The US Department of Justice has imposed criminal penalties on UK reinsurance brokers Tysers Insurance Brokers Ltd. and HW Wood Ltd. as a result of their participation “in a corrupt scheme to pay bribes to Ecuadorian government officials,” the DOJ announced.
The bribes were intended to obtain improper advantages to obtain and maintain the reinsurance business of state-owned Ecuadorian insurance companies, the DOJ said, explaining that the brokers violated the Foreign Corrupt Practices Act (FCPA)
“Tysers and HW Wood admitted that they participated in a scheme to bribe several Ecuadorian government officials to obtain tens of millions of dollars in illicit profits for themselves and their associates,” according to Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division, in a DOJ statement issued on Nov. 20, 2023.
As part of his deferred prosecution agreement (DPA) with the DOJ, Tysers will pay a criminal penalty of $36 million and an additional financial sanction (called administrative forfeiture), which is approximately $10.5 million.
HW Wood received a break in the criminal penalty and forfeiture fee due to its “financial condition and demonstrated inability to pay the penalty,” the DOJ explained, noting that the broker, as a result, will pay a criminal penalty. $ 508,000 and will not receive. to pay the forfeiture amount. (Under the US Sentencing Guidelines, the “appropriate criminal penalty” would have been $22.5 million and approximately $2.3 million would be forfeitable in the United States, the DOJ said).
Representatives for Tysers and HW Wood and Marsh did not respond to requests for comment and Marsh declined to comment.
Initial details of a bribery investigation first emerged in March 2022, when Bloomberg revealed that the UK Serious Fraud Office was investigating the South American business practices of Marsh McLennan Cos.’ Jardine Lloyd Thompson (JLT) and Tysers. UK reinsurance broker JLT ultimately avoided a criminal penalty but paid disgorgement for the profits received in the scheme. See below for more information. HW Wood is not mentioned in the article.
In describing the scheme, the DOJ said, between 2013 and 2017, Tysers (doing business at the time as Integro Insurance Brokers Ltd.) and HW Wood, through their employees and third-party agents, agreed to pay bribes amounting to approximately $2.8 million to the former chairman of two Ecuadorian state-owned insurance companies, Seguros Sucre SA and Seguros Rocafuerte SA, and three other Ecuadorian officials, according to the DOJ, citing documents in court. (Tysers was bought by Australia’s AUB Group in October 2022 and Integro bought Tysers in June 2018).
“In furtherance of the scheme, Tysers paid approximately $20.3 million in commissions and HW Wood paid approximately $7.9 million in commissions and premium payments to the intermediary company that paid the commissions. The Tysers retained commissions of approximately $10.5 million and HW Wood retained commissions of approximately $2.3 million,” the DOJ said.
“Not only did Tysers and HW Wood break any trust their clients and the market place in them, they undermined the process of fair and open competition when they paid bribes to foreign officials in exchange for ensuring of lucrative contracts, and kickbacks for themselves,” said Chief Jim Lee of IRS Criminal Investigation (IRS-CI), in a statement.
The DOJ said the Tysers and HW Wood received awards for their cooperation in the department’s investigation — actions that included:
- Meeting government requests promptly;
- Intent on making foreign-based employees available for interviews;
- Collect and produce many relevant government documents, including documents located outside the United States;
- Make many detailed factual presentations to the government and conduct and perform financial analysis of many transactions; and
- Timely acceptance of responsibility and reaching a quick resolution.
In addition, the DOJ said, brokers received credit for the fact that they participated in “timely corrective measures,” which included:
- Placing employees involved in misconduct on paid administrative leave;
- Termination of all business and relationships with the intermediary company involved in the misconduct; and
- Comprehensive review and improvement of their compliance programs.
As a result of this cooperation, Tysers and HW Wood’s criminal sentences calculated under the US Sentencing Guidelines show a 25% reduction below the applicable guidelines good range, the DOJ said.
Pursuant to the DPAs, the Tysers and HW Wood each agreed to continue to cooperate with the department in any ongoing or future criminal investigations related to this conduct. In addition, Tysers and HW Wood each agreed to continue to improve their compliance programs and provide reports to the department regarding the improvement and implementation of compliance measures for the three-year term of the DPAs.
Additional DOJ actions
The department says it has, so far, charged eight individuals for their actions:
- Juan Ribas Domenech, the former chairman of Seguros Sucre and Seguros Rocafuerte, pleaded guilty in the Southern District of Florida on Sept. 16, 2020, in the money laundering conspiracy for his role in this and another scheme.
- Fernando Martinez Gomez, a financial advisor, pleaded guilty in the Eastern District of New York on March 24, 2022, to two counts, including conspiracy to commit money laundering for his role in this and another plot.
- Esteban Merlo Hidalgo, a co-conspirator and agent of the Tysers and HW Wood, pleaded guilty in the Southern District of Florida on March 28 to four counts of engaging in transactions in criminally derived property obtained through in his participation in this scheme.
- A federal grand jury in the Southern District of Florida returned a seven-count indictment against two other defendants, Cristian Patricio Pintado Garcia and Luis Lenin Maldonado Matute, both fugitives, on July 14, 2022, for their said roles in this scheme. .
- On March 18, 2022, the department issued an “FCPA Corporate Enforcement Policy declination” to JLT, related to bribes paid through a Florida-based intermediary to Ecuadorian government officials to obtain and hold contracts with Seguros Sucre. (In the 2021 annual report of Marsh McLennan, it was revealed that in December of that year, the DOJ informed JLT of its intention to refuse to proceed with any cases “and to seek the disgorgement of $29 million of the alleged gross income in this account,” a charge filed by Marsh McLennan in the fourth quarter of 2021. A company can avoid criminal prosecution by voluntarily disclosing information, fully cooperating, and paying disgorgement, forfeiture, and /or restitution, the DOJ explained on its website.)
- Individually, the former CEO of JLT’s Colombian subsidiary, Felipe Moncaleano Botero, and two intermediaries, Jose Vicente Gomez Aviles and Roberto Heinert, each pleaded guilty in the Southern District of Florida to one count of money laundering conspiracy. , on, respectively, August 4, 2020, June 11, 2020, and Oct. 2, 2020.
The Office of International Affairs and Justice Department authorities in the UK, Panama, Ecuador, and Switzerland are providing assistance in the case.
Florida USA Fraud Agencies
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