Aon Fined $8M By British Regulators

Aon Corp.'s United Kingdom unit was fined close to $8 million by Great Britain's Financial Services Authority (FSA) for making questionable payments overseas, the regulator said today.

The FSA fined Aon Ltd. ?5.25 million ($7.99 million) for making the payments and not instituting adequate controls to ensure bribery and other corrupt practices did not take place.

Between Jan. 2005 and Sept. 2007, the FSA said Aon Ltd., the London-based unit of Chicago based Aon Corp., failed to "properly assess the risks involved in its dealings with overseas firms and individuals helped it win business and failed to implement effective controls to mitigate those risks.

Aon Ltd. made approximately $7 million in "suspicious payments," the FSA said, due to its "weak control environment." The payments involved third parties in Bahrain, Bangladesh, Bulgaria, Burma, Indonesia and Vietnam, who the FSA said could have used the money to bribe the insured, the insurer or a public official. There was also no assurance that the payments were made for "genuine commercial purpose" to the overseas third parties.

Margaret Cole, FSA director of enforcement, said in a statement that this was the largest financial crime-related fine the FSA has made to date.

"[The fine] sends a clear message to the U.K. 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 U.K. financial institutions in corrupt or potentially corrupt practices overseas undermines the integrity of the U.K. financial services sector," she continued.

"The FSA has an important role to play in the steps being taken by the U.K. 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," added Ms. Cole.

The FSA said Aon's fine would have been much higher, ?7.5 million ($11.4 million), but its cooperation and agreement to settle at an early stage in the investigation qualified the broker for a 30 percent discount under the FSA's settlement discount plan.

The FSA said that since the payments were discovered in 2007, Aon Ltd. and its current senior management have identified past issues and improved controls making it "a model of best practice that other firms may wish to adopt."

In a separate statement, Aon said the questionable payments occurred in its aviation and energy sectors in "certain non-U.K., high risk jurisdictions." The payments were not "deliberate or reckless," Aon said, and it has made every effort to reform its systems and controls to prevent a reoccurrence.

Among some of the controls it has put in place, Aon said it has:

o Put in place a robust global anti-corruption program.

o Instituted a review process of all existing and proposed third party relationships.

o Implemented controls and restrictions on the use of overseas third parties, particularly those in "high risk jurisdictions."

"We recognize and regret the failings that occurred in our systems and controls for payments to third parties and are pleased that our efforts to remedy and enhance our controls are considered by the FSA to be 'a model of best practice that other firms may wish to adopt,'" said Peter Harmer, chief executive officer of Aon Ltd.