Insurer agrees to settle charges it violated the FCPA; carrier allegedly netted $11.4M from $3.6M in payments
Aon Corp. has paid $14.5 million to settle charges by the SEC that it bribed prospective international clients with trips and payments in the hope of securing business.
Aon also paid a $1.76 million criminal fine to the Justice Department.
The Securities and Exchange Commission claimed that from 1983 to 2007, the insurance brokerage firm's subsidiaries spent more than $3.6 million in payments to foreign government officials who could help Aon obtain more business. The bribes allegedly netted Aon some $11.4 million in profits.
In one incident in Costa Rica, Aon Ltd., a British subsidiary of the brokerage firm, contributed to a pair of funds it oversaw that were purported to provide education and training for workers at the Instituto Nacional De Seguros, a government-owned reinsurance company with which Aon Ltd. was conducting business, according to the SEC's complaint.
Aon Ltd., along with Alexander Howden Group Ltd., a subsidiary it acquired, allegedly paid about $875,000 into the funds from 1995 to 2002.
But the SEC claimed that the funds were used to cover travel costs for INS officials. Allegedly, the money was used to pay expenses tied to educational conferences that took place in a number of prime tourist destinations — including London, Paris and Cairo — with no discernable business purpose.
Further, the commission said some of the trips included holiday expenses, family-related travel and trips to literary conferences. In its accounting records, Aon Ltd. vaguely described the payments as “various airfares and hotel,” failing to identify the leisure activities, the SEC claimed.
In another case, Aon and a couple of its subsidiaries worked with a government-owned company in Egypt from 1983 to 2009. In 1998, an Aon subsidiary, Aon Risk Services Inc., arranged trips to New York, Baltimore and Washington for officials with the Egyptian company, according to the SEC. While there was some business component to the arrangements, the trips also included a “disproportionate amount” of leisure activities, the SEC wrote.
From 1998 to 2007, Aon Risk Services shelled out $100,000 for the officials' travel costs but scooped up some $1.4 million in brokerage commissions during 2001 to 2007, according to the complaint. The nature of the payments was not accurately reflected in the carrier's books and records, the SEC alleged.
Aon neither admitted or denied the charges in settling the case. But following an internal review in 2007, Aon put in place a program to prevent violations of the Foreign Corrupt Practices Act of 1977.
“Aon has invested a significant amount of time and resources in anti-corruption compliance and transparency to greatly enhance our controls and processes,” Aon chief executive Greg Case said in a statement. “We believe that today, our compliance practices are a model of best practice for other firms to adopt.”
A call to Aon's attorney Laurence Urgenson at Kirkland & Ellis LLP was not immediately returned. Aon spokesman David Prosperi would not comment beyond the insurance brokerage's statement.
Aon's case marks the 14th enforcement action this year by the SEC under FCPA, a federal law that specifically addresses the issue of bribing foreign officials.
