Allianz SE ("Allianz") is headquarted in Munich, Germany, but operates in 70 countries throughout the world. Allianz and its subsidiaries primarily engage in property and casualty insurance, life and health insurance, and asset management businesses worldwide. PT Asuransi Allianz Utama Indonesia (“Utama”) is located in Jakarta, Indonesia and is a majority-owned subsidiary of Allianz. Utama offers general insurance products to individuals and corporate clients.
Between 2001 and 2008, Utama managers made improper payments to employees of state-owned entities in Indonesia in order to obtain and retain business. Allianz learned of the improper payments from two complaints made several years apart. The first complaint was submitted in 2005 alleging significant misconduct, including unsupported payments to agents. A subsequent audit of Utama’s accounting records uncovered that managers at Utama were using “special purpose accounts” to make illicit payments, many to government officials, in order to secure business in Indonesia. Despite the audit, the conduct continued. The second complaint was lodged in 2009 to Allianz’s external auditors and alleged that Allianz created illicit off-the-books accounts. In response, Allianz began an internal investigation.
The Commission staff opened an investigation in April 2010 after receiving an anonymous complaint of possible FCPA violations. The investigation determined that from at least 2001 through December 2008, the Utama managers, with the assistance of others in the Indonesian office, made payments to employees of state-owned entities in Indonesia to procure or retain insurance contracts related to large government projects in Indonesia. As a result of improper payments of approximately $650,626 to agents and employees of state-owned entities and others, Allianz realized $5,315,649 in profits.
The payments were improperly recorded as legitimate transaction costs, thereby causing Allianz’s books and records to be inaccurate. Allianz also failed to devise and maintain a system of internal controls sufficient to provide reasonable assurances to detect and prevent such payments.
On December 17, 2012, the SEC filed a settled administrative cease and desist proceeding against Allianz, alleging that Allianz violated the books and records and internal control provisions of the FCPA. Under the terms of the order, Allianz agreed to cease and desist from further violations and pay disgorgement of $5,315,649, prejudgment interest of $1,765,125, and a penalty of $5,315,649 for a total of $12,396,423.
