'Flowed into pockets of corrupt officials': JLT Specialty fined over Colombia commissions
UK regulator the Financial Conduct Authority (FCA) has fined JLT Specialty £7.88 million ($14 million) over “lax controls” that led to commissions it paid in relation to a business deal in Colombia ending up in “the pockets of corrupt officials”.
The FCA says JLT Specialty – a provider of insurance broking, risk management and insurance claims service that was part of JLT Group – failed to manage its business and risks responsibly and effectively, thereby allowing bribes of more than $US3 million ($4.35 million) to take place in one instance.
The Colombia deal, in which JLT Specialty placed business in the London reinsurance market for JLT Re Colombia – another company in the JLT group – had been introduced by a third party based in Panama.
JLT Specialty paid about $US12.3 million ($17.84 million) in commission between November 2013 and June 2017 to JLT Colombia Wholesale, the parent company of JLT Re Colombia, which in turn paid $US10.8 million ($15.67 million) to the third party.
The third party then paid more than $US3 million to government officials at a state-owned insurer in order to help retain and secure their business for JLT Specialty and JLT Re Colombia, the FCA said in a statement.
“Lax controls by JLT Specialty meant, ultimately, that money flowed into the pockets of corrupt officials,” FCA Executive Director of Enforcement and Market Oversight Mark Steward said.
“It is because of risks such as this that we are maintaining our focus on financial businesses’ financial crime systems, taking action where these firms fall short.”
FCA says it considered that JLT Specialty’s self-report in June 2017 and assistance during its investigation, including providing investigators with access to materials from JLT Group’s internal investigation, were mitigating factors when determining the appropriate level of financial penalty.
The £7.88 million fine follows JLT Specialty’s agreement to settle at an early stage of the investigation. As a result, it qualified for a 30% reduction on the original penalty of £11.26 million ($20 million).
JLT Group was acquired in April 2019 by Marsh & McLennan Companies and JLT Specialty has been non-trading since the sale of its trade, assets and liabilities in 2020.
