On December 17 2012 Allianz SE, a major German insurance and asset management company, reached a settlement with the Securities and Exchange Commission (SEC) on charges of violating the Foreign Corrupt Practices Act (FCPA). In return for a payment of $12.3M SEC committed to abstain from further inquiries regarding the subject of the procedure – accusations of corruption and deficient internal controls.

In April 2010 SEC filed a complaint because of bribery payments made by employees of Allianz’s Indonesian majority-owned subsidiary PT Asuransi Allianz Utama (Utama) to officials of the Indonesian government during 2001 and 2008. In order to perform the illicit payments hush money accounts were installed. In the course of internal and external investigations allegedly a total of at least 295 cases were revealed in which profitable government insurance contracts were obtained or retained because of illicit payments to government officials. Due to the contracts obtained because of bribery payments (the amount of which aggregates to approximately $650.000) net profits of more than $5.3M were achieved.

The bribery payments were disguised as part of the insurance premium, which was divided into two parts: one the actual premium and the other part the bribe intended to be paid to certain government officials, the latter of which was transferred to a special account. This account – though once opened and used for legitimate purpose – was cleared by Ultama management for illegal payments with the purpose of obtaining or retaining lucrative contracts.

The SEC, being competent because Allianz’s shares and bonds were listed with the New York Stock Exchange (NYSE) during the relevant period in question, reproached Allianz with the omission of implanting a sufficient internal control mechanism to detect and prevent such illegal payments, transgressions constituting a violation of the books and records and internal controls provisions of the FCPA according to SEC.

An Allianz spokesman particularly emphasized that the company had become aware of the affairs already in 2009 and subsequently had taken all measures necessary – including advice of external consultants – to avoid the recurrence of such proceedings.