This week, the Securities and Exchange Commission (SEC) obtained a Final Judgment against Asante Berko, former employee of a Goldman Sachs subsidiary, for, as noted in the SEC Press Release, his role in orchestrating a bribery scheme to help a client to win a government contract to build and operate an electrical power plant in the Republic of Ghana, in violation of the Foreign Corrupt Practices Act (FCPA). Yet this matter is also a victory for the Goldman Sachs compliance function who, when in the face of clear subterfuge by Berko, dug deeper into the deal and terminated the company’s involvement.

As alleged in the Complaint, Berko arranged for a Turkish energy company to funnel at least $2.5 million to a Ghana-based intermediary to pay illicit bribes to Ghanaian government officials in order to gain their approval of an electrical power plant project. The complaint further alleges that Berko helped the intermediary pay more than $200,000 in bribes to various other government officials, and that Berko personally paid more than $60,000 to members of the Ghanaian parliament and other government officials. Moreover, Berko took deliberate measures to prevent his employer from detecting his bribery scheme, including misleading his employer’s compliance personnel about the true role and purpose of the intermediary company. Berko consented to the entry of the Final Judgment that permanently enjoins him from violating the anti-bribery provision of the FCPA and orders him to disgorge $275,000 in ill-gotten gains plus $54,163.92 in prejudgment interest.

Those are the basic facts. The Complaint is detailed in how the bribery scheme was concocted and should be studied by every Chief Compliance Officer (CCO) and compliance practitioner as it presents the points in every high-risk transaction where compliance monitoring, oversight and indeed investigations into transactions should be considered.

Use of 3^rd Parties

The first indicia of high risk was the geographic location of the project; Ghana. Almost immediately Berko engaged a third-party to assist in the project. This third-party, which also included a Politically Exposed Person (PEP), had “contacts with the highest levels of the government of Ghana.” Berko also proposed the third party and the Turkish energy company involved in making the bid become partners in the project. This allowed the PEP to personally benefit from the arrangement. Indeed, in an email Berko said the PEP and third-party “will mark up the proposal in a way that will work for them. I will then get the [Energy Company] guys to agree.”

The Bribery Schemes

While involved in these negotiations, and without informing Goldman Sachs, Berko arranged for the Turkish energy company to funnel money to the third-party to be used to bribe government officials, “to win approval for the Power Plant Project. The central conspirators in the bribery scheme were Berko”, the third-party, PEP, and Turkish energy company executives. From at least April 2015 through at least August 2015, they planned, implemented and executed the scheme to bribe government officials. Under the planned scheme, the Turkish energy company agreed to funnel money to an entity controlled by the third-party for Berko, “to use to bribe key government officials responsible for approving the Power Plant Project. And in some instances, Berko and the Intermediary Executive used their own funds to bribe government officials and then sought reimbursement from the Energy Company.” They transferred “large blocks of funds at or close to when the government had agreed to significant milestones in the Power Plant Project. These milestones would occur when the Ministry of Power signed the Power Purchase Agreement; when parliament ratified the Power Purchase Agreement; and when the government provided financing (via a government-backed Letter of Credit) for the Power Plant Project.” Berko, the third-party, and/or the PEP “would then use the transferred funds to bribe the government officials who had corruptly helped them achieve these milestones.”

Bribery Box Score

Finally, there were promises of future bribes to continue throughout the life of the contract. During October 2015, the parent company of the Turkish energy company contracted to pay the third-party up to $42 million over five years for various purported services, none of which justified the $42 million fee. “Rather, the purported services were a pretext for the true purpose of the fee: to allow the Intermediary Company to pay or reimburse bribes in order to obtain additional regulatory benefits (including a tax exemption waiver worth millions of dollars and a government-backed letter of credit) for the” Turkish energy company.

Circumvention of Internal Controls

Berko actively worked to mislead the Goldman Sachs compliance function on his role in the bribery and corruption and all of the illegal acts under the FCPA; by circumventing the company’s internal controls.

1. Use of Personal Email. 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. To evade such scrutiny of his conduct, Berko deliberately used his personal email when facilitating the bribery scheme.
2. Ban on Outside Activities. Berko circumvented Goldman Sachs’s policy 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 Turkish energy company, purposefully hid these payments from Goldman Sachs to avoid detection of the bribery scheme.
3. Withheld Information from Compliance. Berko withheld essential information from a critical document used by Goldman Sachs 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. Berko did not tell Goldman Sachs about the role of either the third-party or the PEP.

Even with all of this subterfuge, the Goldman Sachs compliance function could smell a rat. A more thorough internal investigation into the deal was commenced and the end result was the Turkish energy company refused to respond to Goldman’s request for information on the third-party. In August 2016, Goldman Sachs terminated its involvement in the project and in December Berko resigned from Goldman Sachs. Finally, Goldman Sachs was not prosecuted over this matter.

The facts of this case point to clear red flags. All compliance professionals should study this matter and consider using it for educational purposes in trainings.

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