Lloyd’s brokers settle with US DoJ over Ecuadorean bribery scheme

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Two London insurance brokers have settled with the US government over their participation in a scheme to pay bribes of $2.8mn to Ecuadorean officials via Florida bank accounts to secure reinsurance business from state-owned insurance companies.

Tysers and HW Wood, two reinsurance broking firms that operate in the Lloyd’s of London insurance market, agreed to pay bribes between 2013 and 2017 to the then-chair of two state-owned insurers, Seguros Sucre and Seguros Rocafuerte, and three other Ecuadorean officials, the US Department of Justice said on Monday.

The bribes, paid by an intermediary, went to accounts held in Florida and elsewhere, and followed meetings in the US state.

“Not only have Tysers and HW Wood broken any trust held in them by their clients and the market, they have eroded the process of fair and open competition when they paid bribes to foreign officials in exchange for securing lucrative contracts, and kickback for themselves,” said Jim Lee, chief of the Internal Revenue Service’s criminal investigation division.

Between them, the firms paid $28.2mn in commissions to the intermediary firm that paid the bribes, authorities said, and retained a total of $12.8mn in commissions as a result of the business.

Tysers, which was trading at the time as Integro Insurance Brokers, and HW Wood entered into a three-year deferred prosecution agreement over violations of anti-bribery laws. Under the deal, the brokers agreed to co-operate in future criminal investigations and to enhance and report on their compliance.

Tysers, a Lloyd’s broker established in 1820 and acquired last year by Syndey-based AUB Group, will pay $46.5mn in penalties and forfeiture. This was after a reduction for measures including providing “voluminous relevant documents to the government” and placing employees involved in the conduct on paid administrative leave.

HW Wood agreed to penalties and forfeiture of $24.8mn, but this was slashed to $508,000 “due to [the business’] financial condition and demonstrated inability to pay the penalty”, the DoJ said.

Tysers said it was “pleased to have resolved this legacy matter” and that it had spent “considerable time and effort . . . to ensure an effective and best-in-class compliance program is both implemented and maintained”. HW Wood did not immediately respond to requests for comment. Seguros Sucre and Seguros Rocafuerte could not immediately be reached for comment.

A third broker, JLT, now a division of insurance broking giant Marsh McLennan, stumped up $29mn and was issued a so-called declination relating to bribes paid by an intermediary to Seguros Sucre. A declination is a case that would have been pursued except for the company’s voluntary disclosure, full co-operation and remediation of the matter. Marsh said JLT had voluntarily reported its employee’s actions to the DoJ before it was bought by Marsh, and it was “pleased this matter is behind us”.

Eight people have been charged by the DoJ in related matters, including the former chair of the state-owned companies, Juan Ribas Domenech, who pleaded guilty to money laundering in 2020 for his role in this and another scheme, US authorities said. Others who have pleaded guilty in related criminal matters include Esteban Merlo Hidalgo, an agent of Tysers and HW Wood, and the former chief of JLT’s Colombian subsidiary.

Two other defendants indicted for their alleged role in the scheme, including Luis Lenin Maldonado Matute, remained fugitives, authorities said. According to a 2022 legal filing, Matute had corresponded with an unnamed UK reinsurance broker asking him to buy Wimbledon tickets for a senior colleague who “resides in Miami”.

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