Two British reinsurance brokers settled FCPA violations with the DOJ on Monday for bribes paid to officials at Ecuadorian state-owned insurance companies.
Tysers Insurance Brokers Limited, a subsidiary of AUB Group, agreed to pay the DOJ $46.5 million in penalties and disgorgement.
Tysers entered into a three-year deferred prosecution agreement with the Department of Justice, paying a $36 million criminal penalty and an administrative forfeiture of about $10.5 million. The DPA resolved a criminal information filed in federal court in Florida charging Tysers with conspiracy to violate the FCPA’s anti-bribery provisions.
H.W. Wood Limited, another UK-based reinsurance broker, also entered into a three-year deferred prosecution agreement Monday 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 U.S. Sentencing Guidelines, the DOJ agreed to a reduced criminal penalty and no forfeiture amount.
According to the DOJ, between 2013 and 2017, Tysers (known and 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 $2.8 million 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 to secure improper advantages in order to obtain and retain reinsurance business with the state-owned insurance companies.
The bribes were paid to accounts held in Florida and elsewhere and arranged in part through emails sent from and meetings held in Florida. Tysers paid $20.3 million in commissions and H.W. Wood paid $7.9 million in commissions and premiums to the intermediary company that paid the bribes. Tysers retained commissions of about $10.5 million and H.W. Wood retained commissions of about $2.3 million, the DOJ said.
Pursuant to the DPAs, Tysers and H.W. Wood have each agreed to continue to cooperate with the DOJ in any related ongoing or future criminal investigations. Tysers and H.W. Wood also each agreed to continue to enhance their compliance programs and report to the DOJ about their compliance measures for the three-year term of the DPAs.
Tysers received a 25 percent reduction off the bottom line of the applicable U.S. Sentencing Guidelines because of its timely remediation, such as placing employees involved in the misconduct on paid administrative leave, terminating all business and affiliations with the intermediary company involved in the misconduct, and comprehensively reviewing and enhancing its compliance program.
The DOJ said Tysers enhanced its compliance program by adding new training programs and updating its anti-bribery and anti-corruption policies. It also added new procedures for onboarding and making payments to third-parties.
H.W. Wood also received a 25 percent reduction off the bottom line of the applicable U.S. Sentencing Guidelines because of its timely remedial measures.
Related to this investigation, on March 18, 2022, the DOJ issued a declination to another UK-based reinsurance broker, Jardine Lloyd Thompson Group Holdings Ltd., for bribes paid through a Florida-based intermediary to Ecuadorian government officials to obtain and retain contracts with Seguros Sucre. Jardine Lloyd Thompson disgorged approximately $29 million.
The DOJ found that Jardine Lloyd Thompson’s bribery in Ecuador totaled around $3.1 million but declined to bring an FCPA enforcement action, citing the company’s self-disclosure, proactive cooperation, and remediation.
The DOJ said Monday that to date it has charged eight individuals in related matters.
“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,” a DOJ spokesperson said Monday.
Sydney-based AUB acquired Tysers in May 2022 for $615 million (£500 million).
AUB said in its August 2023 Annual Report that the UK Serious Fraud Office communicated that “it has decided not to take any action against Integro Insurance Brokers Limited/Tysers in respect of the alleged conduct.”
AUB CEO Mike Emmett said in a company statement, “We are pleased to have resolved this legacy matter with the DOJ. Tysers has cooperated fully with authorities and spent considerable time and effort – including investing in a full compliance and control review and uplift – to ensure an effective and best-in class compliance program is both implemented and maintained.”
AUB first disclosed the investigation in its August 2023 Annual Report, according to data from FCPA Tracker.