Aon Pays $16.2 Million In Settlement

Aon Corporation, one of the biggest insurance brokerage firms in the world, agreed today to resolve FCPA charges with the DOJ and SEC.

It will pay a $1.76 million criminal penalty to the DOJ and $14.5 million in disgorgement and prejudgment interest to the SEC.

A U.K. subsidiary of Chicago-based Aon paid a penalty of £5.25 million to the U.K.'s Financial Services Authority in 2009 to resolve overseas bribery allegations. The fine was the largest the FSA had levied for financial crimes.

Citing Aon’s 'extraordinary cooperation,' the DOJ entered into a non-prosecution agreement with the company and its U.K. subsidiary, Aon Limited.

Aon’s subsidiaries, the SEC said, made over $3.6 million in improper payments between 1983 and 2007 to win or retain insurance business in Costa Rica, Egypt, Vietnam, Indonesia, the United Arab Emirates, Myanmar, and Bangladesh. The company made $11.4 million in profits from the bribes.

'[S]ome of the improper payments,' the SEC said, 'were made directly or indirectly to foreign government officials who could award business directly to Aon subsidiaries, who were in position to influence others who could award business to Aon subsidiaries, or who could otherwise provide favorable business treatment for the company’s interests. . . . [T]hese payments were not accurately reflected in Aon’s books and records, and Aon failed to maintain an adequate internal control system reasonably designed to detect and prevent the improper payments.'

The improper payments were for training, travel, and entertainment provided to employees of foreign government-owned clients, and to 'third-party facilitators.'

The DOJ said Aon was given a non-prosecution agreement because of 'its timely and complete disclosure of improper payments in Costa Rica and other countries that it discovered during its thorough investigation of its global operations; its early and extensive remedial efforts; the prior financial penalty of £5.25 million that Aon Limited paid to the United Kingdom’s Financial Services Authority (FSA); and the FSA’s close and continuous supervisory oversight over Aon Limited.'

Aon Corporation trades on the NYSE under the symbol AON.

View the DOJ's December 20, 2011 release here.

View the SEC's Litigation Release No. 22203 and Accounting and Auditing Enforcement Release No. 3348 (both dated December 20, 2011) in Securities and Exchange Commission vs. Aon Corporation, Civil Action No. 1:11-cv-02256 (D.D.C.) (filed Dec. 20, 2011) here.

POTUS Walks ASEAN's Mean Streets

President Obama meets tomorrow on Bali, Indonesia with the heads of state from ASEAN -- the Association of Southeast Asian Nations.

ASEAN hasn't been effective in spreading free trade and investment across the region. A big obstacle is corruption. Although the group includes Singapore, ranked as the least corrupt country in the world on the CPI, it also includes some of the planet's most corrupt nations.

Even with Singapore, the average CPI rank for ASEAN's ten members is 101, dragged down by Cambodia (154), Laos (154), and Myanmar (176), which managed to beat only Somalia. 

On the President's agenda in Bali will be 'improving economic integration and addressing security challenges in the region.' Both start with fighting corruption.

Here are the ASEAN countries in order of their CPI ranking:

Singapore (1)

Brunei  (38)

Malaysia (56)

Thailand (78)

Indonesia (110)

Vietnam (116)

Philippines (134)

Cambodia (154)

Laos (154)

Myanmar (176)

U.K. Arrest In Securency Case

The Guardian today reported the  arrest of a British businessman who allegedly paid for the son of a Vietnamese state bank governor to attend Durham University in the U.K. in exchange for a banknote printing deal.

Bill Lowther, a 71-year-old businessman knighted in Britain and Belgium, was charged by the Serious Fraud Office on September 8.

The SFO hasn't mentioned the arrest. It usually posts news releases on its website on the day arrests are made in major corruption cases.

"The SFO and Australian police," the Guardian said, "allege that the Securency executives bribed Le Duc Thuy, the then bank governor, to induce him to award the firm a contract to print Vietnam's currency in 2003."

The Guardian said it located the official's son in Hanoi this summer. "He denied his education was funded through corrupt payments and said both the fees for his studying and his living costs while at Durham, totalling more than £10,000, were paid by his family," the Guardian said.

Securency, the polymer banknote-maker half owned by the Reserve Bank of Australia, is under investigation in Australia and the U.K. Seven executives from the firm were arrested this year by Australian police for bribing officials in Vietnam, Malaysia, and Indonesia.

Lowther, the first person to be charged in the U.K in the growing scandal, will appear at the City of Westminster magistrates court in London on September 20.

Rob Evans was one of the reporters on the story for the Guardian. He broke the BAE bribery scandal.

Best Weapon Against Graft? Try Education

A report this week by the VOA's Trung Nguyen said although Vietnam ranks 116 on the Corruption Perception Index and is one of Asia's most corrupt countries, citizens there want to clean things up. The problem is that they don't know how.

Le Hien Duc, an 81-year-old Vietnamese activist called the “anti-corruption grandmother," said people aren't well educated and don't know the proper legal procedures to fight corruption.

She told the VOA people file complaints to the prime minister and other senior officials, thinking those officials handle the cases directly. "People draft complaints about corruption but do not know how to prepare them properly or even how to sign them or where to send them," VOA reported.

Duc said graft in Vietnam is bad. She's received complaints from 50 of Vietnam’s 58 provincial areas, involving land and real estate management as well as education and other sectors.

People with an education understand the law, Duc said, but farmers, workers and others do not, and do not understand that giving cash to police creates favorable conditions for corruption.

Duc, a retired teacher, helps people by filing complaints for them about public corruption. She's been honored by Transparency International and was included on Ethisphere's list of the 100 most influential people in business ethics. (Duc was listed in 2008; here's the list for 2010.)

A Life Sentence In Vietnam, Where Risks Abound

A Vietnamese official who took bribes from a Japanese company promoting road-building projects was sentenced to life in prison Monday, according to an AP report.

Huynh Ngoc Sy, 57, was found guilty of accepting $262,000 from Pacific Consultants International, or PCI. The court also ordered the confiscation of his personal property.

In early 2009, PCI's former president and three executives pleaded guilty to bribing Sy to secure contracts for road projects backed by Japanese aid money. They paid Sy $820,000 while he was head of Ho Chi Minh City's transport department and promised him nearly $2 million more.

When the scandal broke in 2008, Japan -- Vietnam's biggest trading partner -- suspended aid loans to the country. It restarted the funding in March 2009.

Following their guilty pleas in Japan, the PCI executives escaped serious punishment. The judge suspended the ¥70 million ($860,000) fine he imposed and they didn't serve any jail time.

Japan has a poor anti-corruption enforcement record. According to a report released in June by the OECD's working group on bribery, the world's third largest economy reported only eight enforcement actions against overseas bribery during the 10 years from 1999.

In PCI's case, the Japanese government may have felt forced to act. The tainted Vietnam road project was partially financed by $330 million of Japanese taxpayer-funded foreign aid.

Vietnam ranks 120 on the corruption perception index, tied with Armenia, Bolivia, Ethiopia, Kazakhstan, and Mongolia.

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Because of the long-running American trade embargo, there were no FCPA-related enforcement actions involving Vietnam until a couple of years ago. But since then there have been several:

Veraz Networks, Inc.: In June this year, the San Jose, California-based VOiP company paid $300,000 to settle civil charges brought by the SEC that it violated the FCPA's books and records and internal controls provisions by making illegal payments to foreign officials in China and Vietnam. In 2007 and 2008, the SEC said, a Veraz employee made improper payments to the CEO of a government-controlled company in Vietnam.

Daimler AG: In March this year, the German vehicle maker was charged in a criminal information with FCPA-related violations involving at least 22 countries, including Vietnam. It paid $185 million to settle with the DOJ and SEC.

Aon Ltd.: In January 2009, the U.K.'s Financial Services Authority fined insurance services firm Aon Ltd. for failing to control compliance risks in a number of countries, including Vietnam. Parent Aon Corporation self-reported a compliance investigation to the DOJ and SEC in 2007, and agreed with U.S. prosecutors to toll any applicable statute of limitations. The U.S. investigations are still pending.

Nam Nguyen, Kim Nguyen, An Nguyen, Joseph Lukas, and Nexus Technologies: In 2008, the U.S. citizens and their Philadelphia-based company were charged with violating the FCPA by bribing government officials in Vietnam. The bribes were intended to secure contracts to supply high-tech items -- including third-party underwater mapping and bomb containment equipment, helicopter parts, chemical detectors, satellite communication parts and air tracking systems. They pleaded guilty and were sentenced this year. Two were jailed for 16 and nine months respectively, two were given suspended sentences, and the company agreed to dissolve.

Siemens AG: In December 2008, Siemens' guilty plea to FCPA books and records violations involved numerous countries, including Vietnam. The SEC's complaint said Siemens' medical division "paid $183,000 in early 2005 and $200,000 in early 2006 in connection with the sale of approximately $6 million of medical devices on two projects involving the Vietnamese Ministry of Health." And in 2002, the complaint said, Siemens' communications division paid about $140,000 in bribes as "part of a much larger bribery scheme concocted by high-level managers at Siemens regional company in Vietnam, SLV, to pay bribes to government officials at Vietel and the Vietnamese Ministry of Defense in order to acquire Phase I of the Vietel GSM tender." Siemens paid $800 million to settle with the DOJ and SEC.