AON CORPORATION

INDUSTRY

Financial Services/Private Equity

CORPORATE HEADQUARTERS

Chicago, Illinois, United States of America

SUMMARY OF ALLEGATIONS

Nationality of Foreign Officials: Bangladesh

Summary of Allegations:

Aon allegedly paid a former Aon employee acting as an introducer USD 1.07 million in payments to secure accounts with two government-owned entities. Aon allegedly knew that the employee would use a portion of the money to the son of a former high-ranking government official.


Approximate Alleged Payments to Foreign Officials: Unspecified

Business Advantage Allegedly Obtained: Accounts with government-owned entities

Nationality of Foreign Officials: Bulgaria, Panama

Summary of Allegations:

Aon allegedly discovered improper payments made in Panama and Bulgaria during an internal investigation.


Approximate Alleged Payments to Foreign Officials: Unspecified

Business Advantage Allegedly Obtained: Unspecified

Nationality of Foreign Officials: Costa Rica

Summary of Allegations:

A U.K. subsidiary of Aon was involved with a government-owned reinsurance company (called INS). The subsidiary contributed a portion of its brokerage commission on its INS account to a brokerage fund, in total USD 660,000. Almost all of the money was used to pay for services for INS employees, including airfare, hotels conference fees and meals. The travel was to tourist destinations like Prais, Monte Carlo and London and allegedly had no business purpose or connection to the reinsurance industry. The money went to a tourism company connected to the head of reinsurance placement at INS.


Approximate Alleged Payments to Foreign Officials: USD 650,000

Business Advantage Allegedly Obtained: Unspecified

Nationality of Foreign Officials: Egypt

Summary of Allegations:

Aon was an insurance broker for a government-owned entity. The subsidiary handling the account sponsored an annual trip to the U.S. for Egyptian officials with the government-owned entity. The trips were to popular tourist destinations, including New York and Washington, D.C. The trips included more leisure time than business-related activities.


Approximate Alleged Payments to Foreign Officials: USD 100,000 in travel-related costs

Business Advantage Allegedly Obtained: Brokerage commissions of USD 1.4 million

Nationality of Foreign Officials: Indonesia

Summary of Allegations:

Aon was a broker on reinsurance contracts with two state-owned entities. Aon employees allegedly authorized a consultant and a company to make improper payments to government officials to secure the contracts. The consultant received a USD 100,000 retainer to assist Aon in securing one of the contracts. Aon also agreed to pay the consultant, a company and other parties a percentage of premiums if Aon secured the contract. None of these other payments were made.

Aon paid another company USD 100,000 to assist Aon in securing both contracts. Officials encouraged Aon to enter into an agreement with the company.

Another USD 100,000 was paid to a third-party for allegedly assisting Aon obtain one of the contracts.


Approximate Alleged Payments to Foreign Officials: Unspecified

Business Advantage Allegedly Obtained: USD 8.1 million in contracts

Nationality of Foreign Officials: Myanmar

Summary of Allegations:

Aon used an introducer to assist it in obtaining accounts with two government-owned entities. The introducer allegedly used some of his commission to make a payment to a senior manager at one of the entities to "protect [Aon's] interests."

Aon also paid USD 3.25 million to a third party to assist Aon in securing a contract with a government-owned insurance company. Aon allegedly ignored red flags like indications that the third party was connected to an official in the insurance company, and that payments were made to a bank account outside of Myanmar.


Approximate Alleged Payments to Foreign Officials: Unspecified

Business Advantage Allegedly Obtained: Protection of Aon's interests.

Nationality of Foreign Officials: United Arab Emirates

Summary of Allegations:
Approximate Alleged Payments to Foreign Officials:

Business Advantage Allegedly Obtained:

Nationality of Foreign Officials: Viet Nam

Summary of Allegations:

Aon retained a third-party facilitator in 2002 to assist it in being appointed as insurance broker for Vietnam Airlines, a government-owned entity. Aon offered the facilitator 30% share of the Vietnam Airlines account in 2003, and to retain a share of the account in later years. Allegedly, the facilitator did not provide legitimate services to Aon. Instead, the facilitator transferred some of the money paid to it by Aon to unnamed individuals known as "related people."


Approximate Alleged Payments to Foreign Officials: USD 650,000

Business Advantage Allegedly Obtained: USD 2.2 million in brokerage commissions

ENFORCEMENT RESULTS

Agencies: United Kingdom: Financial Services Authority
Results: Civil Penalty, Disgorgement
Year Resolved: 2009
Compliance Monitor:
Ongoing: No
Details:

On 6 January 2009, the UK Financial Services Authority ("FSA") issued a Final Notice and imposed a penalty of GBP 5.25 million on Aon Limited. The FSA investigation was settled at an early stage, allowing for a 30% discount. But for Aon Limited's cooperation and prompt settlement, the financial penalty that would have been imposed by the FSA would have been GBP 7.5 million.

The FSA found that, between 14 January 2005 and 30 September 2007, Aon Limited failed 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 corruption risks.

Aon Limited was found to be in breach of Principle 3 of the Financial Services and Markets Act 2000 by failing to take reasonable care to organise and control its affairs responsibly and failing to implement adequate risk management systems. In particular, the procedures in place did not require adequate levels of due diligence to be carried out before entering relationships or making payments to intermediaries.

Aon Limited failed to monitor its relationships with its intermediaries in respect of the specific risk of bribery. Further, Aon Limited did not provide its staff in relevant business divisions with sufficient guidance and training on bribery and corruption risks in relation to dealing with intermediaries. Aon Limited also failed to ensure that the committee appointed to oversee the relevant risks received adequate management information and/or routinely assessed whether bribery and corruption risks were being managed effectively.

The FSA recognized that Aon Limited's senior management had taken steps to mitigate the seriousness of its failings. Aon Limited had promptly reported the matter to SOCA and the FSA after discovering two groups of potentially improper payments. On discovery of the third case Aon Limited had established a dedicated steering committee which reported directly to its Board and this committee had overall responsibility for reviewing both the inappropriate payments and the systems and controls related to intermediaries. Aon Limited had instructed a leading firm of accountants to review its systems and controls in place to control the payments to intermediaries. Aon Limited implemented the short recommendations made by the external accountants. Aon Limited also retained its law firms to carry out detailed investigations of potentially inappropriate payments and, where appropriate, had taken responsive action including termination or other disciplinary action against staff.



Agencies: United States: Department of Justice, United States: Securities and Exchange Commission
Results: Criminal Fine, Disgorgement, Non-Prosecution Agreement
Year Resolved: 2011
Compliance Monitor:
Ongoing: No
Details:

On 20 December 2011, AON entered into a non-prosecution agreement with the DOJ and agreed to pay a USD 1.76 million penalty to resolve violations of the FCPA. Aon also reached a settlement with the SEC and agreed to pay approximately USD 14.5 million in disgorgement and prejudgment interest.

Aon Limited made various potentially inappropriate payments to a number of intermediaries amounting to USD 2.5 million and EUR 3.4 million during the period between January 2005 and the end of September 2007. These payments related to the activities of Aon Limited as an insurance broker and, in particular, in relation to customers who were state owned and involved in obtaining insurance including in relation to energy and aviation risks.

Aon Limited conducted an internal investigation and subsequently instructed outside accountants and lawyers to assist with a further investigation.

Over the relevant period, the FSA recorded that 66 potentially inappropriate payments amounting to approximately USD 2.5 million and EUR 3.4 million may have been made to nine intermediaries.

The NPA stipulates that Aon pay a "substantially reduced" fine of USD 1,764,000, based on the DOJ's intention "to credit meaningfully Aon for its extraordinary cooperation with the Department, including its thorough investigation of its global operations and complete disclosure of facts to the Department, and its early and extensive remediation," taking into account also the prior assessment of a larger fine by the FSA in the UK for conduct in countries other than Costa Rica.

The duration of the NPA is two years.



ENTITIES/INDIVIDUALS INVOLVED

DETAILS OF HOW CONDUCT WAS DISCOVERED

Discovery Method: Voluntary Disclosure
Details:

Aon Limited, being a regulated entity under the UK's anti-money laundering legislation, is required to file Suspicious Activity Reports ("SARs") on discovering activities that fall within the definition of "money laundering." The relevant payments were such that Aon Limited was required to make a SAR to the UK's Serious Organised Crime Agency ("SOCA"). The information contained within these disclosures was also disclosed to the FSA, by whom Aon Limited is regulated.

Specifically, in June 2006, in connection with the departure of former brokers, Aon Limited became aware of a number of potentially inappropriate payments that may have been made in connection to its energy reinsurance business in Indonesia, and conducted an internal review of the matter. The Indonesian payments were again been brought to Aon Limited's attention by the Indonesian authorities in April 2007. Aon Limited then treated these payments as suspicious.

After another group of suspicious transactions relating to business in Bahrain came to Aon Limited's attention in May 2007. Aon Limited's Board then promptly reported the Bahrain and Indonesia payments to SOCA and the FSA.

In January 2008, Aon Limited instructed a firm of accountants to conduct an extensive past payments review which covered all payments made by Aon Limited to overseas third parties between 1 January 2002 and 31 December 2007. This review identified a further number of payments made by Aon Limited to overseas third parties which were potentially inappropriate, some of which resulted in further notifications to SOCA.


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