By Melodie Warner
The U.S. Securities and Exchange Commission said Allianz SE
(ALIZF, ALV.XE, AZSEY) agreed to pay roughly $12.4 million to
settle allegations of improper payments to government officials in
Indonesia during a seven-year period.
The SEC alleges a unit of the Germany-based insurance and
asset-management company violated the books and records and
internal-controls provisions of the Foreign Corrupt Practices Act
from 2001 to 2008 while the company's shares and bonds were
registered with the SEC and traded on the New York Stock
Exchange.
The agency alleges 295 insurance contracts on large government
projects were obtained or retained by improper payments of $650,626
by Allianz's subsidiary in Indonesia to employees of state-owned
entities.
Allianz made more than $5.3 million in profits as a result of
the allegedly improper payments, the SEC said.
The agency said two complaints allegedly brought the purported
misconduct to Allianz's attention. The first complaint, submitted
in 2005, reported unsupported payments to agents, and a subsequent
audit of accounting records at the Indonesia unit found that
managers were allegedly using special-purpose accounts to make
payments to government officials in order to secure business in
Indonesia. The second complaint was allegedly made to Allianz's
external auditor in 2009.
"Allianz's subsidiary created an 'off-the-books' account that
served as a slush fund for bribe payments to foreign officials to
win insurance contracts worth several million dollars," said Kara
Brockmeyer, chief of the SEC Enforcement Division's FCPA unit.
The SEC alleges Allianz lacked sufficient internal controls to
detect and prevent the wrongful payments and improper
accounting.
Without admitting or denying the findings, the SEC said Allianz
agreed to cease and desist from further violations and pay a
disgorgement of $5.32 million, prejudgment interest of $1.77
million and a penalty of $5.32 million.
An Allianz representative said the company has since enhanced
its anti-corruption and gifting policies and procedures
group-wide.
Write to Melodie Warner at melodie.warner@dowjones.com
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