Exhibit 99.2
|
|
KPMG LLP |
|
|
|
|
Suite 1500 |
Telephone |
801 333 8000 |
|
|
15 West South Temple |
Fax |
801 237 1552 |
|
|
Salt Lake City, UT 84101-9901 |
Internet |
www.us.kpmg.com |
March 27, 2006
Ms. Kristine Hughes,
Chairman, Board of Directors
Nature’s Sunshine Products, Inc.
75 East 1700 South
Provo, Utah 84606
Re: Follow-up from meeting on March 22, 2006 and March 26, 2006
Dear Ms. Hughes:
We write to follow-up on our meetings on Wednesday, March 22, 2006 and on our telephonic meeting yesterday regarding the status of the remedial actions recommended by the independent investigator and endorsed by the Special Committee. We have had an opportunity to consider their report on the investigation presented to us on March 15, 2006, additional information received on March 22, 2006 and the comments made during our call on March 26, 2006.
While we understand that the investigators are in the process of finalizing their report and that additional remedial actions may be recommended, we believe it is necessary for the Company to act on those recommendations already presented. It is our belief that the Company will need to implement all of the recommendations.
The investigator and the Special Committee have concluded that the Company should terminate Mr. Douglas Faggioli, President and CEO. The investigation found electronic evidence indicating that Mr. Faggioli knew of an alleged fraud in the international operations of the Company yet signed two different representation letters to KPMG LLP (KPMG) (on March 15, 2005 and August 5, 2005) affirming to the contrary, and that he had approved a payment in violation of the Foreign Corrupt Practice Act. We understand that the investigation of Mr. Faggioli is continuing with respect to the transfer tax plan, design and approval of bonuses with reference to the tax plan, and the termination of Mr. Jeff Hill, the former corporate controller of the Company. However, the results of those investigations will not alter the conclusions already reached.
Despite these conclusions, the Company has not taken any remedial action with respect to Mr. Faggioli. To the contrary, at our meeting on March 15, 2006 and March 26, 2006 you stated that the Company would not terminate Mr. Faggioli. Such a response to the investigation and its findings is not acceptable.
The investigator and the Special Committee also recommended that Mr. Franz Cristiani, the chair of the Audit Committee, be removed from that position. The evidence provided by the investigation indicates that Mr. Cristiani was aware of an alleged fraud that, in his words, “could be considered material from an auditing standpoint and could pose a significant problem to our company.” Despite being copied on the representations to the contrary being made to KPMG, Mr. Cristiani made no attempt to notify KPMG of these allegations or to correct the inaccurate representations made to KPMG. To date he remains chair of the Audit Committee. In addition to the recommendation, it is our belief that he must be removed from the Audit Committee and the Board of Directors.
