Aon Corp. CEO Patrick G. Ryan’s attempt at a PR offensive hit a snag when he had to clarify comments he made in a top-of-the-fold, front-page Dec. 5 Chicago Tribune story about the No. 2 broker’s ethical practices surrounding contingent commissions and bid rigging. Only a day after coming off as untroubled by possible impending legal action against the company, Ryan admitted that some employees had broken company ethics policy.
Allegations have not been brought against Aon, but New York Attorney General Eliot Spitzer has subpoenaed records and “a person close to the inquiry” told The New York Times that investigators “have discovered coercive and deceptive practices.”
This really set the rumor mill churning, and when Aon took out an $890 million line of credit, many saw it as a pre-emptive move to fend off a potential Spitzer suit. But in his interview with the Tribune, Ryan seemed to shrug off any worries about the company’s behavior.
“I’m very comfortable with our past behavior,” Ryan, 67, told the newspaper during an interview.
Spitzer filed a civil lawsuit against Marsh & McLennan on Oct. 14, alleging that brokers took payoffs from insurance companies to steer corporate clients their way rather than searching for the best prices as required. Ryan said such steering did not occur at Aon.
“You can talk to 1,000 Aon brokers and I would defy you to find one who would say they ever placed business” by steering clients toward insurance companies that paid Aon brokers larger commissions, said Ryan, who is also a director of Tribune Co., which publishes the newspaper. “They just don’t do it and they don’t get paid that way.”
A day later, Ryan issued a brief statement in response to the article, which was headlined “Aon chief not fazed by insurance probes.” Ryan said the characterization was inaccurate and that he in fact took the matter very seriously.
“We believe that the attorney general’s investigation has raised serious issues about the insurance industry,” he said, “which is why Aon has announced that it will terminate contingent commissions and has put in place new business practices for the future.”
Ryan also said he “made positive comments about the conduct of Aon employees because I do believe the vast majority of our employees adhere to the longstanding principles embodied in our code of conduct and Aon values. However, we have found indications that some employees have not always followed these principles.”
Ryan did not detail exactly what misconduct had taken place or whether it was similar to what happened at Marsh.
Little is known of Spitzer’s investigation into Aon’s brokerage activities. In his lawsuit against Marsh, Spitzer took issue with contingent fees paid by insurance companies in exchange for steering more business their way. Spitzer called the fees “kickbacks.” Since then, both Aon and Marsh have given up contingent fees.
In September– two weeks before the Spitzer investigation became public–Ryan said he planned to step down as CEO once a successor is named.
Rumors later surfaced that Ryan was leaving the $10 billion company before legal troubles hit. But Ryan has denied the speculation, noting he will remain on Aon’s board as chairman.
“The fact that I’m staying on as chairman ought to knock that theory out,” Ryan told the Tribune. “If it had anything to do with Spitzer, I wouldn’t be staying on as chairman.”
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