SEC Charges Germany-Based Allianz SE with FCPA Violations (with Banoun and Clark Comment)

The SEC charged Germany-based insurance and asset management company Allianz SE with violating the books and records and internal controls provisions of the Foreign Corrupt Practices Act (FCPA) for alleged improper payments to government officials in Indonesia during a seven-year period.

Banoun and Clark Comment: The Allianz Cease-and-Desist (C&D) represents yet another example of the SEC’s obtaining disgorgement of profits based upon alleged violations of the FCPA’s accounting and internal controls provisions. Neither Allianz nor its Indonesian subsidiary was charged with violating the anti-bribery provisions of the FCPA, presumably because there was no U.S. nexus for the alleged bribery in Indonesia, and, according to the Order, the parent company was not aware that its subsidiary’s “commission payment request process allowed funds to be diverted for improper payments.#8221; While the Order describes no link between the accounting violations and the subsidiary’s profits from the questionable Indonesian transactions, all of the profits from the transactions were ordered to be disgorged. The C&D notes that Allianz had received information from two whistleblowers over a several-year period and self-investigated, but never made any disclosure to the SEC. In 2010, the SEC itself learned of the allegations and initiated its own investigation. Allianz retained new counsel and began cooperating with the SEC staff. This case appears to underline the importance of making prompt disclosure whenever there is any likelihood that a whistleblower may be involved.Persons interested in discussing this matter may call Ray Banoun or Peter Clark.

See: SEC Order.See also: SEC Press Release.