Aon Corp Agrees to Pay over $14.5M to Resolve FCPA Violations
On December 20, 2011, the Justice Department announced that it has entered into a non-prosecution agreement with Aon Corporation, a publicly traded corporation and one of the largest insurance brokerage firms in the world, to resolve violations of the Foreign Corrupt Practices Act (FCPA). As part of the agreement, Aon has agreed to pay a $1.76 million penalty. Aon has also separately agreed to pay the Securities and Exchange Commission approximately $14.5 million in disgorgement and prejudgment interest.
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UK Subsidiary Used Funds to Pay Officials at Costa Rica State-Owned Co
According to the non-prosecution agreement, Aon’s United Kingdom subsidiary, Aon Limited, administered certain training and education funds in connection with its reinsurance business with Instituto Nacional De Seguros (INS), Costa Rica’s state-owned insurance company. The supposed purpose of the funds was to provide education and training for INS officials.
However, between 1997 and 2005, Aon Limited used a significant portion of the funds to reimburse INS officials for non-training related activity, including travel with spouses to overseas tourist destinations, or for uses that could not be determined from Aon’s books and records. Many of the invoices and other records for trips taken by INS officials did not provide any business purpose for the expenditures, or showed that the expenses were clearly not related to a legitimate business purpose.
Accounting Books & Records Did Not Accurately Reflect Purposes of Expenses
As part of the agreement, Aon admitted that Aon Limited’s accounting books and records related to the funds, which were consolidated into Aon’s books and records, did not accurately and fairly reflect the purpose for which the expenses were incurred. Aon also admitted that it failed to devise and maintain an adequate system of internal accounting controls with respect to foreign sales activities sufficient to ensure compliance with the FCPA.
Aon to Pay a $1.76M Penalty, $14.5M in Disgorgement and Prejudgment Interest
According to the agreement, Aon Corporation agreed to pay $1.76 million monetary penalty. The agreement also requires that Aon Corporation adhere to rigorous compliance, bookkeeping and internal controls standards and cooperate fully with the Justice Department.
In a related matter, Aon Corporation reached a settlement with the Securities and Exchange Commission (SEC) and agreed to pay approximately $14.5 million in disgorgement and prejudgment interest.
DOJ's Consideration of Various Factors Led to a Reduced Monetary Penalty
DOJ entered into the non-prosecution agreement with Aon as a result of Aon’s cooperation with the department and the SEC; its timely and complete disclosure of improper payments in Costa Rica and other countries that it discovered during its thorough investigation of its global operations; its early and extensive remedial efforts; the prior financial penalty of £5.25 million that Aon Limited paid to the UK's Financial Services Authority (FSA); and the FSA’s close and continuous supervisory oversight over Aon Limited. These factors also led to a substantially reduced monetary penalty.