Yesterday, the SEC announced the filing of a civil complaint charging Asante Berko (pictured – a former Executive Director of Goldman Sachs International) with Foreign Corrupt Practices Act violations and other charges for “orchestrating a bribery scheme to help a client [a Turkish energy company] win a government contract to build and operate an electrical power plant” in Ghana.
The Turkish energy company would appear to be Aksa Enerji (see here and here).
Of note, the SEC alleged that the “Holding Company” – that is Goldman Sachs – violated the FCPA’s anti-bribery provisions. However the SEC’s release states that Goldman Sachs “is not being charged.”
In summary fashion, the complaint alleges:
“Berko, a United States citizen, is a former executive of a United Kingdom-based financial services company (the “Subsidiary”) that is a wholly-owned subsidiary of a publicly traded bank holding company based in the United States (the “Holding Company”).
Berko’s role at the Subsidiary was to develop investment banking business for the Subsidiary and the Holding Company, which included identifying and arranging financing, restructuring or merger transactions for clients, and assisting with the work necessary to complete those transactions.
From approximately 2015 through at least 2016 (the “relevant period”), while employed at the Subsidiary, Berko schemed to bribe various government officials in the Republic of Ghana (“Ghana”) so that a client of the Subsidiary, a Turkish Energy Company (the “Energy Company”), would win a contract (the “Power Purchase Agreement”) to build and operate an electrical power plant in Ghana and sell the power to the Ghanaian government (the “Power Plant Project” or “Project”). To effect the corrupt scheme, Berko arranged for the Energy Company to funnel between $3 million to $4.5 million to a Ghana-based company (the “Intermediary Company”) to bribe various government officials responsible for approving the Power Plant Project. The Energy Company transferred at least $2.5 million of the planned $3 million to $4.5 million to the Intermediary Company, all or most of which was used to bribe Ghanaian government officials.
Berko crafted, developed and carried out the bribery scheme with the knowledge, or under circumstances that made it substantially certain, that all or a portion of the money paid to the Intermediary Company would be paid as bribes to Ghanaian government officials to secure support for the Power Plant Project. Berko and the Energy Company timed the largest transfers of funds to coincide with key milestones in the approval process of the Power Plant Project so that funds would be available to bribe the corrupt officials who were in positions to help accomplish those milestones. For example:
a. On or about April 13, 2015, Berko learned that the Energy Company and the Ministry of Power of Ghana (“Ministry of Power”) had reached an agreement in principle on the terms of the Power Purchase Agreement. By April 20, 2015, at the request of the Intermediary Company, Berko and the Energy Company had arranged for the Energy Company to transfer $500,000 to the Intermediary Company, which the Intermediary Company then used to bribe a senior Ghanaian government official (“Government Official 1”) who represented the Ministry of Power during its negotiations with the Energy Company.
b. On May 11, 2015, the Energy Company and the Ministry of Power signed the Power Purchase Agreement. On May 19, 2015, the Intermediary Company sent an invoice to the Energy Company for an additional $1.5 million in funds for the bribe scheme. On May 22, 2015, the Energy Company transferred $1.5 million to the Intermediary Company, all or part of which was to be used to bribe Ghanaian government officials. Berko knew of this transfer at, or soon after, the time of this transfer.
c. On July 17, 2015, the Ghanaian parliament ratified the Power Purchase Agreement. On July 20, 2015, the Intermediary Company requested, through Berko, that the Energy Company send it another $1.5 million for its “next crucial steps.” Those funds were to be used to bribe Ghanaian government officials and to advance the bribery scheme.
d. On August 4, 2015, the Intermediary Company emailed another invoice to the Energy Company, copying Berko, for $250,000 for the bribery scheme. On October 19, 2015, the Energy Company transferred $250,000 to the bank account of an employee of the Intermediary Company (“Intermediary Employee 1”) who was also part of the bribery scheme.
Berko also helped the Intermediary Company pay smaller bribes, totaling approximately $210,000, to various other government officials involved in the Power Plant Project. These included bribes to a Ghanaian government official (“Government Official 2”) who assisted Government Official 1 on the Project, employees at the Ministry of Power who provided confidential information to the Intermediary Company concerning the Project, government engineers who assessed the Energy Company’s technology, and officials at other government agencies who reviewed the Project.
In addition to the bribes paid through the Intermediary Company, Berko personally paid bribes to advance the corrupt scheme. By August 2015, Berko had paid bribes of at least $66,000 to members of the Ghanaian parliament and other government officials in his effort to obtain approval for the Power Plant Project.
Berko sought to profit from the bribery scheme in two ways. First, he knew the Subsidiary would earn over $10 million in fees if the Energy Company secured the Power Plant Project and the Subsidiary organized financing for it, which in turn would enhance Berko’s performance and stature within the Subsidiary. Second, by at least July 2015, Berko understood that the Energy Company would secretly compensate him for arranging the bribe scheme. Unbeknownst to the Subsidiary – and in violation of Berko’s employment agreement with the Subsidiary – between September 2016 and February 2017, the Energy Company paid Berko $2 million for successfully coordinating the bribery scheme.
Berko took deliberate measures to prevent the Holding Company’s and the Subsidiary’s compliance personnel from discovering his corrupt scheme. First, Berko used his personal email rather than his work email to arrange the bribery scheme in order to evade detection. Berko knew that Subsidiary and/or Holding Company compliance personnel could review his work email as part of their periodic and/or project-related due diligence. Second, Berko intentionally failed to correct a critical document – directed to the Holding Company – that falsely stated that the Energy Company had not compensated any intermediaries or politically exposed persons in connection with the Power Plant Project.
Despite Berko’s efforts to conceal his misconduct, the Holding Company required additional due diligence to further assess the potential reputational risks associated with the Project and to address other concerns. As part of this diligence, during March 2016, compliance personnel at the Subsidiary reviewed Berko’s emails and discovered the involvement of the Intermediary Company. After interviewing Berko about the Intermediary Company, they began to investigate the matter further.
During approximately May through June 2016, and as part of their further investigation, Subsidiary personnel questioned the Energy Company’s executives about the Intermediary Company’s role in the Power Plant Project. The Energy Company’s executives provided incomplete and inaccurate information to the Subsidiary personnel’s questions and failed to disclose that the Intermediary Company’s true purpose was to facilitate the bribery scheme. When Subsidiary personnel continued to probe the role of the Intermediary Company in the transaction, the Energy Company’s executives refused to answer any more questions on the topic. As a result of information obtained during this further investigation, by August 2016, the Subsidiary terminated its involvement in the Project.
Between September 2016 and February 2017, the Energy Company paid Berko $2 million for his effort in facilitating the bribery scheme. On or about December 7, 2016, Berko tendered his resignation to the Subsidiary, which became final on or about March 6, 2017. Following his departure from the Subsidiary, Berko began providing consulting services for the Energy Company.”
Earlier this year, Berko became a Managing Director of the Tema Oil Refinery. (See here).
The SEC’s complaint further alleges:
“Berko directly or indirectly made use of the means and instrumentalities of United States interstate commerce in connection with the acts, practices, and courses of business alleged herein, including electronic messaging systems based in the United States. Among other things, while in New York, Berko communicated, using a United States-based email account and email service provider, with employees of the Intermediary Company in order to advance the bribery scheme described herein. Berko also arranged for, perpetrated and participated in the bribery scheme with the understanding that documentation relating to the Power Plant Project would be sent, through the instrumentalities of interstate commerce in this district, to New York-based members of a Committee of the Holding Company. Berko also travelled to and from London and other international venues through airports in this district in furtherance of the scheme detailed herein. Berko further knew, or was reckless in not knowing, that funds would be transferred through wire communications through this district to banks in New York and then to individuals and entities in Ghana to facilitate the bribe scheme and helped arrange some of those fund transfers.”
The SEC alleged that “Berko acted as an employee and/or agent of the Holding Company [Goldman Sachs] for the Power Plant Project through his employment, duties and responsibilities” and that “Holding Company [Goldman Sachs] directed and controlled Berko for both his general work activities and specifically for his work on the Power Plant Project.”
Under the heading “Berko Sought to Circumvent the Legal and Compliance Controls at the Subsidiary and the Holding Company,” the complaint alleges:
“At all times, Berko acted to keep the bribery scheme hidden from legal and compliance personnel at the Subsidiary and the Holding Company by circumventing their internal controls, including but not limited to their anti-bribery and other anti-corruption policies. For example:
a. Berko circumvented the anti-bribery policy, which prohibited employees from “providing anything of value to obtain or retain business” to, among others, “public officials,” “employees of state-owned enterprises,” and “clients/customers.”
b. Berko circumvented the policy on Engaging Intermediaries/Finders, which required employees to disclose to compliance personnel any payments to intermediaries or to politically exposed persons relating to transactions requiring Holding Company committee approval. Berko, who received a copy of the policy knew, or was reckless in not knowing, that the Intermediary Company and the PEP should have been disclosed to compliance personnel under this policy, but deliberately kept their involvement hidden.
c. Berko circumvented his employer’s policy on email use, which required employees to use only company-approved email and text messaging for any work related business. Berko knew that compliance personnel could review his email and other documents as part of their due diligence on the Power Plant Project. To evade such scrutiny of his conduct, Berko deliberately used his personal email when facilitating the bribery scheme.
d. Berko circumvented his employer’s Policy on Outside Activities, which required firm approval for any compensated activities “before engaging in any Outside Activity,” “for which the individual is or anticipates being compensated.” Berko, who received $2 million from the Energy Company for facilitating the bribery scheme (while he was employed by the Subsidiary) purposefully hid these payments from the Subsidiary to avoid detection of the bribery scheme.
Berko withheld essential information from a critical document used by the Holding Company to evaluate the Power Plant Project. This document, called a Posting Memo, was typically prepared for most significant investment banking transactions and was routinely provided to the appropriate Holding Company committee so it could assess the transactions.”
[…]
The Posting Memo contained a section entitled “Intermediaries and Finders” that asked whether (1) the Subsidiary, its client or other person involved in the transaction had compensated an intermediary; and (2) whether the Subsidiary, its client or other person engaged or compensated an advisor with a familial or other close relationship to a current or former government official or employee involved in the transaction. The memo answered “No” to both questions.”
Based on the above, the SEC charged Berko with violating the FCPA’s anti-bribery provisions and aiding and abetting the “Holding Company’s Violation’s” of the FCPA’s anti-bribery provisions. In pertinent part, the SEC alleged:
“The Holding Company violated [the FCPA’s anti-bribery provisions] when it made use of the mails or other means or instrumentalities of interstate commerce corruptly in furtherance of offers, payments, promises to pay, or authorizations of the payments of, any money, offer, gift, promise to give, or authorizations of the giving of anything of value to foreign officials for the purposes of influencing their acts or decisions in their official capacity, inducing them to do or omit to do any action in violation of their lawful duties, securing an improper advantage, or inducing such foreign officials to use their influence with foreign governments or instrumentalities thereof to affect or influence any act or decision of such government or instrumentality in order to assist the Holding Company in obtaining or retaining business while engaging in the corrupt transactions described above.”
In the SEC’s release Charles Cain (Chief of the SEC’s FCPA Unit) stated:
“As alleged in our complaint, Berko orchestrated a scheme to bribe high-level Ghanaian officials in pursuit of firm business and his own enrichment. Berko’s misconduct was egregious and individual accountability remains a key component to our FCPA enforcement efforts. The firm’s compliance personnel took appropriate steps to prevent the firm from participating in the transaction and it is not being charged.”
As highlighted in previous posts here and here, the DOJ and SEC have previously charged various individuals associated with Goldman Sachs with FCPA offenses for paying bribes to various Malaysian and Abu Dhabi officials in connection with 1Malaysia Development Berhad (1MDB), Malaysia’s state-owned and state-controlled investment development company.
FCPA Institute Online
The most comprehensive online FCPA training course available. Over 12 hours of narrated instruction from Professor Koehler allowing professionals to elevate their FCPA knowledge and practical skills at their own pace.
Purchase
