7.3 AON SETTLEMENT WITH THE FSA – JANUARY 2009
Regulatory failure
Inadequate risk management procedures
Amount of payments
$2.5 million and €3.4 million
Benefit gained
$7.2 million and €1 million
Amount fined
£5.25 million
Criminal prosecutions
None
Prosecutions in other countries
None
Monitor appointed
No
296.
The handling of this overseas bribery case is somewhat unusual, in that it was settled by the FSA. The FSA had been lobbying for some time for statutory powers to use the promise of lesser sentences or, in appropriate cases, immunity from prosecution for co-operating witnesses, in order to obtain successful outcomes in market abuse cases. This has now been achieved: from April 2010 the 87 FSA may use the powers under Sections 71 to 74 of SOCPA. However, in the case of Aon, the FSA chose to use its regulatory powers as it did not have a remit to prosecute corruption cases.
297.
The FSA fined Aon, an international insurer, £5.25 million for its failure in not having adequate risk management procedures in place to control payments to overseas agents. This control failure led to suspicious payments being made over a number of years. The published notice of the fine stated: “During the Relevant Period, Aon Ltd breached Principle 3 by failing to take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems. Aon Ltd did not take reasonable care to establish and maintain effective systems and controls for countering the risks of bribery and corruption associated with making payments to non FSA-authorised overseas third parties (Overseas Third Parties) who assisted Aon Ltd in winning business from overseas clients, particularly in high risk jurisdictions. As a result, Aon Ltd made various suspicious payments to a number of Overseas Third Parties amounting to approximately $2.5 million and €3.4 million during the Relevant Period.”
298.
The FSA conducted its investigation pursuant to its powers under the Financial Services and Markets Act 2000, under which the FSA has a statutory responsibility for market confidence and the reduction of financial crime. Principle 3 in the above quote refers to the FSA’s Principles for Business which inter alia requires regulated companies to take reasonable care to organise and control their affairs responsibly and effectively, with adequate risk management systems.
299.
Under Section 206(1) of the Act the FSA imposed a penalty of £5.25 million on Aon, having regard to the serious nature of the case. Although Aon was not considered to have been reckless in allowing corrupt payments to be made by third parties it was clear that the control weaknesses had existed for a number of years despite earlier instances of bribes being known. The FSA stated: “Aon Ltd agreed to settle at an early stage of the FSA’s investigation. It therefore qualified for a 30% (Stage 1) discount under the FSA’s executive civil settlement procedures. Were it not for this
87
The FSA requires the consent of the Attorney General where it offers a full immunity.
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