3 Compliance Takeaways from Aon’s $16.3 Million FCPA Settlement

In late December 2011, insurance broker Aon Corporation agreed to pay $16.3 million to the Department of Justice and the Securities and Exchange Commission to settle charges of Foreign Corrupt Practices Act violations in connection with payments its UK subsidiary made on behalf of government officials in Costa Rica and other countries. Aon’s subsidiary had set up a travel and education fund for the officials, but “failed to maintain an adequate internal control system reasonably designed to detect and prevent improper payments,” which led to the use of the fund for personal entertainment expenses of the government employees. 

For your reference, here are three FCPA takeaways from the Aon story:

1. There is no excuse for poor documentation: 

“There must be a clear and DOCUMENTED business purpose in travel and payment of educational expenses. Remember the three most important things are DOCUMENT, DOCUMENT and DOCUMENT. Beyond that your books and records need to reflect accurate payments for travel, as in who, what, when, where and how; not ‘various airfare and hotels.’” (Aon Nets an NPA by Thomas Fox) 

2. If it looks like a vacation, it probably is:

“The SEC noted that a ‘substantial number’ of the ‘purported educational conferences’ were in ‘attractive tourist destinations,’ such as London, Paris, Monte Carlo, Zurich, Munich, Cologne, and Cairo, and ‘had no discernible purpose’ or had no apparent connection to the insurance industry. The expenses included literary conferences, holiday expenses, pure entertainment or extensive leisure activities, and family-related travel.” (2011 Ends With Over $100 Million in Penalties and Disgorgements for FCPA Violations at Insurance Company and Telecom Company by Morrison & Foerster LLP) 

3. It is your responsibility to know where the line is, and not to cross it: 

“Trainings are standard in the [insurance] industry and have a legitimate business purpose. Brokers need to teach their clients about the complicated products they sell so that clients can make sound decisions based on their particular needs… But at some point, a training becomes a bribe under the FCPA and other international anti-corruption laws.” (The Aon Case: Lessons from the Latest FCPA Action Involving the Americas by Matteson Ellis)

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