from bribing foreign officials for business advantages. It also broke federal securities laws by filing misleading disclosures.
The SEC uncovered the plot and built its case. Nature's Sunshine settled in 2009 without admitting wrongdoing, but paid the $600,000 penalty. The company never revealed the full extent of the bribery or if higher-level officials approved the payments. The case highlighted a company's willingness to break the law and falsify its books when regulatory hurdles threatened profits abroad.