UK’s FSA Fines Aon $8 Million for Bribery, Corruption Control ‘Failings’

January 9, 2009

The UK’s Financial Services Authority has levied a £5.25 million ($8 million) fine against Aon Limited, the broker’s UK operations, “for failing to take reasonable care to establish and maintain effective systems and controls to counter the risks of bribery and corruption associated with making payments to overseas firms and individuals.”

The FSA said the action highlights its important role in the “steps being taken by the UK to combat overseas bribery and corruption.”

The FSA cited Aon’s failure between January 14, 2005 and September 30, 2007, “to properly assess the risks involved in its dealings with overseas firms and individuals who helped it win business and failed to implement effective controls to mitigate those risks,” as the reason for the disciplinary action. It added that, “as a result of Aon Ltd’s weak control environment, the firm made various suspicious payments, amounting to approximately US$7 million, to a number of overseas firms and individuals.”

Margaret Cole, director of enforcement, noted: “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.”

The FSA’s bulletin did indicate, however, that Aon Ltd. had fully cooperated with the FSA and had “agreed to settle at an early stage of the FSA’s investigation.” Aon thereby “qualified for a 30 percent discount under the FSA’s settlement discount scheme. Without the discount the fine would have been £7.5 million [$11.43 million].”

The bulletin also noted that “since the discovery of its failings in 2007, Aon Ltd. and its current senior management have demonstrated that they treat this matter with the utmost seriousness. The FSA considers that the pro-active determination of Aon Ltd.’s current senior management to identify past issues and improve the firm’s systems and controls in this area is a model of best practice that other firms may wish to adopt.”

The final notice issued by the FSA may be found on its web site at: www.fsa.gov.uk.

In a clear warning to other firms, the FSA reminded them that it had “sent out an industry wide letter to commercial insurance intermediaries in November 2007 reminding them of their regulatory obligations in relation to bribery and corruption risks. The FSA is also currently conducting a thematic review into the adequacy of the systems and controls in place at a number of commercial insurance intermediary firms for preventing illicit payments and inducements particularly through the use of overseas third parties.”

Source: Financial Services Authority

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