INSURANCE GIANT AON SETTLES FCPA CHARGES
p>Aon Corporation, one of the largest insurance brokerage firms in the world, resolved FCPA charges with the Department of Justice and the Securities and Exchange Commission. The firm entered into a non-prosecution agreement with the DOJ. In connection with that agreement, the company admitted that its books and records did not accurately reflect the purpose of certain expenses and that it failed to devise an adequate system of internal controls as they relate to its foreign sales activities. Under the terms of the agreement the company will pay a $1.76 million criminal fine and adhere to rigorous compliance and internal control procedures.
The firm also settled with the SEC. Publically traded Aon consented to the entry of a permanent injunction prohibiting future violations of Exchange Act Sections 13(b)(2)(A) and 13(b)(2)(B) without admitting or denying the allegations in the complaint except as to jurisdiction. The firm also agreed to pay disgorgement of $11,416,814 along with prejudgment interest. SEC v. Aon Corporation, Civil Action No. 1:11-cv-02256 (D.D.C. Filed Dec. 20, 2011). Aon also paid a fine in the amount of â‚¤5.25 million to the UKâ€™s Financial Services Authority.
The criminal investigation focused on payments made between 1997 and 2005 by Aon Limited, the firmâ€™s United Kingdom subsidiary. That subsidiary administered certain training and education funds in connection with its reinsurance business with Instuto Nacional De Seguros or INS, Costa Ricaâ€™s state-owned insurance company. The supposed purpose of the payments was for the education and training of INS employees. In fact, significant portions of the money were used for other purposes, according to the DOJ. Those included travel with spouses to overseas tourist locations or for purposes which could not be determined. Many of the invoices did not specify a legitimate business purpose for the expenditure.
The Commissionâ€™s complaint focuses on the payments made in Costa Rica as well as those in Egypt, Vietnam, Indonesia, United Arab Emirates, Myanmar and Bangladesh. According to the SEC, a total of $3.6 million in improper payments were made by subsidiaries of the firm between 1983 and 2007. All of the payments were to either those who could award business or were in a position to influence others who could award business. The payments were made for travel and entertainment and to third-party facilitators.
The settlement in the criminal investigation is based on what criminal prosecutors termed the â€œextraordinaryâ€ cooperation of the firm with the DOJ and the SEC. That cooperation included timely and complete disclosure of the improper payments in Costa Rica. It also included disclosure of other improper payments discovered during a thorough investigation of Aonâ€™s global operations. In addition, the DOJ considered the early and extensive remedial efforts taken by the firm as well as the fine paid to the SFA in the United Kingdom. The SEC did not disclose the predicate for its settlement.