JLT fined for failing to counter bribery
JLT Specialty Limited (JLTSL), part of Jardine Lloyd Thompson (JLT), has been fined £1.88 million by the UK Financial Conduct Authority (FCA) for failing to have appropriate checks and controls in place to counter the risk of bribery and corruption.
The fine relates to the broker’s business dealings in Africa and focuses on the checks and controls the broker used in relation to making payments to overseas third parties specifically Overseas Introducers.
The investigation focuses on the period of February 19, 2009 to May 9, 2012. The initial penalty was £2.68 million. The FCA agreed to reduce the fine by 30 per cent when the firm agreed to settle at an early stage of the investigation.
The FCA said JLT repeatedly failed to respond to its concerns over its systems and payments to third parties during that period.
During the period in question, JLTSL received almost £20.7 million in gross commission from business introduced by Overseas Introducers. Of this, it paid in excess of £11.7 million to these Overseas Introducers. The payments made to these Overseas Introducers therefore accounted for approximately 57 percent of the brokerage earned.
During the probe, the FCA found that the broker did not conduct proper due diligence before entering into relationships with partners in other nations who helped it secure new business between 2009 and 2012. It was also said to have failed to effectively assess the potential risks of new insurance business secured through its existing overseas introducers
“In particular JLTSL did not take adequate steps to assess whether the Overseas Introducer was connected with the clients it introduced and/or any public officials,” FCA said in a statement.
It also added: “JLTSL failed adequately to assess the risk associated with each piece of new insurance business introduced by an Overseas Introducer, which meant that JLTSL could not ensure that it took sufficient steps to counter the risk of bribery and corruption prior to making payments to Overseas Introducers.”
The authority said it found no evidence to suggest that JLTSL has permitted any illicit payment or inducement to any Overseas Introducer nor that JLT intended to permit any illicit payment or inducement to any Overseas Introducer. However, the fine reflects its failings in managing the risk around these issues.
The regulator gives several specific examples of JLT’s poor checks and controls in its statement. In one example, a major shareholder of the Overseas Introducer responsible for introducing to JLTSL insurance business in West African countries was known to JLTSL to be a Nigerian public official.
“JLTSL did not conduct adequate searches to establish whether or not the Overseas Introducer or any of its associated individuals (i) had any connections to the clients; and/or (ii) had any connections to a public or government official in these West African countries,” the statement said.
“As a Nigerian public official, it could reasonably be envisaged that the shareholder of this Overseas Introducer would have connections to West African public officials. However, JLTSL did not conduct adequate searches to confirm whether this was the case, or take adequate steps to counter the risk arising from any connections which it discovered.”
