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DOJ Charges Two Individuals With FCPA And Other Violations In Connection With An African Bribery Scheme On Behalf Of CEFC China Energy Company Ltd.


Yesterday, the DOJ announced that Chi Ping Patrick Ho (of Hong Kong, China) and Cheikh Gadio (of Senegal) were criminally charged with conspiring to violate the Foreign Corrupt Practices Act, violating the FCPA, conspiring to commit international money laundering, and committing international money laundering.

Although not specifically mentioned in the DOJ’s indictment, it is easy to connect the dots that Ho is associated with China Energy Fund Committee (CEFC) and as noted here, CEFC is “fully funded by CEFC China Energy Company Limited.” Gadio is associated with Sarata Holding (a consulting and advising firm specializing in business and development partnerships with Africa).

Big picture – in the past two weeks – the DOJ has announced three core FCPA enforcement actions involving 9 individuals. (See here for the November 7th action against 5 individuals associated with Rolls-Royce and here for the November 9th action against 2 individuals associated with SBM Offshore).

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In Depth Into The Och-Ziff FCPA Enforcement Action

och ziff

Last week, the DOJ and SEC announced (here and here) a Foreign Corrupt Practices Act enforcement action against Och-Ziff Capital Management Group (and a related entity) for improper business practices in various African countries. The aggregate settlement amount was $412 million (a $213 million DOJ criminal penalty and a $199 million SEC resolution consisting of disgorgement and prejudgment interest), the 4th largest FCPA settlement amount of all-time.

As highlighted in this previous post, the SEC also found Daniel Och (CEO) and Joel Frank (CFO) culpable for certain of the improper conduct. As indicated in the post, this represents what is believed to be the first time in FCPA history that the SEC also found the current CEO and CFO of the issuer company liable, to some extent, for company FCPA violations. Moreover, the $2.2 million Och agreed to pay, without admitting or denying the SEC’s findings, is the largest settlement amount in FCPA history by an individual in an SEC action.

Whether the Och-Ziff enforcement action is the “first time a hedge fund has been held to account for violating the FCPA” (as the DOJ stated in its release) is a debatable point. (See here for the 2007 FCPA enforcement action on the DOJ’s FCPA website against hedge fund Omega Advisors).

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DOJ Criminally Charges Gabonese National Connected To Och-Ziff With FCPA Conspiracy In Connection With African Mining Projects


Och-Ziff, a publicly-traded hedge fund that has been under Foreign Corrupt Practices Act scrutiny since 2011 for its business dealings in Africa, recently disclosed that it is in discussions with the DOJ and SEC regarding resolution of the matter. As noted in this recent post, Och-Ziff has reserved over $400 million in anticipation of the resolution. (For the latest on this expected resolution see here).

In the meantime, a criminal complaint was recently unsealed charging Samuel Mebiame, a Gabonese national connected to Och-Ziff, with conspiracy to violate the FCPA’s anti-bribery provisions.

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Will The DOJ Also Bring An Enforcement Action Against Griffiths Energy?

Last month, in an event widely reported, Canadian authorities brought an enforcement action against Griffiths Energy International Inc. (“GEI”) under Canada’s Corruption of Foreign Public Officials Act (“CFPOA”)

This post summarizes that enforcement action, including allegations in the Statement of Facts concerning conduct in the U.S. that would seem to provide a basis for the U.S. Department of Justice to also bring a Foreign Corrupt Practices Act (“FCPA”) enforcement action against GEI.

Indeed, in GEI’s press release announcing resolution of the CFPOA matter, the company stated that it voluntarily disclosed the conduct at issue to both Canadian and U.S. authorities in November 2011 and specifically noted as follows.  “Since its voluntary disclosure Griffiths Energy has been cooperating and working with the Royal Canadian Mounted Police, the Public Prosecution Service of Canada (“PPSC”) and the U.S. Department of Justice to bring the matter to a close.”

Given that the above release was unclear as to whether the DOJ investigation is active or closed, I asked GEI this precise question, and the response from the company’s external public relations advisor last week was as follows.  “Griffiths Energy’s management is not available to comment.”  That answer would seem to suggest that the DOJ investigation is not closed.

The Statement of Facts in the CFPOA matter (see here) focuses on GEI’s efforts to obtain a production sharing contract (“PSC”) with the African nation of Chad to provide GEI with the exclusive right to explore and develop oil and gas reserves and resources in the Borogop and Doseo blocks in southern Chad.  In sum, GEI agreed that it “directly agreed to provide, and indirectly provided, improper benefits to a Chadian public official in order to further the business objectives of GEI and its subsidiaries.”  The public official is Chad’s Ambassador to Canada, Mahamoud Adam Bechir (the “Ambassador”), and by extension his wife Ms. Nouracham Niam.  Because Chad had no embassy located in Canada, the Ambassador resided in Washington D.C.

The Statement of Facts highlights a number of attempts by GEI to obtain the blocks in Chad as well as various consulting agreements designed to facilitate that process.   The first consulting agreement in August 2009 was signed by GEI and the Ambassador, on behalf of a Maryland-based entity wholly-owned by the Ambassador, and it provided for a $2 million fee payable to the entity if “GEI was awarded the Doseo and Borogop blocks on or before December 31, 2009.”  According to the Statement of Facts, “the services to be provided under the consulting agreement by the consultant were generally described as providing advisory, logistics, operational other assistance with respect to implementing GEI’s oil and gas projects in Chad.”

The Statement of Facts indicates however that “GEI’s outside legal counsel advised … that the Ambassador was a government official and that GEI could not make an offer or give an advantage or do anything directly or indirectly with him.  The agreement was terminated and no payments were made by GEI pursuant to this agreement.”

However, a second consulting agreement, “with identical terms” was entered into in September 2009 between GEI and a Nevada entity wholly-owned by the Ambassador’ wife.  According to the Statement of Facts, “a subscription agreement associated with the grant of 1,600,000 founders shares in GEI” to the Ambassador’s wife was also entered into and accompanied by a Western Union payment for the share price.  The Statement of Facts also indicates that “two other individuals” nominated by the Ambassador’s wife also were given the opportunity to purchase founders shares.  These individuals included the wife of the Deputy Chief of the Chadian Embassy in Washington D.C.

The Statement of Facts next discuss a meeting in Washington D.C. arranged by the Ambassador’s wife between “high-level officials from both GEI and the Government of Chad” to sign a memorandum of understanding (MOU) in relation to the blocks.  The MOU was not signed at this meeting, but was shortly thereafter.  During a change in Chad’s government, a final production sharing agreement was delayed, and a new MOU was signed in November 2010.  According to the Statement of Facts, in January 2011, “GEI engaged new external legal counsel and transferred PSC-related documents for review” and GEI “also instructed new external legal counsel to either extend or redo the original consulting agreement” referenced above.  In mid-January 2011, the renewed consulting agreement was signed by GEI and the Ambassador’s wife.

Thereafter, “GEI and its outside legal advisors then travelled to Chad to complete the negotiations for the PSC” and on January 19, 2011, the PSC was signed.  Shortly thereafter, the $2 million payment from GEI to the Maryland entity wholly-owned by the Ambassador’s wife was made and deposited in the entity’s bank account in Washington D.C.

However, the Statement of Facts noted that even though the payments were made to persuade the “Ambassador to exercise his influence to assist GEI entering Chad,” no “influence was actually realized.”


GEI is a privately-held Canadian company and as such the FCPA’s dd-3 prong could apply if (in the words of the FCPA) GEI “or any officer, director, employee, or agent … while in the territory of the United States, corruptly [made] use of the mails or any means or instrumentality of interstate commerce or to do any other act in furtherance of” the payment scheme.

It is also interesting to note the relevance of the two “domestic concerns” (in the words of the FCPA) – namely the Maryland entity and Nevada entity – in the conduct at issue.


Returning to the CFPOA action, this is only the third instance Canadian authorities have brought corporate charges under the CFPOA.  (See this prior post with an analysis of the Nikko Resources enforcement action and general reference to the Hydro Kleen enforcement action).  The Statement of Facts provide a useful description by the Canadian authorities of facts and circumstances they considered when arriving at the ultimate fine amount of $9 million (plus the 15% victim fine surcharge) for a total amount of $10.35 million.

Under the heading “Full and Extensive Cooperation with Authorities” the Statement of Facts indicates as follows.

  • An entirely new management team was hired within GEI between July 2011 and August 2011 and six new independent directors were appointed to GEI’s board.  “No current member of GEI’s management team or board of directors was involved with or knowledgeable about the consulting agreements that are issue in this case.”
  • GEI’s current board and management learned of the consulting agreements “in the course of conducting due diligence in anticipation of its initial public offering which was to take place prior to Dec. 31, 2011.  “Immediately” thereafter, a Special Committee comprised entirely of the independent members of GEI’s board was created and engaged outside legal counsel and forensic accounting experts.
  • GEI “disclosed the existence of the issues [and the results of its internal investigation] to representatives of the Public Prosecution Service of Canada” as well as “enforcement authorities in the U.S.”
  • “Hard costs paid to GEI’ legal and accounting advisors on the internal investigation currently stand at CAD $5.0 million.
  • “GEI made the further decision to withdraw its IPO, causing GEI to write off approximately CAD $1.8 million in sunk pre-IPO expenses” and “causing GEI to incur significantly higher costs of capital through private placements in order to be able to continue its operations.”


As to GEI’s “current development and exploration activities in Chad” see this recent company release.

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