Two UK-based reinsurance brokers settled Foreign Corrupt Practices Act violations with the Department of Justice (DOJ) on Monday for bribes paid to officials at Ecuadorian state-owned insurance companies.
The first, Tysers Insurance Brokers Limited, a subsidiary of AUB Group, entered into a three-year deferred prosecution agreement (DPA) with the DOJ, paying a $36m criminal penalty and disgorgement of about $10.5m. The DPA resolved a criminal information filed in federal court in Florida charging Tysers with conspiracy to violate the FCPA’s anti-bribery provisions.
The second business, H.W. Wood Limited, another UK-based reinsurance broker, also entered into a three-year deferred prosecution agreement to resolve a criminal information filed in federal court in Florida charging it with conspiracy to violate the FCPA’s anti-bribery provisions. It agreed to pay the DOJ a criminal penalty of $508,000 for the same bribery scheme in Ecuador.
Due to H.W. Wood’s financial condition and demonstrated inability to pay the penalty calculated under the US Sentencing Guidelines, the DOJ agreed to a reduced criminal penalty and no forfeiture amount.
“Not only have Tysers and H.W. Wood broken any trust held in them by their clients and the market, they have eroded the process of fair and open competition when they paid bribes to foreign officials in exchange for securing lucrative contracts, and kickback for themselves,” said Chief Jim Lee of the Internal Revenue Service’s Criminal Investigation Unit. “We will continue to work with our partners to investigate FCPA violations to ensure honest corporations that playing by the rules pays better in the end.”
Bribe payments
According to court documents, between 2013 and 2017, Tysers (doing business during the relevant period as Integro Insurance Brokers Limited) and H.W. Wood, through their employees and third-party agents, agreed to pay bribes totaling approximately $2.8m to the then-chairman of two Ecuadorian state-owned insurance companies, Seguros Sucre S.A. and Seguros Rocafuerte S.A., and three other Ecuadorian officials.
They allegedly did so to secure improper advantages to obtain and retain reinsurance business with the state-owned insurance companies. The bribes were paid to accounts held in Florida and elsewhere and were transmitted through, among other things, emails sent from and meetings held in Florida.
In furtherance of the scheme, Tysers paid approximately $20.3m in commissions and H.W. Wood approximately $7.9m in commissions and premium payments to the intermediary company that paid the bribes. Tysers retained commissions of approximately $10.5m and H.W. Wood retained commissions of approximately $2.3m, DOJ said.
DOJ’s Corporate Enforcement Policy
Tysers
DOJ granted Tysers a DPA and a 25% reduction off the bottom of the applicable US Sentencing Guidelines fine range based on a number of factors, including, among others, the nature and seriousness of the offense.
Tysers received credit for its cooperation with the department’s investigation, which included:
- meeting the government’s requests promptly;
- making foreign-based employees available for interviews;
- collecting and producing voluminous relevant documents to the government, including documents located outside the United States;
- making several detailed factual presentations to the government and conducting and producing financial analyses of voluminous transactions; and
- timely accepting responsibility and reaching a prompt resolution.
Tysers implemented timely remedial measures as well, which included, among other things, placing employees involved in the misconduct on paid administrative leave and terminating all business and affiliations with the intermediary company involved in the misconduct.
It also comprehensively reviewed and enhanced its compliance program, including;
- engaging additional resources with appropriate expertise to assist in evaluating and strengthening its compliance program;
- making enhancements to the governance and oversight of its compliance program;
- adding new compliance resources and personnel;
- updating and enhancing its antibribery and anticorruption policies;
- enhancing procedures related to onboarding and making payments to third-parties;
- enhancing training programs.
H.W. Wood
H.W. Wood received credit for its cooperation with the department’s investigation based on the same cooperative elements noted above for Tysers.
H.W. Wood also engaged in timely remedial measures, which included, among other things;
- terminating the contract of an employee involved in the misconduct;
- enhancing its compliance program, including creating new compliance positions and compliance control improvements;
- implementing a process to ensure continuous monitoring and review of third-party relationships;
- updating and enhancing its policies and procedures;
- updating compliance training and communications.
Related charges
The DOJ has charged eight individuals in matters related to this FCPA case, it said.
The Department also issued an FCPA Corporate Enforcement Policy declination in March 2022 to another UK-based reinsurance broker, Jardine Lloyd Thompson Group Holdings Ltd. The declination related to bribes paid through a Florida-based intermediary to Ecuadorian government officials to obtain contracts with Seguros Sucre. JLT disgorged approximately $29m as part of the declination agreement.