How Goldman Sachs' Compliance Team Saved the Bank From Bribery Charges
"The firm's compliance personnel took appropriate steps to prevent the firm from participating in the transaction, and it is not being charged," regulators said in a statement.
April 17, 2020 at 06:09 PM
4 minute read
Doing compliance is like flying a plane—one usually only hears about it when the plane crashes. But Goldman Sachs Group Inc. has a compliance team that steered it away from an alleged bribery scheme, and regulators noticed.
The U.S. Securities and Exchange Commission charged Asante Berko, a former executive of a bank subsidiary in the U.K., on April 13 with orchestrating a $3 million scheme to help a client win a government contract in Ghana. Berko has denied wrongdoing in a statement, and his attorney, Carl "Chip" Loewenson Jr. of Morrison & Foerster in New York, declined to comment on Friday.
The bank was not named as a defendant.
The commission's statement said, "The firm's compliance personnel took appropriate steps to prevent the firm from participating in the transaction and it is not being charged."
It was a lift for a compliance team that suffered a massive black eye last year from the bank's involvement in a $4.5 billion bribery and money-laundering scheme tied to Malaysia's sovereign wealth fund.
Nicole Sharp, head of Goldman Sachs corporate communications, said in a statement, "Goldman Sachs fully cooperated with the SEC's investigation." Sharp then reiterated what the commission said about the bank's compliance personnel taking "appropriate steps." She referred other questions about those steps to the detailed, 37-page complaint.
The document accuses Berko of two counts of violating the U.S. Foreign Corrupt Practices Act by arranging for his firm's client, Turkish energy company AKSA Enerji, to funnel bribe money to an intermediary consultant in Ghana. The money allegedly was used to pay off Ghanaian government officials to win a contract to build and operate an electrical power plant project.
The complaint, filed in U.S. District Court in Brooklyn, describes how Berko tried to hide his conduct from compliance staff by using his personal rather than work email account; by signing off on a memo that falsely stated the energy company had not paid any intermediaries or "politically exposed persons" in the deal; and by assisting the energy company's CEO in drafting false and misleading responses to questions posed by Goldman Sachs' compliance personnel.
Despite Berko's efforts, the compliance team conducted a review of his work emails and uncovered reference to the intermediary company, according to the complaint.
A team of legal and compliance people was assigned to further investigate and began questioning the energy company's executives. The executives at first "provided incomplete and inaccurate information," the complaint says, and in time refused to answer any questions on the topic.
At that point, Goldman Sachs terminated its involvement in the project in August 2016. A few months later Berko resigned from Goldman Sachs, effective March 2017, but he continued working with AKSA Enerji to close the deal with Ghana. He then became head of the state-owned Tema Oil Refinery in Ghana but resigned that position April 15 after being charged.
Between September 2016 and February 2017, AKSA paid Berko $2 million for his efforts in facilitating the bribery scheme, the complaint states.
According to the complaint, the scheme was to continue well into the future. The document says Berko helped draft a contract in which Enerji would pay the Ghana intermediary up to $42 million over five years if it won additional regulatory concessions for Enerji, including a tax exemption waiver and a government-backed letter of credit.
"Berko knew, or was reckless in not knowing, that for the energy company to obtain the specified regulatory benefits, the intermediary company would likely need to bribe government officials," the complaint states.
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