Bribery newsflash: FSA fines Willis for inadequate anti-bribery controls

The world’s largest insurance broker has been handed a record fine of £6.895 million "for failings in its anti-bribery and corruption systems and controls". Read more

The world’s largest insurance broker has been handed a record fine of £6.895 million "for failings in its anti-bribery and corruption systems and controls" after it failed to ensure that £27 million in payments it made to win and maintain overseas insurance contracts were not used for bribery and corruption. An early agreement by Willis to settle meant that the FSA cut the fine by 30 per cent, without which it would have been £9.85 million.

The Financial Services Authority said today that Willis Limited allowed an "unacceptable risk" that payments it made to third parties in countries such as Egypt and Russia could be used to bribe or corrupt officials. An investigation by the regulator found that, until August 2008, the broker failed to:

• establish and record an adequate commercial justification for the payments
• carry out appropriate checks and balances or evaluate the risks of doing business with overseas third parties
• regularly review its relationships to confirm they remained appropriate.

Although Willis improved its processes after August 2008, the FSA said Willis failed to ensure that staff were carrying them out.

It is the largest fine that the FSA has levied relating to systems and control procedures around financial crime. The FSA has made no finding that Willis Limited or third parties were engaged in any unlawful acts.

Tracey McDermott, the FSA’s acting director of enforcement and financial crime, said: "The involvement of UK financial institutions in corrupt or potentially corrupt practices overseas undermines the integrity of the UK financial services sector."

Commentary

It is notable that the FSA imposed this record fine on Willis for failing to have in place adequate systems and controls to prevent corrupt payments. The FSA identified a risk of such payments, but there was no proof that bribery actually took place. The case demonstrates the importance of having in place adequate procedures to prevent bribery in the current regulatory and enforcement environment.  The recent introduction of the Bribery Act reinforces this requirement for all sectors.  The Act provides a statutory defence to a criminal allegation of corporate bribery if it can be demonstrated that "adequate procedures" were in place to prevent such activity.

We will be providing regular commentary and updates of our Enforcement Trends publication.