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Marsh & McLennan is setting up an $850 million restitution fund as part of a settlement with New York Attorney General Eliot Spitzer over allegations the firm engaged in an illegal insurance industry kickback and bid-rigging scheme.
Spitzer's office also noted that Marsh would issue an apology for its "unlawful" conduct.
The settlement is one of the largest reached by Spitzer during his three year campaign against corporate wrongdoing. Spitzer charged that Marsh's big insurance broker division was at the forefront of an industry wide conspiracy that had driven up prices for insurance products for corporations and consumers.
The charges led to the dismissal of Jeffrey Greenberg as CEO of Marsh. In the immediate aftermath of the scandal, Marsh's stock lost 47 percent of its value, the company announced sweeping overhaul of its insurance commission practices, and it said it was slashing up to 3,000 jobs.
"To its credit, Marsh is not disputing the problems identified in our original complaint," said Spitzer.
The settlement gives Marsh four years to establish the restitution fund. The first $225 million payment is due on June 1.
In announcing the settlement, Marsh also released the results of an internal investigation conducted by its outside counsel, Davis Polk & Wardwell. The lawyers said they found "relatively limited" evidence of illegal bid-rigging in the insurance brokerage division. Most of the wrongdoing was confined to employees working in Marsh's excess property and casualty and workers compensation groups.
"While the number of such instances that we have identified at this point is relatively limited, the individuals have pleaded guilty to date have state that such discussion took place regularly," the lawyers said. "We anticipate that additional examples of this type of conduct may well be identified in these and other product lines as the government investigations continue."
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