Aon Corporation: The Training Funds That Paid for Tourist Trips

In the Aon Corporation FCPA case, the company agreed to pay $14,545,020 in a proposed SEC settlement over allegations that its subsidiaries made improper payments to obtain insurance business and recorded them inaccurately. The Justice Department’s account of a separate criminal agreement described training funds that paid for officials and their spouses to visit overseas tourist destinations. For someone who knows the insurance placement, the reimbursement or the accounting entry, the case turns on a familiar question: what did the business expense actually buy?

Aon was an Illinois-based provider of risk management services and insurance and reinsurance brokerage. The Securities and Exchange Commission announced its proposed settlement on December 20, 2011, alleging that Aon broke the Foreign Corrupt Practices Act’s rules on accurate books and internal controls. The same day, the Justice Department announced Aon’s non-prosecution agreement, which included admissions about inaccurate accounting and inadequate controls.

Training Funds Paid for Trips With Spouses

The Justice Department’s account of the non-prosecution agreement describes Aon Limited, Aon’s United Kingdom subsidiary, administering training and education funds connected to its reinsurance business with Instituto Nacional De Seguros. INS was Costa Rica’s state-owned insurance company, and the funds’ stated purpose was education and training for its officials. The broker’s business relationship with the public insurer supplied both the setting for the funds and the people they were supposed to benefit.

According to that account, between 1997 and 2005 Aon Limited used a significant portion of the funds to reimburse INS officials for activity unrelated to training. That included travel with spouses to overseas tourist destinations. Training, apparently. Other uses could not be determined from Aon’s books and records.

The Justice Department’s account says many invoices and other trip records gave no business purpose for the spending, or showed expenses clearly unrelated to a legitimate business purpose. The fund had an educational label, but the records underneath it told a different story.

We would expect a risk-management business to know what its own training funds paid for. The travel and hospitality question reaches past the account name to the people on the trip and what they actually did. An employee who knew the itinerary or processed the reimbursement could recognize the gap without being responsible for the entire reinsurance relationship.

The False Description Reached the Parent’s Books

Under its criminal non-prosecution agreement, Aon admitted that Aon Limited’s fund records did not accurately and fairly reflect the purpose of the expenses, according to the Justice Department’s announcement. Those records were consolidated into Aon’s own books. Aon also admitted that its internal accounting controls over foreign sales were inadequate to ensure compliance with the law.

That connection makes the foreign subsidiary’s accounting part of the parent’s story. The local reimbursement described one use of money; the consolidated accounts carried that description upward. Someone in finance may know how the expense was recorded even if someone else arranged the travel or dealt with the insurer.

For Aon’s books and records and internal accounting controls, the useful questions concern the fund’s stated purpose, the expense it reimbursed and the description that entered the accounts. In the separate Fresenius Medical Care case, the SEC found that a contract misrepresented the purpose of commission payments. We connect those decisions to the people who saw them, rather than treating the existence of an invoice as the end of the inquiry.

The SEC Allegations Extended Beyond Costa Rica

The SEC’s account of its complaint alleged improper payments by Aon subsidiaries between 1983 and 2007. It described training, travel and entertainment for employees of foreign government-owned clients and third parties, as well as payments to third-party facilitators. The countries it named were Costa Rica, Egypt, Vietnam, Indonesia, the United Arab Emirates, Myanmar and Bangladesh.

According to the SEC, some payments went directly or indirectly to foreign officials who could award business, influence others who awarded business or otherwise provide favorable treatment for Aon’s interests. The agency alleged that the payments were inaccurately recorded and that Aon lacked an adequate system to detect and prevent them. The official’s influence over the insurance business connects the payment to the commercial benefit the SEC said Aon sought.

For an insurance insider, the two payment categories open different windows on the same relationship. A travel file can identify who received a benefit, while a facilitator’s invoice can identify who was paid to act between the broker and its customer. The business decision, payment approval and accounting entry together show more than any one description on its own.

What Aon Agreed to Pay the SEC

The SEC alleged more than $3.6 million in improper payments to obtain or retain insurance business. Aon agreed to give up $11,416,814 in profits.

We see the incentive in those figures: the alleged payments were smaller than the profits Aon agreed to give up. The insurance business won or retained was what the SEC said those payments bought. Aon’s separate agreement with the Justice Department supplied the accounting admissions described above.

A trip reimbursement can explain a benefit to an official, while the insurance account can explain what the business stood to gain. Our work connects that inside knowledge to the payment, decision and false record that make the case understandable.

What Your Part of the Insurance Business Can Reveal

An insurance placement employee may know who could direct the business and why a facilitator was involved. A travel or finance employee may know who went on a trip, what an invoice said and how the reimbursement was approved. An accountant or internal auditor may know how that expense reached the parent company’s accounts or what happened when someone questioned it.

Those are different views of the same commercial decision. We work with the part you know and bring the transaction into focus, including the customer relationship, the benefit and the explanation used to pay for it.

An eligible whistleblower whose information leads to a successful SEC enforcement action can receive 10% to 30% of qualifying money collected when the action orders more than $1 million in sanctions. We assess which whistleblower program fits your information with you. Where what you know also concerns separate fraud against the U.S. government, a whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know What the Fund Paid For

If the travel, training or facilitator payments you know do not match their business explanation, tell our whistleblower experts what was behind the expense. We develop the case with you and bring in foreign-bribery whistleblower lawyers who understand insurance transactions and accounting across subsidiaries. You have a partner beside you from the first conversation through the pursuit of your case.