Mercer’s parent company MMC sued by Spitzer
US – March & McLennan Companies, the parent company of consulting firm Mercer, has been sued by New York Attorney General Eliot Spitzer in a corruption probe.
Spitzer issued a statement saying MMC “steered unsuspecting clients to insurers with whom it had lucrative payoff agreements, and that the firm solicited rigged bids for insurance contracts”. There was no suggestion that Mercer itself was involved.
Spitzer – who has also probed MMC’s asset management arm Putnam Investments - announced that two insurance company executives have pleaded guilty to criminal charges in connection with the scheme.
The complaint, filed in State Supreme Court in Manhattan, alleges Marsh collected approximately 800 million dollars (641 million euros) in so-called “contingent commissions” in 2003.
"The insurance industry needs to take a long, hard look at itself," Spitzer said. "If the practices identified in our suit are as widespread as they appear to be, then the industry's fundamental business model needs major corrective action and reform."
“We take very seriously the allegations made public by Attorney General Spitzer today,” MMC said. “We have been cooperating with the Attorney General's investigation since it began in the spring but have not been made aware of the charges until now.”
“We are committed to getting all the facts, determining any incidence of improper behaviour, and dealing appropriately with any wrongdoing. This is our highest priority.”
MMC’s independent directors issued a statement announcing an independent review. “The review will be thorough, prompt and efficient. Pending the results of the review, we will not draw any conclusions. We have full confidence in the company's leadership.
“When the review has been concluded, the Board will take all appropriate action in the interests of our shareholders, employees and our clients.”
Insurance group Aon Corp., which also operates consulting and asset management subsidiaries, said Spitzer’s suit contains allegations that “would violate Aon policies and that, to the best of our knowledge, our employees have not engaged in”.
“Aon will continue to cooperate with the Office of the Attorney General to address the concerns raised in his investigation.”
Fitch Ratings said: "The potential costs may significantly affect Marsh & McLennan's capital position and debt repayment capacity. The nature of the allegations may also affect the ongoing revenue and profit potential of Marsh & McLennan's insurance brokerage operations."