US DOJ Slaps Criminal Fines on UK Brokers Tysers and H.W. Wood for Bribery

By | December 5, 2023

The US Department of Justice has slapped criminal penalties on UK reinsurance brokers Tysers Insurance Brokers Ltd. and H.W. Wood Ltd. as a result of their participation “in a corrupt scheme to pay bribes to Ecuadorian government officials,” the DOJ announced.

The bribes were intended to secure improper advantages in order to obtain and retain reinsurance business with the state-owned Ecuadorian insurance companies, the DOJ said, explaining that the brokers violated the Foreign Corrupt Practices Act (FCPA)

“Tysers and H.W. Wood have admitted to engaging in a scheme to bribe multiple Ecuadorian government officials to earn tens of millions of dollars in illicit profits for themselves and their co-conspirators,” according to Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division, in a DOJ statement issued on Nov. 20, 2023.

As part of its deferred prosecution agreement (DPA) with the DOJ, Tysers will pay a criminal penalty of $36 million and an additional financial sanction (called an administrative forfeiture), of approximately $10.5 million.

H.W. Wood got a break on the criminal penalty and forfeiture payment due to its “financial condition and demonstrated inability to pay the penalty,” the DOJ indicated, noting that the broker would, as a result, pay a criminal penalty $508,000 and would not have to pay the forfeiture amount. (Under the U.S. Sentencing Guidelines, the “appropriate criminal penalty” would have been $22.5 million and approximately $2.3 million would have been forfeitable to the United States, the DOJ said).

Tysers and H.W. Wood representatives did not respond to requests for comments and Marsh declined to comment.

Intiail details of a bribery investigation first emerged in March 2022, when Bloomberg revealed that the UK Serious Fraud Office was examining the South American business practices of Marsh McLennan Cos.’ Jardine Lloyd Thompson (JLT) and Tysers. UK reinsurance broker JLT ultimately avoided a criminal penalty but paid disgorgement for profits received in the scheme. See below for further information. HW Wood was not mentioned in the article.

Details of the Scheme

Describing the scheme, the DOJ said, between 2013 and 2017, Tysers (doing business at that time as Integro Insurance Brokers Ltd.) and H.W. Wood, through their employees and third-party agents, agreed to pay bribes totaling approximately $2.8 million to the then-chairman of two Ecuadorian state-owned insurance companies, Seguros Sucre S.A. and Seguros Rocafuerte S.A., and three other Ecuadorian officials, according to the DOJ, quoting court documents. (Tysers was purchased by Australia’s AUB Group in October 2022 and Integro bought Tysers in June 2018).

“In furtherance of the scheme, Tysers paid approximately $20.3 million in commissions and H.W. Wood paid approximately $7.9 million in commissions and premium payments to the intermediary company that paid the bribes. Tysers retained commissions of approximately $10.5 million and H.W. Wood retained commissions of approximately $2.3 million,” the DOJ said.

“Not only have Tysers and H.W. Wood broken any trust held in them by their clients and the market, they have eroded the process of fair and open competition when they paid bribes to foreign officials in exchange for securing lucrative contracts, and kickback for themselves,” said Chief Jim Lee of IRS Criminal Investigation (IRS-CI), in a statement.

The DOJ said both Tysers and H.W. Wood received credit for their cooperation with the department’s investigation – actions that included:

  • Meeting the government’s requests promptly;
  • Endeavoring to make foreign-based employees available for interviews;
  • Collecting and producing voluminous relevant documents to the government, including documents located outside the United States;
  • Making several detailed factual presentations to the government and conducting and producing financial analyses of voluminous transactions; and
  • Timely accepting responsibility and reaching a prompt resolution.

In addition, the DOJ said, the brokers received credit for the fact that they engaged in “timely remedial measures,” which included:

  • Placing employees involved in the misconduct on paid administrative leave;
  • Terminating all business and affiliations with the intermediary company involved in the misconduct; and
  • Comprehensively reviewing and enhancing their compliance programs.

In light of this cooperation, Tysers’ and H.W. Wood’s criminal penalties calculated under the U.S. Sentencing Guidelines reflects a 25% reduction off the bottom of the applicable guidelines fine range, the DOJ said.

Pursuant to the DPAs, Tysers and H.W. Wood have each agreed to continue to cooperate with the department in any ongoing or future criminal investigations relating to this conduct. In addition, Tysers and H.W. Wood have each agreed to continue to enhance their compliance programs and provide reports to the department regarding remediation and the implementation of compliance measures for the three-year term of the DPAs.

Additional DOJ Actions

The department said it has, to date, charged eight individuals for their actions:

  • Juan Ribas Domenech, the former chairman of Seguros Sucre and Seguros Rocafuerte, pleaded guilty in the Southern District of Florida on Sept. 16, 2020, to money laundering conspiracy for his role in this and another scheme.
  • Fernando Martinez Gomez, a financial adviser, pleaded guilty in the Eastern District of New York on March 24, 2022, to two counts, including conspiracy to commit money laundering for on his role in this and another scheme.
  • Esteban Merlo Hidalgo, a co-conspirator and agent of Tysers and H.W. Wood, pleaded guilty in the Southern District of Florida on March 28 to four counts of engaging in transactions in criminally derived property obtained through his participation in this scheme.
  • A federal grand jury in the Southern District of Florida returned a seven-count indictment against two other defendants, Cristian Patricio Pintado Garcia and Luis Lenin Maldonado Matute, both of whom remain fugitives, on July 14, 2022, for their alleged roles in this scheme.
  • On March 18, 2022, the department issued a “FCPA Corporate Enforcement Policy declination” to JLT, relating to bribes paid through a Florida-based intermediary to Ecuadorian government officials to obtain and retain contracts with Seguros Sucre. (In Marsh McLennan’s 2021 annual report, it revealed that in December of that year, the DOJ notified JLT of its intention to decline to pursue any charges “and to seek disgorgement of $29 million in alleged gross profits on this account,” a charge that was recorded by Marsh McLennan in the fourth quarter of 2021. A company can avoid criminal prosecution by voluntarily disclosing information, fully cooperating, and payment of disgorgement, forfeiture, and/or restitution, the DOJ explained on its website.)
  • Separately, the former CEO of JLT’s Colombian subsidiary, Felipe Moncaleano Botero, and two intermediaries, Jose Vicente Gomez Aviles and Roberto Heinert, each pleaded guilty in the Southern District of Florida to one count of money laundering conspiracy, on, respectively, Aug. 4, 2020, June 11, 2020, and Oct. 2, 2020.

The Justice Department’s Office of International Affairs and authorities in the UK, Panama, Ecuador, and Switzerland provided assistance in the case.

Topics Florida USA Fraud Agencies

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