Germany-based insurance and asset-management company Allianz has reached a $12.3 million settlement with the Securities and Exchange Commission over charges that it violated the Foreign Corrupt Practice Act.

The SEC complaint against Allianz stems from improper payments made to government officials in Indonesia during a seven-year period. According to the complaint, Allianz violated the books and records and internal-controls provisions of the Foreign Corrupt Practices Act from 2001 to 2008 while the company's shares and bonds were registered with the SEC and traded on the New York Stock Exchange.

“Allianz's subsidiary created an ‘off-the-books' account that served as a slush fund for bribe payments,” Kara Brockmeyer, chief of the SEC's Enforcement Division's FCPA Unit, said in a prepared statement. The company lacked sufficient internal controls to detect and prevent illicit payments and improper accounting, the SEC said.

The SEC charges, settled Dec. 17, stemmed from allegations that certain employees of Allianz's Indonesia subsidiary obtained or retained 295 insurance contracts on large government projects by means of improper payments totaling $650,626. As a result of the improper payments, Allianz made more than $5.3 million in profits, the SEC said.

The SEC said that two complaints brought the misconduct to Allianz's attention. The first complaint submitted in 2005 reported unsupported payments to agents. A subsequent audit of accounting records at Allianz's Indonesia subsidiary found that managers were using “special purpose accounts” to make illegal payments to government officials in order to secure business in Indonesia. The misconduct continued in spite of that audit, the SEC said. A second complaint was made to Allianz's external auditor in 2009.

Without admitting or denying the findings, Allianz agreed to cease and desist from further violations and pay a disgorgement of $5.3 million, prejudgment interest of $1.77 million, and a penalty of $5.3 million, the SEC said.

The Department of Justice also investigated Allianz for criminal violations of the FCPA, but dropped its probe in February.