Global Mining Company Settles SEC Charges of FCPA Violations
A global mining and metals company settled SEC charges over an alleged bribery scheme in Guinea in violation of the Foreign Corrupt Practices Act.
According to the SEC Order, the company hired a French investment banker to serve as a consultant to help the company retain mining rights in Guinea. The SEC found that the consultant offered and attempted to make an improper payment of $822,000 to a former senior Guinean government official in connection with the mining rights. According to the SEC, the consultant was a close friend of the Guinean official and had no direct work experience relating to either the mining business generally or mining in Guinea specifically. The SEC identified email discussions amongst the company's senior executives that highlighted the consultant's history and ongoing friendship with the Guinean official as the primary motivation for hiring him.
The SEC stated that the consultant operated as an agent of the company without a contract defining the scope of services. A contract was eventually put in place, but not until one day before payment was provided for services rendered. The consultant was paid $10.5 million for his services in two tranches. The payments were allegedly made indirectly through a wholly-owned subsidiary of the company, and both payments were improperly initiated using manual payment forms. The SEC found that payments to the consultant were not accurately reflected in the company’s books and records, and that the company failed to have sufficient internal accounting controls to detect or prevent the misconduct.
The company was found in violation of SEA Section 13(b)(2)(A), which requires issuers to keep books, records and accounts, and to accurately and fairly reflect the transactions and dispositions of the assets of the issuer. The SEC also found the company in violation of SEA Section 13(b)(2)(B), which requires maintenance of an internal accounting controls system to provide reasonable assurances as to authorizations and recordkeeping regarding access to assets and transactions.
To settle the charges, the company agreed to (i) cease and desist from further violations and (ii) pay a $15 million civil penalty.