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Entries in United Kingdom (121)

Friday
May142010

SFO Facing Uncertain Future

For the second time in recent months, U.K. judges have warned the Serious Fraud Office not to make plea deals in overseas bribery cases, throwing into doubt the agency's whistleblower program and its partnership with the U.S. Justice Department in resolving global corruption cases.

This week a U.K. appeals court affirmed the suspended sentence agreed between the SFO and a former sales executive who helped bribe Greek doctors and then turned whistleblower. But at the same time, the court said the SFO's U.S.-style approach was unconstitutional.

Robert John Dougall, 45, formerly marketing director of DePuy, pleaded guilty in April to making £4.5 million in corrupt payments to Greek medical professionals within the state-controlled healthcare system. DePuy, acquired by Johnson & Johnson in 1999, makes and sells orthopedic devices. 

The SFO said Dougall was the first "co-operating defendant" in a major SFO corruption investigation. It had recommended leniency in exchange for his guilty plea and help in the case, as typically happens in U.S. white-collar prosecutions. The SFO asked for a suspended sentence; the trial court instead sent Dougall to prison for a year.

The appeals court reversed the sentence but hammered the SFO. It said "agreements between the prosecution and the defense about the sentences to be imposed in fraud and corruption cases were constitutionally forbidden" and solely under the purview of judges, according to reports.

In March, Britain's second-ranking criminal judge said the $12.7 million fine the SFO agreed with a U.K. division of Innospec Inc. went beyond the SFO's authority. Delaware-based Innospec had reached what it believed was a $40 million global settlement with U.S. prosecutors and the SFO.

At Innospec's hearing, Lord Justice Thomas, the deputy head of criminal justice in the U.K. courts, said: “I have concluded that the director of the SFO had no power to enter into the arrangements made and no such arrangements should be made again.” Although he confirmed the U.K. part of the fine agreed by the SFO, he called the amount "wholly inadequate." See our post here.

The SFO first charged Dougall in November 2009 after a "referral" from the U.S. Justice Department. Two months earlier, DePuy and four other orthopedic device makers -- Biomet, Zimmer, Smith & Nephew and Stryker -- had agreed to pay $310 million to settle charges they paid kickbacks to induce U.S. doctors to buy their products. Since the U.S. settlement, the four companies, along with Medtronic Inc. and Wright Medical Group, have disclosed DOJ and SEC Foreign Corrupt Practices Act investigations. See our post here.

Wednesday
Apr282010

Not What They Had In Mind

A U.K.-funded anti-corruption court in Afghanistan this week sentenced the manager of a British company that guards the British embassy in Kabul to two years in prison for bribery.

Bill Shaw, a 28-year British army veteran who retired as a major and was awarded the MBE, will be sent next week to one of the country's most notorious jails, Pul-e-Charkhi, according to reports from the Guardian and others.

Shaw was also fined $25,000. Convicted with him was an an Afghan, Maiwand Limar, who was also sentenced to two years in prison.

Shaw said he made what he believed were legitimate payments of $25,000 to gain release of two bombproof vehicles confiscated by Afghan security forces last year. He said he used an intermediary and tried for weeks to obtain an official receipt.

He was sentenced by three judges sitting on an anti-corruption tribunal that's funded largely by the U.K. Shaw's case was one of the first to come before the special court.

Shaw said he cooperated with Afghan investigators, giving interviews and returning to the country in early January after a vacation in the U.K. He was arrested on March 3rd.

Shaw's lawyer, Kimberley Motley, criticized the trial. "For some reason," she said, "[the tribunal] decided not to follow Afghan law or the U.N. conventions to which Afghanistan is a party. Furthermore, the presumption of innocence did not exist for him."

The U.S. and other Western countries have criticized Afghan President Hamid Karzai for corruption. But he has blamed foreigners for importing most of the graft. Now his government is apparently targeting expatriates. In addition to Shaw's prosecution, three Italian medical workers in Helmand were arrested and held briefly last month for plotting to murder the local governor. This month in Kabul, police raided at least five bars and restaurants popular with foreigners, alleging illegal sales of alcohol.

Thursday
Apr152010

The Bribery Bill's Wash Up

The news last week from the U.K. that the Bribery Bill had become the Bribery Act seemed important. But we didn't understand why it still wasn't law.

So we asked London lawyer Kelly Hagedorn about it. Here's what she said:

Dear FCPA Blog,

The U.K.’s Bribery Act received Royal Assent on April 8 and passed onto the statute book.

Britain's been trying to pass a new law to deal with overseas bribery and corruption for a long time -- the predecessor Corruption Bill went back and forth between the Houses of Commons and Lords several times before final rejection in 2003. The Bribery Act nearly ended up with the same fate.

The General Election, however, was called on April 6, requiring Parliament to be dissolved on April 12. That left less than a week for “wash up” -- a process whereby the Government seeks to rush through unfinished legislative business before dissolution. It worked.

But the law isn't yet in force. The statutory instruments needed to implement the Act still have to be released. The “general offences” part should come into force in June 2010. The corporate offence of failing to prevent bribery (section 7) should come into force in October 2010, after the Government issues guidance on “adequate procedures” by July 2010.

The Bribery Act has a broader scope than the FCPA and a wide reach, particularly for the offence of failing to prevent corruption within an organisation. This applies to organisations incorporated anywhere, if they undertake a business or part of a business in the U.K. The defence to this charge is that the organisation had “adequate procedures” in place to attempt to prevent bribery.

Companies should start preparing now, if they haven't already, for implementation of the Bribery Act. 

More about the Bribery Act can be found here.

Monday
Feb012010

Former BAE Agent Charged For Bribes

Austrian national Alfons Mensdorff-Pouilly: BAE's agent has been charged in Britain with corruption but his prosecution still needs approval from the U.K.'s attorney general.The U.K.'s Serious Fraud Office on Friday charged one of BAE's former middlemen, Count Alfons Mensdorff-Pouilly, with bribery in connection with arms sales to countries in Eastern and Central Europe. He was formally accused of "conspiracy to corrupt, contrary to section 1 of the Criminal Law Act 1977."

The SFO alleged that Mensdorff-Pouilly, 56, conspired with others from 2002 though 2008 to bribe government officials and representatives from the Czech Republic, Hungary, and Austria. The bribes were intended to secure contracts from those governments for the sale of SAAB/Gripen fighter jets marketed by BAe Systems plc.

David Leigh and Rob Evans, the investigative journalists from the Guardian who first reported BAE's alleged corrupt selling practices nearly five years ago, said Friday that Mensdorff-Pouilly's prosecution still needs approval from Britain's attorney general, Lady Scotland. Mensdorff-Pouilly lives in Luising, Austria and is an Austrian citizen. The attorney general hasn't yet agreed to let the case proceed, the SFO's lawyers said, and they asked the court for a month-long adjournment while she decides. 

These are the first criminal charges arising from the investigation of BAE's practices.

The SFO dropped an investigation in December 2006 into allegations the company bribed members of the Saudi Arabian government in exchange for the sale of Typhoon jet fighters. The SFO said it had to abandon the case after Saudi Arabia threatened to end anti-terrorism cooperation with the British government.

The U.S. Justice Department is reportedly still investigating BAE's payments of about $2 billion to Saudi Prince Bandar bin Sultan. He was formerly ambassador to the United States and some of the payments allegedly passed through U.S. bank accounts he controlled.

The SFO on Friday said its current investigation of BAE has involved collaboration with the Vienna (Austria) Prosecution Office (Staatsanwaltschaft Wien) and police (Bundeskriminalamt) and was coordinated with help from Eurojust. The SFO said it also had help from Czech, Hungarian and Swiss authorities.

View a copy of the Serious Fraud Office's January 29, 2010 release here.

Wednesday
Dec022009

Tesler Fights Extradition; Jefferson Appeals

The London lawyer accused by the U.S. of being a middleman in KBR's bribery of Nigerian officials appeared in court last week to fight extradition. Jeffrey Tesler, 61, a U.K. citizen, was indicted in February by a federal grand jury in Houston. He was charged with one count of conspiring to violate the Foreign Corrupt Practices Act and ten substantive FCPA offenses. If convicted on all counts, he faces up to 55 years in prison. U.K. police, acting at the request of U.S. authorities, arrested Tesler in March.

According to a Press Association report, Tesler argued in the City of Westminster Magistrates' Court that his case is already under investigation by the U.K.'s Serious Fraud Office and shouldn't be duplicated by American prosecutors.

Tesler's lawyer, Bill Clegg QC, also said Tesler's case isn't linked to the U.S. "No person who was alleged to have received a bribe was promised a bribe in the U.S.A. No money to pay any bribes originated from any U.S. bank account. Mr Tesler, who it is alleged arranged the bribes, had never visited the U.S. in relation to the alleged conspiracy." The alleged bribes, Clegg said, were handled by a Gibraltar company and paid through Swiss bank accounts.

The U.S. indictment charged Tesler with using his Gibraltar company, Tri-Star Investments, to funnel about $132 million in bribes to Nigerian officials. The payments were intended to secure contracts worth more than $6 billion to build liquefied natural gas facilities on Nigeria's Bonny Island. The DOJ said Tesler was acting for a joint venture known as TSKJ, equally owned by KBR, Technip, SA of France, Snamprogetti Netherlands B.V. (a subsidiary of Saipem SpA of Italy) and JGC of Japan.

The Crown's lawyer, David Perry QC, said U.S.-based companies were involved and money had been channelled through U.S. bank accounts. According to a report in the Guardian, Perry said the allegations against Tesler could be criminal offenses "in Britain as well as the U.S., so extradition could take place under normal legal rules."

In the indictment, the U.S. made this claim of jurisdiction:

At all times relevant to this Indictment, Tesler was an "agent" of an "issuer" within the meaning of the FCPA, Title 15, United States Code, Section 78dd- 1, an "agent" of a "domestic concern" within the meaning of the FCPA, Title 15, United States Code, Section 78dd-2, and an "agent" of a "person" within the meaning of the FCPA, Title 15, United States Code, Section 78dd-3.

The London court continued Tesler's extradiction hearing.

 *   *   *

Down But Not Out. Former congressman William Jefferson, sentenced last month to 13 years in prison for corruption and conspiring to violate the Foreign Corrupt Practices Act, managed to file his notice of appeal on time. It was touch-and-go after Jefferson, 62, filed for bankruptcy in August, saying he owes his criminal defense lawyers more than $5.7 million. But two of the lawyers are sticking with him.

The Times Picayune reported that attorneys Robert Trout and Amy Jackson received approval last week from the trial judge, T.S. Ellis III, for the court to pay Jefferson's legal fees for the appeal. The lawyers won't get their full rates but a lower amount equivalent to court-appointed public defenders. Ellis also approved their request for the court to pay for a transcript of the six-week trial, probably about $26,000.

Jefferson is free on bail pending his appeal. It's expected to take at least a year. Judge Ellis said he released Jefferson because his defense raised an argument that's untested in the appellate courts. Jefferson says he was acting as a private citizen, while a corruption statute he was convicted under applies only to public acts by elected officials. The judge also said he regretted not making the jury's verdict form more specific. (See our post here.)

Jefferson was convicted on 11 charges -- conspiracy, soliciting and taking bribes, depriving citizens of honest services, money laundering and racketeering. He was acquitted of five charges, including Count 11 of the indictment -- the only substantive FCPA charge he faced.

Sunday
Oct252009

Halliburton May Face U.K. Charges

Halliburton disclosed Friday in its latest SEC filing that the U.K.'s Serious Fraud Office (SFO) may bring civil claims or criminal charges against it under various British laws. In February this year, Halliburton and its former subsidiary, Kellogg Brown & Root LLC, admitted paying Nigerian officials at least $182 million in bribes for contracts awarded between 1995 and 2004 to build liquefied natural gas facilities on Bonny Island, Nigeria. The companies agreed with the U.S. Justice Department to pay a $402 million criminal fine, with Halliburton paying $382 million of that amount. Halliburton also agreed with the Securities and Exchange Commission to be jointly liable with KBR to pay $177 million in disgorgement. See our post here.

In Friday's disclosure, Halliburton said the SFO is focused on M.W. Kellogg Limited (MWKL), a U.K. subsidiary of KBR. The DOJ's criminal information had said KBR tried to shield itself from the FCPA by using MWKL to hold ownership in TSKJ, a four-party joint venture that acted as the main contractor on the Bonny Island project. TSKJ's other members were Technip SA of France, Snamprogetti Netherlands B.V. (a subsidiary of Saipem SpA of Italy), and JGC Corporation of Japan. Each partner held about 25% of the venture.

Halliburton said a finding that it broke British laws could "result in fines, restitution and confiscation of revenues, among other penalties." The amount of final civil or criminal penalties, the company said, will depend on whether MWKL knew about and authorized any of the illegal payments, how much revenue resulted from the bribes, and "the level of cooperation provided to the SFO during the investigations."

The company said its role in the Bonny Island project is also being investigated by France, Nigeria, and Switzerland and could also result in third-party claims.

In February this year, a federal grand jury sitting in Houston indicted Jeffrey Tesler, 60, of London, England, and Wojciech Chodan, 71, of Maidenhead, England, for violating the FCPA. The two U.K. citizens allegedly helped KBR bribe Nigerian officials. The Justice Department unsealed the indictments after Tesler's March 5 arrest by British police acting at the request of U.S. authorities. Chodan hasn't been arrested but faces an outstanding U.S. warrant. The DOJ said it will try to extradite both men to the U.S. to stand trial.

Tesler, a lawyer in London, and Chodan, a former employee and consultant of MWKL, were charged with one count of conspiracy to violate and ten counts of violating the FCPA. They face up to 55 years in prison if convicted on all counts. The indictment also seeks forfeiture from them of more than $132 million -- the amount they allegedly paid to Nigerian officials as bribes. See our post here.

In the U.K., the SFO hasn't indicated whether it plans to take action against Tesler and Chodan or other individuals involved in the case. Tesler was identified in KBR's 2007 annual report. British and French authorities investigated him two years ago but didn't file any charges.

In September 2008, Albert “Jack” Stanley, 65, a former chairman and CEO of KBR, pleaded guilty to a two-count criminal information that charged him him with conspiracy to violate the FCPA and conspiracy to commit mail and wire fraud. He admitted that from 1995 to 2004, he helped TSKJ bribe government officials in Nigeria. Stanley was sentenced to seven years in prison and a restitution payment of $10.8 million. The sentence is subject to review based on his cooperation. See our post here.

Jack Stanley was a senior vice president of Dresser Industries, Inc. when it merged into Halliburton in September 1998. Dresser's wholly-owned construction subsidiary, Kellogg, was combined with Halliburton's construction subsidiary, Brown & Root, Inc., to form KBR. In November 2006, Halliburton spun off KBR, which became a separate publicly-traded company.

Under their agreement for KBR's spin off, Halliburton is obligated to pay most of KBR's fines and other penalties for actual or alleged violations of the FCPA and similar foreign laws committed before November 2006. Halliburton has said it gave the indemnity "[t]o enhance KBR's financial stability and solvency, making possible the separation of KBR . . . ."

KBR, Inc. trades on the NYSE under the symbol KBR.

Halliburton Company trades on the NYSE under the symbol HAL.

Halliburton Company's Form 10-Q filed October 23, 2009 (for the period ending September 30, 2009) can be downloaded here.

Read all our posts about Halliburton here.
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Thursday
Sep032009

Guilty Plea In UK Bribe Case

The former director of sales and marketing for Pacific Consolidated Industries (PCI) admitted yesterday that he bribed an official from the U.K. Ministry of Defense (MOD) in return for equipment orders. Leo Winston Smith, 73, pleaded guilty in the U.S. federal district court for central California to conspiracy to violate the Foreign Corrupt Practices Act (18 U.S.C. §371) and corruptly obstructing and impeding the due administration of the internal revenue laws (26 U.S.C. §7212(a)).

Smith, along with PCI's former president and part owner, Martin Eric Self, 51, paid at least $70,000 in bribes to the MOD official. The money was funneled through a sham marketing agreement PCI created in 1999 with a relative of the official. In return, PCI was awarded MOD contracts worth around $11 million. Smith also admitted under-reporting income on his 2003 U.S. federal tax return and failing to file a 2003 corporate return for his Nevada company, Design Smith Inc.

Sentencing in Smith's case is scheduled for December 18, 2009. He faces a maximum five years in prison on the FCPA conspiracy charge and three years on the tax charge, and a fine of about $255,000.

His co-conspirator, Martin Eric Self, pleaded guilty in May 2008 to violating the FCPA (here). Although Self faced up to five years in prison on each of two FCPA counts, his plea agreement contemplated a prison term of eight months. He was finally sentenced in November 2008 to two years probation. The MOD official, Michael Hale, pleaded guilty in the United Kingdom to accepting nine separate payments from PCI totaling more than $300,000. He was sentenced in April 2007 to two years in prison.

Privately-held PCI manufactures Air Separation Units (ASUs) and other equipment for the military, medical, and oil and gas markets. ASUs generate oxygen in remote, extreme, and confined locations. The Justice Department said that in late 2003, after the alleged illegal conduct occurred, a group of private investors bought California-based PCI. They referred the case to U.S. prosecutors and "fully cooperated in the government’s investigation."

Download a copy of the DOJ's September 3, 2009 release here.

Download a copy of the plea agreement in U.S. v. Leo Winston Smith (Case No.: CR 07-69(A) - AG) here.
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Wednesday
Mar252009

First Look: The U.K.'s Draft Antibribery Law

Britain's Justice Secretary, Jack Straw, unveiled a draft bill on March 25 that will completely overhaul the country's antibribery laws. He called the old laws anachronistic, inconsistent, unclear, and difficult for the public to understand and for prosecutors and the courts to apply. The new legislation, he said, will simplify and modernize the law, and help bring transparency and accountability to international business deals.

The draft bill creates a framework of two general offenses: one dealing with the giving, promising, and offering of a bribe, and another with agreeing to receive or accept a bribe. The other main provisions are:

• extra-territorial jurisdiction to prosecute bribery committed abroad by persons ordinarily resident in the U.K. as well as U.K. nationals, and U.K. corporate bodies,

• a maximum penalty of 10 years imprisonment for all new offenses and corporate offenses will carry an unlimited fine,

• a new corporate liability offense of negligently failing to prevent bribery,

• provision for the Secretary of State to authorize conduct that would constitute a bribery offense by the intelligence agencies, and

• setting aside Parliamentary Privilege to make evidence from proceedings in Parliament admissible in the prosecution of a member of either of the Houses of Parliament for a bribery offense or in related proceedings.

For those familiar with U.K. law, the bill replaces the offenses at common law and under the Public Bodies Corrupt Practices Act 1889, the Prevention of Corruption Act 1906 and the Prevention of Corruption Act 1916 (known collectively as the Prevention of Corruption Acts 1889 to 1916 and which would be repealed).

Our correspondent from Paris, Guillermo Christensen, who sent us the draft bill, thinks it will cause big changes in the compliance landscape. He said, "The inclusion of liability for organizations that are negligent in preventing bribery by their employees is going to require a major awakening of compliance efforts among U.K. companies and executives (and non-U.K. companies operating in the U.K. . . . even more interesting), who have been frequently quoted in industry surveys as seeing compliance as something that they do 'over there' in the USA."

Justice Secretary Straw also signaled a new tone in the U.K.'s enforcement strategy and its cooperation with international investigations. That follows criticism from the OECD and others about Britain's failure for the past decade to prosecute overseas public bribery. Three years ago, the Serious Fraud Office dropped an investigation into BAE's alleged £1 billion bribery of Saudi officials after the Blair government said the U.K.'s domestic security could be threatened. The U.S. Justice Department picked up the investigation, which is ongoing.

Straw said, "The UK is determined to work closely with its international partners to tackle bribery. We are already, for example, providing technical assistance to developing countries to promote better governance and making significant progress on tracing, recovering and repatriating money-laundered misappropriated assets. We are also supporting the implementation of the UN Convention against Corruption, the OECD Bribery Convention and the Council of Europe’s Criminal Law Convention on Corruption."

Download a copy of the U.K.'s draft bribery legislation released on March 25, 2009 here.

Jack Straw's comments quoted above appear in the foreword to the draft bill.
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Monday
Feb022009

A Bit Of An Old Boy's Club

The U.K.'s Serious Fraud Office was created in 1988 with the mission to investigate and prosecute big-time fraud and corruption -- the misdeeds, as Teddy Roosevelt would have said, of the wealthy criminal class. But things at the SFO haven't gone well, and Britain's Sunday Times is reporting that dozens of lawyers, accountants and investigators are being offered up to three times their annual salaries to leave their jobs.

The SFO has often been in hot water because of blown prosecutions. But the worst trouble came after its 2006 decision to stop investigating BAE Systems for bribery. It said it had to drop the case because Saudi Arabia threatened not to buy Typhoon aircraft or continue sharing anti-terrorism intelligence. The High Court called the episode an outrage, an abject surrender to threats, and a capitulation.

After the BAE debacle, the U.K.'s then-attorney general, Lord Goldsmith, hired a former New York City prosecutor to find out why the SFO couldn't get it right. Jessica de Grazia had been an assistant district attorney in Manhattan for 13 years before she took the job. As the Times said, her arrival at the SFO sparked panic.

What de Grazia found, among other things, was that in 2007, the Serious Fraud Office had about three times more lawyers than the Frauds Bureau at the Manhattan District Attorneys Office. The New York DA's 19 lawyers, with virtually no outside help, managed to conclude the prosecution of 124 white collar defendants from 2003 to 2007. During the same period, however, the SFO's 56 staff lawyers concluded 166 prosecutions, even though the SFO spent more than £4 million on external counsel, ranging from newly qualified barristers to Queen’s Counsel. In other words, the per-lawyer prosecution rate in the New York DA's office was at least double and maybe triple that of the SFO.

De Grazia also found huge discrepancies in conviction rates. During the 2003-2007 period, the SFO’s average conviction rate for serious and complex white collar crimes was just 61%; the Frauds Bureau in New York had a 92% conviction rate for the same type of offenses. And at the federal prosecutor's office in New York City, the conviction rate was a nearly perfect 97%.

What's the problem in the SFO? De Grazia cited "a commingling of external and internal factors." External factors, she said, were the laws, government policy, and legal professional rules and practices. The big problem within the SFO's control, she said, was "insufficient innovation." The Times newspaper wasn't so polite. Cronyism and incompetence, it said, and “a bit of an old boy’s club.”

Former SFO director Robert Wardle left his post in April 2008, two months before de Grazia released her report. “She caused chaos,” one of her eventual victims recalled last week. The Times report said, “She called meetings of case controllers and asked them to identify the crap assistant directors. Then she went to the investigators and asked them who was a crap case controller.”

More changes at the SFO are probably ahead. The Times says de Grazia has just delivered another report -- this one highly confidential -- to Britain's new attorney general, Baroness Scotland. The new report, the Times says, is far more blunt than the June '08 version released to the public. It calls the SFO “a demoralised and underperforming agency” where the work of many dedicated and competent employees was “ blocked by inadequate management and leadership.”

Our thanks to a friend, now in Paris, for sending us the Times stories this weekend.

Download a copy of Jessica de Grazia's June 2008 report here.

Listen to this podcast here.
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Friday
Jan092009

Aon Pays £5.25 Million Corruption Fine

The U.K.'s Financial Services Authority said yesterday that it has fined Aon Ltd £5.25 million ($8.05 million) for failing to recognize and control the risks of overseas payments being used as bribes. The fine is the largest the FSA has levied for financial crimes. Aon Ltd is the principal U.K. subsidiary of Chicago-based Aon Corporation, the world's biggest insurance broker.

Aon Corporation disclosed in November 2007 an internal investigation into possible violations of the Foreign Corrupt Practices Act and non-U.S. anti-corruption laws. Aon said then in its Form 10-Q that it had self-reported the investigation to the Department of Justice, the Securities and Exchange Commission and others, and that it had already agreed with U.S. prosecutors to toll any applicable statute of limitations. The U.S. investigations are still pending.

This is now the third case brought by U.K. authorities involving overseas bribery by U.K. companies. In September 2008, the Overseas Anti-Corruption Unit of the City of London Police said an employee of CBRN Team Ltd, a U.K. security consulting firm, and an official of Uganda, had pleaded guilty to bribery charges. The CBRN employee received a suspended sentence and the Ugandan official was sentenced to twelve months in jail. And in October last year, the U.K.'s Serious Fraud Office reached a £2.25 million civil settlement with construction firm Balfour Beatty plc for alleged unlawful accounting in connection with overseas "payment irregularities" which it self-reported.

Apparently to emphasize the new willingness of her agency and other U.K. authorities to prosecute overseas bribery, Margaret Cole, the FSA's director of enforcement, said:

The involvement of UK financial institutions in corrupt or potentially corrupt practices overseas undermines the integrity of the UK financial services sector. The FSA has an important role to play in the steps being taken by the UK 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.
According to its website, the Financial Services Authority is an independent non-governmental body with statutory powers under the Financial Services and Markets Act 2000. It has a range of rule-making, investigatory and enforcement powers intended to "promote efficient, orderly and fair financial markets and help retail financial service consumers get a fair deal." The Treasury appoints its 12-member board.

Between January 2005 and September 2007, according to the FSA, Aon Ltd didn't properly assess or control the risks involved in its dealings with overseas firms and individuals who helped it win business. "As a result of Aon Ltd’s weak control environment, the firm made various suspicious payments, amounting to approximately US$7 million, to a number of overseas firms and individuals." The payments were made in Bahrain, Bangladesh, Bulgaria, Burma, Indonesia and Vietnam.

The FSA said Aon cooperated fully and agreed to settle early in the investigation, qualifying for a 30% discount under the FSA’s settlement discount scheme. Without the discount the fine would have been £7.5 million.

View the FSA's January 8, 2009 release here.

Download the FSA's Final Notice (January 6, 2009) here.

View Aon's January 8, 2009 statement here.
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