SEC: Allianz Agrees to Pay $12.4 Million to Settle Allegations of Bribes

   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 [e-mail]

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