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    Home » JLT, coordinator for NNPC insurance, fined N500m

    JLT, coordinator for NNPC insurance, fined N500m

    January 5, 2014
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    Fine04 January 2014, News Wires – Jardine Lloyd Thompson Limited, JLT, the United Kingdom, UK, based international reinsurance broker that coordinated the Nigerian National Petroleum Corporation , NNPC Consolidated Insurance Programme, CIP, for upward of eight years, has been fined £1.88 million (about N500 million) for “inadequate bribery controls” in its business dealings across Africa.

    The UK Financial Conduct Authority, FCA, imposed the monetary penalty on JLT Specialty Limited (JLTSL) for failing to have appropriate checks and controls in place when making payments to overseas third parties.

    The initial penalty was £2,684,013. However, the FCA agreed to reduce the fine by 30 per cent to £1,876,000 when the firm agreed to settle at an early stage of the investigation.

    During the probe, the British market watchdog found that JLTSL did not conduct proper due diligence before entering into relationships with partners in other nations who helped it secure new business between 2009 and 2012. JLTSL was also said to have failed to effectively assess the potential risks of new insurance business secured through its existing overseas introducers

    In the review period, JLTSL was said to have pocketed approximately N7 million in gross commission from business offered by overseas introducers and paid them over N1.7 million in return.

    Observers said JLT may have been advised to spend time and money improving its systems rather than on the fees of a lawyer-for-hire willing to write outraged letters on behalf of deep-pocket clients after its initial hesitance.

    The FCA said JLT repeatedly failed to respond to its concerns over its systems and payments to third parties during that period.

    The Director of Enforcement and Financial Crime at the FCA, Mr. Tracey McDermott said: These failings are unacceptable given Jardine Lloyd Thompson Specialty Limited (JLTSL) actually had the checks in place to manage risk, but didn’t use them effectively, despite being warned by the FCA that they needed to up their game.

    “Businesses can be profitable but firms must ensure that they take the necessary steps to control the risks in that business,” McDermott said.

    The market regulatory agency said that the poor systems around these payments created an unacceptable risk that overseas introducers could use the payments for corrupt purposes.

    Meanwhile, the Insurance Insider reported that the London-listed firm was fined for its unacceptable approach to managing the risk of bribery or corruption to third parties in Africa and elsewhere between 2009 and 2012.

    It noted that the judgement came three years after the reinsurance broker threatened to sue it for defamation because it raised questions over its business affairs in Nigeria way back in 2010.

    As at 2010, three insurance companies that led the Nigerian National Petroleum Corporation’s Consolidated Policy (NNPC-CIP) have retained the services of JLT group as coordinator of the insurance programme on behalf of the country.

    They are NICON Insurance Corporation, Leadway Assurance Company Limited and Custodian and Allied Insurance Plc. The companies were said to have preferred dealing with JLT because they felt the firm was conversant with the NNPC insurances and has coordinated the business for a long time.

    Some other local insurers questioned the use of JLT for eight years as non- competitive sole reinsurance broker, alleging that the firm was paid over $53 million as commission.

    Jardine Lloyd Thompson Reinsurance Brokers (JLT Re) is among the world’s top ten reinsurance brokers and its London market operations achieved strong growth in turnover and trading profit.

    JTL’s aviation and aerospace expansion placed it at the forefront of specialist aviation brokers and the non-marine treaty reinsurance business following the successful integration of Harman Wicks & Swayne, which it acquired in 2008.

    Following the successful acquisition and business expansion programmes, the group Chief Executive, Mr Dominic Burke said that the company was in a much better shape than it was few years ago.

    “I think there is clarity, which had not existed for some time and as a consequence of that morale is very good. There is a sense that JLT is now on the front foot and we are continuing to recruit some high-profile people,” he said.

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