(Includes additional information on allegations and remediation, along with Aon response, starting second paragraph.)

 
   DOW JONES NEWSWIRES

The U.K. Financial Services Authority fined an Aon Corp. (AOC) unit a record GBP5.25 million ($7.9 million) for failing to maintain a system to counter the risks of bribery and corruption associated with making payments to overseas companies.

The FSA said that between January 2005 and September 2007, reinsurer and risk-management firm Aon Ltd. made "suspicious payments" amounting to $7 million to several overseas companies and individuals in Bahrain, Bangladesh, Bulgaria, Indonesia, Myanmar and Vietnam.

The regulator, in imposing its largest-ever financial crime-related fine, said the company failed to implement effective controls to mitigate the risks involved in dealing with overseas firms.

The FSA said Aon's payment-authorization program didn't take into account higher levels of risk that some parts of its business were exposed to in the countries they operated in, and didn't provide its staff with training about the risks of bribery and corruption. That led to weak controls over overseas payments, giving rise to an "unacceptable risk" that Aon could make potentially corrupt payments to win or keep business, the regulator added.

Aon said in a statement Thursday the failings arose mainly from its aviation and energy sectors in business in non-U.K., high-risk sectors.

"The FSA has made it clear that Aon Ltd.'s conduct was neither deliberate nor reckless," the company said. Since becoming aware of the issues, the company said, it and its senior management have been determined to remedy their systems and controls so similar problems won't happen again.

The FSA said Aon cooperated fully and agreed to settle at an early point in the investigation, qualifying it for a 30% discount under the FSA's early settlement plan. Without that discount, the fine would have been GBP7.5 million.

The FSA said Aon Ltd. and its parent have implemented a new anti-corruption program that includes a policy limiting the use of overseas third parties, particularly in high-risk areas. It generally prohibits the use of third parties whose only service to Aon is assisting in getting business through client introductions where there is a heightened risk of corrupt practices.

The regulator added Aon's current senior management treated the matter with "utmost seriousness" and were proactive in identifying past issues and improving the firm's controls.

-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089; kerry.grace@dowjones.com

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary. You can use this link on the day this article is published and the following day.