Aon Will Pay $16.3 Million to Resolve U.S. Bribery Probes
December 21, 2011, 12:13 PM ESTBy David Voreacos
(Updates in fourth paragraph with SEC comments.)
Dec. 20 (Bloomberg) -- Aon Corp., the largest insurance broker, agreed to pay $16.3 million to resolve criminal and civil probes of possible bribes paid overseas to get business.
Aon settled a civil enforcement action by the U.S. Securities and Exchange Commission, agreeing to pay $14.5 million and denying wrongdoing. Chicago-based Aon also will pay a $1.76 million criminal fine and signed a Justice Department non-prosecution agreement that requires anti-bribery controls.
Aon subsidiaries made more than $3.6 million in improper payments between 1983 and 2007 related to business in countries including Costa Rica, Egypt, Vietnam, Indonesia, United Arab Emirates, Myanmar and Bangladesh, the SEC alleged. The payments led to $11.4 million in illicit profits, the agency claimed.
“Aon’s liability is not premised on an isolated instance of misconduct,” Kara Brockmeyer, chief of the SEC Enforcement Division’s Foreign Corrupt Practices Act unit, said in a statement. “Rather, for years, Aon’s subsidiaries repeatedly engaged in misconduct around the world.”
In 2009, Aon paid a 5.25-million pound ($7.9 million) fine to Britain’s Financial Services Authority for not having sufficient anti-bribery controls.
The Justice Department agreed to not prosecute Aon for violating the FCPA. It cited Aon’s “extraordinary cooperation” with the Justice Department and SEC, its “timely and complete disclosure” of facts about improper payments in eight nations, its “early and extensive remedial measures,” and the fine it paid to the FSA.
‘Acting With Integrity’
“Acting with integrity is Aon’s core value and we embody this in our commitment to the highest professional standards,” said Greg Case, chief executive officer and president, in a statement. “Aon has invested a significant amount of time and resources in anti-corruption compliance and transparency to greatly enhance our controls and processes.”
The two-year non-prosecution agreement said “it is understood that Aon has and will continue to strengthen its compliance, bookkeeping, and internal controls standards and procedures.”
Aon Ltd., a U.K. subsidiary, acquired a Costa Rican brokerage firm in 1997, according to a six-page statement of facts. All insurance agreements in Costa Rica, including reinsurance contracts brokered by Aon, had to be issued by INS, the nation’s state-owned insurance company.
Training Funds
Aon set up training and education funds that were supposed to benefit INS officials. In fact, Aon “used a significant portion of the funds to reimburse for non-training related activity or for uses that could not be determined from Aon’s books and records,” the company admitted.
Most of the money from the two funds went to a Costa Rican tourism company where the director of the INS reinsurance department served on the board, Aon said. That director took 14 trips with Aon funds, including five with his wife. The director of INS and his wife also took overseas trips, Aon said.
“A substantial number of the trips taken by INS officials were in connection with conferences and seminars in tourist destinations, including London, Paris, Monte Carlo, Zurich, Munich, Cologne, and Cairo,” Aon said. “Many of the invoices and other records for these trips do not provide the business purpose of the expenditures.”
--Editors: Fred Strasser, Andrew Dunn
To contact the reporter on this story: David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net.
To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.
