SEC Charges Executive of U.K. Subsidiary with FCPA Violations
The Foreign Corrupt Practices Act centers on bribes being paid to foreign officials. As with any U.S. statute, there must be facts tying the wrongful conduct to the jurisdictional hooks in the statute. While the defendant in the Commission’s most recent case has dual U.S./foreign citizenship, the complaint focuses in part on an agency theory under which the employee of the subsidiary acts as an agent of the parent in the corrupt transaction. Indeed, the wrongful conduct is done for a client of the foreign subsidiary and the acts of its employee undertaken to secure business in a foreign country for that client — the parent is not charged. SEC v. Berko, Civil Action No. 1:20-cv-01789 (E.D.N.Y. Filed April 13, 2020).
Defendant Asante K. Berko is a citizen of the United States and Ghana where he currently resides. Over a period beginning in July 2014, and continuing until December 2016, he was an executive in the U.K. Subsidiary of a New York City based Holding Company whose shares are traded in this country. The Holding Company provided broker dealer, investment banking and other financial services for its clients outside the U.S. While the senior executives of the Subsidiary served on committees of the Holding Company, there is no allegation that Mr. Berko was a member of any such committee. The books and records of the Subsidiary were consolidated with those of the Holding Company.
Mr. Berko, as an executive at the Holding Company, was charged with developing investment banking business for that firm and its Holding Company. During the time period here, Mr. Berko sought to bribe various Ghana officials to secure business for a client of the Subsidiary, a Turkish Energy Company. Specifically, Mr. Berko sought to obtain a contract to build and operate an electrical power plant in Ghana for the client. The power would be sold to the Ghanaian government.
In April 2015 Mr. Berko learned that the Energy Company client and the Ministry of Power of Ghana had reached an agreement in principle regarding the terms of a Power Purchase Agreement. Within days the investment banker and his client arranged to transfer $500,000 to the Intermediary Company recruited to participate in the scheme. A second invoice arrived for $1.5 million days later. The funds were transferred to the Intermediary Company. All or part of the money was used to bribe Ghanaian government officials, according to the Complaint. Mr. Berko knew of the transfer at or after it occurred.
In mid-July 2015 the Ghanaian parliament ratified the Power Purchase Agreement. Three days later the Intermediary Company requested through Mr. Berko another $1.5 million. A few days later another invoice demanded an additional $250,000. Each was paid as part of the scheme, according to the complaint. Additional smaller bribes were arranged for other officials involved with the Power Plant. Mr. Burko, in addition, is alleged to have personally paid at least $66,000 to member of the Ghanaian parliament and other government officials in connection with the transactions.
Mr. Berko would profit in two ways from the transaction. First, the Subsidiary would profit which would enhance him. Second, the Energy Company ultimately paid him a $2 million success fee, a violation of his employment agreement with the Subsidiary.
Steps were taken by Mr. Berko to prevent the Holding Company and Subsidiary compliance personnel from discovery the corrupt scheme. First, the executive used his personal email in connection with the deal, rather than the one furnished by the firm which was reviewed by compliance. Second, he did not correct a document forwarded to the Holding Company representing that the Energy Company did not compensate any intermediaries or politically exposed persons in connection with the Power Plant transaction. Nevertheless, compliance continued to examine the transaction, uncovered emails of Mr. Berko to Intermediary and eventually unraveled the transaction. The complaint alleges violations of Exchange Act Section 30A only as to Mr. Berko and not against any entity. The case is pending.