DOJ Continues Run on Individual FCPA Criminal Prosecutions

Michael Volkov
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The Department of Justice announced criminal FCPA charges against two individuals in connection with bribery payments to foreign officials in Chad and Uganda. The Justice Department’s announcement occurred on the heels of unsealing criminal FCPA charges against 7 individuals arising from two separate investigations or enforcement actions.

The FCPA Unit’s recent actions underscore that the Yates Memorandum appears to have had an impact on the FCPA Unit’s focus and prosecution strategies. As we close out 2017, we are likely to see additional enforcement actions against companies and possible more individuals.

In the most recent announcement, the Justice Department charged Chi Ping Patrick Ho and Cheikh Gadio with FCPA conspiracy, violating the FCPA, money laundering conspiracy and international money laundering. Ho is linked to the China Energy Fund Committee, which is funded by the state-owned China Energy Company. Gadio is associated with a business development organization, Sarata Holding.

Ho and Gadio sought to disguise the payments as charitable contributions by funneling them through a non-governmental organization funded by the China Energy Company.

It is not known how law enforcement and prosecutors learned of the bribery scheme. There appear to be two possible scenarios – the large wire transactions through the New York banking system may have tripped SARs reporting requirements given the amount of money involved and the attempt to disguise the transactions by having the NGO funnel the money to the accounts. Alternatively, the Justice Department prosecuted several individuals associated with the United Nations and there could be cooperating witnesses who learned of the schemes since they were hatched in and around New York at the United Nations.

Ho and Gadio engaged in two bribery schemes – one in Chad and one in Uganda. Ho was the head of a non-governmental organization that holds “Special Consultative Status” with the United Nations Economic and Social Council. The Chinese energy conglomerate funds the NGO.

Ho and Gadio arranged to pay a $2 million bribe to the President of Chad in exchange for valuable and exclusive oil rights for China Energy Company in Chad. Gadio, a former foreign minister from Senegal, arranged the illegal bribery arrangement, and was paid $500,000 by Ho for his services.

Ho originally sought Gadio’s assistance to address environmental law violations against China Energy Company in Chad that resulted in $1.2 billion in fines. Gadio was able to introduce Ho to Chad’s senior government officials, and they were able to resolve the environmental matter, as well as address future business opportunities. Ho’s initial $2 million payment was disguised as a charitable contribution.

In the Uganda bribery scheme, Ho paid a $500,000 payment to an account designated by Uganda’s foreign minister (the former President of the UN General Assembly), and provided gifts and promised further benefits, including a joint venture position for development of oil properties, in exchange for lucrative business advantages, including the purchase of a Uganda bank.

Ho’s $500,000 bribery payment to Uganda’s foreign minister was disguised as a political contribution to the re-election of Uganda’s president, who already had been re-elected at the time of the payment.

The Justice Department’s prosecution of two more individuals for FCPA violations is significant because it may reflect a trend, probably the result of the Yates Memorandum, and a renewed focus on culpable individuals for FCPA violations.  DOJ may be reviewing other major FCPA settlements for culpable individuals and identifying other targets.  In the meantime, DOJ continues to line up individuals for FCPA prosecution.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Michael Volkov, The Volkov Law Group | Attorney Advertising

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