Allianz SE (ALV) will pay more than $12.3 million to settle U.S. Securities and Exchange Commission claims that the Munich-based insurer made improper payments to government officials in Indonesia during a seven-year period.
SEC investigators found that Allianz violated the Foreign Corrupt Practices Act in 295 insurance contracts for government projects from 2001 to 2008 obtained or retained by payments to employees of state-owned entities, the agency said today in a statement. Allianz made more than $5.3 million in profits as a result of the improper payments, the SEC said.
“Allianz’s subsidiary created an ‘off-the-books’ account that served as a slush fund for bribe payments,” Kara Brockmeyer, chief of the SEC’s Enforcement Division’s FCPA Unit, said in the agency’s statement. The company lacked sufficient internal controls to detect and prevent illicit payments and improper accounting, the SEC said.
Joel Cohen, a Gibson Dunn & Crutcher LLP partner representing Allianz, said in an e-mail that the company fully cooperated with the investigation, which it resolved without admitting or denying wrongdoing.
“Over the past few years, Allianz has enhanced its global Anti-Corruption Program, which includes robust books and records controls and global anti-corruption and compliance trainings for employees,” Cohen said in the e-mail. “Prior to and during the SEC’s investigation, Allianz took steps intended to strengthen its internal controls and mitigate FCPA risks.”
The alleged misconduct was brought to the SEC’s attention by two complaints, according to the agency. The first, submitted in 2005, led to an audit of accounting records at the Indonesian subsidiary that showed managers were using “special purpose accounts” to pay government officials. A second complaint was made to Allianz’s external auditor in 2009.
To contact the reporter on this story: Gregory Mott in Washington at email@example.com