‘Sinked into the pockets of corrupt officials’: JLT Specialty fined over Colombian commissions – International – Insurance News
UK regulator the Financial Conduct Authority (FCA) has fined JLT Specialty £7.88 million ($14 million) for “lax controls” that led to commissions being paid as part of a trade deal in Colombia that ended up in ‘the pockets of corrupt officials’.
The FCA says JLT Specialty – a provider of insurance brokerage, risk management and insurance claims services that was part of the JLT Group – failed to manage its business and risks responsibly and effective, thus allowing kickbacks of more than $3 million ($4.35 million) to take place in one case.
The Colombian deal, in which JLT Specialty placed business in the London reinsurance market for JLT Re Colombia – another JLT Group company – had been introduced by a Panama-based third party.
JLT Specialty paid approximately $12.3 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 $10.8 million dollars ($15.67 million) at the third party.
The third party then paid more than $3 million to government officials from a public insurer to help them retain and secure their business for JLT Specialty and JLT Re Colombia, the FCA said in a statement.
“JLT Specialty’s lax controls meant, in the end, that money was flowing into the pockets of corrupt officials,” said Mark Steward, FCA’s executive director of enforcement and market surveillance.
“It is because of risks such as this that we continue to focus on the financial crime systems of financial firms, taking action where these firms fail.”
The FCA said it considers JLT Specialty’s self-declaration in June 2017 and assistance during its investigation, including providing investigators with access to JLT Group’s internal investigation documents , were mitigating factors when determining the appropriate level of financial sanction.
The £7.88million fine follows JLT Specialty’s agreement to settle at an early stage of the investigation. As a result, he qualified for a 30% reduction on the original £11.26 million ($20 million) penalty.
JLT Group was acquired in April 2019 by Marsh & McLennan Companies and JLT Specialty has been non-trading since selling its business, assets and liabilities in 2020.