Issuing its biggest ever crime-related fine, the FSA said Aon did not take reasonable care to counter the risks of bribery and corruption associated with making payments to overseas third parties who assisted the firm in winning business from
overseas clients, particularly in high risk jurisdictions.
The regulator said Aon made various suspicious payments to a number of overseas third parties amounting to approximately US$2.5 million and €3.4 million in 2007. The payments relate to the business won from competitors in Bahrain, Bangladesh, Bulgaria, Burma, Indonesia and Vietnam. The fine would have been £7.5m but for the co-operation of Aon in the investigation.
In 2000, it was censured and fined by Lloyd’s Disciplinary Board in relation to a number of similar matters that had occurred in Alexander Howden Group Limited and Nicholson Leslie Limited, two predecessor companies of Aon Ltd.
The case relates to the reinsurance of various overseas insurance companies, one of which is owned by the Burmese government. Aon paid more than $500,000 to a third party in relation to securing this business. It also paid around $1.4m into a Swiss numbered bank account of a British Virgin Islands-based company in relation to reinsurance business for a Bulgarian insurer.
Aon says it has significantly strengthened and enhanced its controls around the usage of third parties, including implementation of a robust global anti-corruption compliance programme, the introduction of risk-based procedures to review all existing and proposed third party relationships and a globally implemented third party policy controlling and restricting the use of overseas third parties, particularly those in high-risk jurisdiction.
Margaret Cole, director of enforcement, says:
“This is the largest financial crime related fine imposed by the FSA to date. It sends a clear message to the UK financial services industry that it is completely unacceptable for firms to conduct business overseas without having in place appropriate anti-bribery and corruption systems and controls.
“The involvement of UK financial institutions in corrupt or potentially corrupt practices overseas undermines the integrity of the UK financial services sector. The FSA has an important role to play in the steps being taken by the UK to combat overseas bribery and corruption. We have worked closely with other law enforcement agencies in this case and will continue to take robust action focused on firms’ systems and controls in this area.”
Peter Harmer, chief executive of Aon Limited, says: “We recognise and regret the failings that occurred in our systems and controls for payments to third parties and are pleased that our efforts to remedy and enhance our controls are considered by the FSA to be ’a model of best practice that other firms may wish to adopt’.”