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https://www.moneylaunderingwatchblog.com/2017/08/former-guinean-minister-mines-sentenced-seven-years-prison-laundering-8-5-million-bribes-paid-chinese-companies-exchange-mining-rights/#more-2803

 

U.S. Money Laundering Charges Stemmed from Foreign Bribes to Foreign Official by Foreign Companies.

On August 25, a U.S. District Court Judge for the Southern District of New York sentenced former Guinea Minister of Mines and Geology, Mahmoud Thiam, to seven years in prison, followed by three years of supervised probations, for laundering $8.5 million bribes paid to him by China Sonangol International Ltd. and China International Fun, SA (CIF).  The judge also entered an order for the forfeiture of the full of $8.5 million of laundered funds.  The sentence followed Thiam’s conviction by a jury in May 2017 of money laundering.

Although the alleged money laundering transactions charged in the indictmentinvolved wire transfers from foreign banks to bank accounts held in New York City, all of the bribery which produced the illicit proceeds at issue in the money laundering charges occurred entirely overseas. As we will discuss, this case serves as a reminder that the offense of money laundering centers on a discrete financial transaction, not the underlying illegal activity. This case also illustrates the willingness of the U.S. Department of Justice (“DOJ”) to pursue cases primarily involving conduct which occurred abroad, and also how the DOJ may use the money laundering statutes – assuming that there is a U.S. jurisdictional hook – to pursue certain individuals who would be untouchable under the Foreign Corrupt Practices Act: the foreign officials themselves who are receiving the bribes.

The Charges, Trial and Sentencing

Thiam, a naturalized U.S. citizen, served as Minister of Mines and Geology for the Republic of Guinea from 2009 to 2010. The evidence at trial demonstrated that during this time Thiam abused his position to influence the Guinean government to enter into agreements with the Chinese conglomerates that provided the companies with lucrative mining rights in Guinea. The complaint, which offers more details about the alleged transactions than the indictment, indicated these agreements formed a joint venture with the Chinese companies owning 85% of the joint venture and the Guinean government owning the remaining 15%. The agreements further required the Guinean government to create a national mining company, grant the Chinese companies the right be the first and strategic shareholder, and to use the mining company “as the vehicle to won all existing and future exploration and operating mines in which the Republic of Guinea has full ownership and control.”  In exchange for influencing the Guinean government to enter these agreements, Thiam received $8.5 million in bribes in violation of the Guinean Penal Code, which he laundered through banks in Hong Kong and New York City; the wire deposits into the U.S. bank accounts formed the basis of the two-count indictment returned against Thiam.

Thiam proceeded to trial. While on the stand, Thiam admitted to lying to the banks regarding the source of his income, telling them he was a private consultant and concealing his status as a public official. According to the indictment, the proceeds of the bribe were used fund Thiam’s lavish lifestyle in the United States, including buying a multi-million dollar estate and paying for private schools for his children.  The allegations of illicit money used to buy high-end real estate in the U.S. echo what is now a familiar concern being articulated by U.S. enforcement officials.

Following the sentencing, an official for the FBI that “the FBI will not stand by while individuals attempt to live by their own rules and use the United States as a safe haven for their ill-gotten gains.” Although the money laundering counts against Thiam rested directly upon the use of U.S. banks to receive illicit proceeds, it is notable that none of the alleged bribery had any nexus whatsoever with the United States; it occurred entirely overseas, and involved a former foreign official and foreign companies. As we previously have blogged (hereherehere, and here), allegations regarding schemes perpetrated almost entirely outside of the United States seem to be an increasingly common fact pattern as cross-border cases proliferate and U.S. enforcement actions more often involve conduct occurring largely overseas.

The DOJ had pushed for a prison sentence within the Sentencing Guidelines range of 151 to 188 months, arguing Thiam’s conduct was the “very form of rampant official corruption that has contributed to dire poverty in Guinea and elsewhere in Africa, despite the vast natural resources those countries possess.” The DOJ also emphasized Thiam’s repeated deceptions and alleged obstruction of justice during the trial. The judge imposed a less stringent sentence, commenting that she did not believe Thiam – who had lived in Europe and the United States before returning to his native Guinea – set out to break the law when traveled to Guinea, which was suffering a financial crisis at the time, but that ultimately he did succumb to corruption. However, the judge also noted that Thiam had lied during his trial testimony and had shown little remorse: “I even sense a whiff of entitlement[.]” Thiam’s lawyers have stated that they plan to appeal.

The Money Laundering Statutes: A “Supplement” to the FCPA?

The case and sentencing highlight the use of the money laundering statutes, 18 U.S.C. § 1956 and § 1957, to prosecute foreign officials for receiving bribes, conduct which is not actually punishable under the Foreign Corrupt Practices Act of 1977 (FCPA), 15 U.S.C. § 78dd-1, et seq.

The FCPA generally prohibits individuals and businesses from paying bribes to foreign officials to assist in obtaining or retaining business.   However, “foreign officials” cannot be charged under the FCPA or with conspiracy to violate it.  Therefore, a foreign official could not be prosecuted for his conduct in soliciting or receiving bribes under the FCPA.

By comparison, the money laundering statute provides criminal punishment against whoever “conducts or attempts to conduct” a financial transaction knowing the transaction involves proceeds from some unlawful activity.” 18 U.S.C. § 1956(a).  The section specifies that this prohibition refers to situations where the person knew the property involved in the transaction represented proceeds from some activity that constitutes a felony under State, Federal, or foreign law. 18 U.S.C. § 1956(c)(1).  Thus, a violation of a foreign law, such as the Guinean Penal Code, can serve as the predicate “unlawful activity” for the money laundering scheme.  Section 1956 also specifically includes in the list of “specified unlawful activity,” or SUAs (that is, offenses which can produce “proceeds” involved in money laundering transactions), the bribery of a public official. 18 U.S.C. § 1956(c)(7)(B)(iv).

Therefore, the money laundering statute can be used to supplement the FCPA in pursuing participations in schemes to bribe foreign officials, including the officials themselves even though they would escape liability under the FCPA. For example, in 2015 U.S. Court of Appeals for the Eleventh Circuit affirmed in United States v. Duperval a money laundering conviction and nine year prison sentence of a former official of Haiti’s state-owned telecommunications company who had received and laundered bribes from a Miami-based telecommunications firm.

In addition to providing clear statutory grounds for prosecuting the recipient of bribes, the money laundering statute carries potentially harsher criminal penalties than the FCPA, imposing up to 20 years in prison for each money laundering count as compared to only five years on each FCPA count.  As Thiam’s case demonstrates, the DOJ is likely to continue to use the money laundering statute complement to the FCPA in prosecuting bribes of foreign officials.

 

USA DOJ ANNOUNCEMENT: Former Guinean Minister of Mines Sentenced to Seven Years in Prison for Receiving and Laundering $8.5 Million in Bribes From China International Fund and China Sonangol

 


FOR IMMEDIATE RELEASE
Friday, August 25, 2017

A former Minister of Mines and Geology of the Republic of Guinea was sentenced today to seven years in prison, and three years of supervised release, for laundering bribes paid to him by executives of China Sonangol International Ltd. (China Sonangol) and China International Fund, SA (CIF).

 

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Joon H. Kim of the Southern District of New York, Assistant Director Stephen E. Richardson of the FBI’s Criminal Investigative Division and Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office made the announcement.

 

Mahmoud Thiam, 50, of New York, New York, was sentenced by U.S. District Judge Denise L. Cote of the Southern District of New York.  Thiam was convicted on May 3, after a seven-day trial of one count of transacting in criminally derived property and one count of money laundering.

 

“Mahmoud Thiam engaged in a corrupt scheme to benefit himself at the expense of the people of Guinea,” said Acting Assistant Attorney General Blanco. “Corruption is a cancer on society that destabilizes institutions, inhibits fair and free competition, and imposes significant burdens on ordinary law-abiding people just trying to live their everyday lives.  Today’s sentence sends a strong message to corrupt individuals like Thiam that if they attempt to use the U.S. financial system to hide their bribe money they will be investigated, held accountable, and punished.”

 

“As a unanimous jury found at trial, Thiam abused his position as Guinea’s Minister of Mines to take millions in bribes from a Chinese conglomerate, and then launder that money through the American financial system,” said Acting U.S. Attorney Kim. “Enriching himself at the expense of one Africa’s poorest countries, Thiam used some of the Chinese bribe money to pay his children’s Manhattan private school tuition and to buy a $3.75 million estate in Dutchess County. Today’s sentence shows that if you send your crime proceeds to New York, whether from drug dealing, tax evasion or international bribery, you may very well find yourself at the front end of long federal prison term.”

“Thiam abused his official position, but the outcome shows that no one is above the law,” said Assistant Director Stephen E. Richardson. “The FBI will not stand by while individuals attempt to live by their own rules and use the United States as a safe haven for their ill-gotten gains. I would like to applaud the dedicated investigators and prosecutors who have worked to hold those who have committed these crimes accountable for their illegal actions.”

 

“Today’s sentencing should remind the public that no matter who you are, or how much money you have, you’re not immune from prosecution.  The FBI will continue to use all resources at our disposal to uncover crimes of this nature and expose them for what they really are,” said Assistant Director in Charge Sweeney

 

According to evidence presented at trial, China Sonangol, CIF and their subsidiaries signed a series of agreements with Guinea that gave them lucrative mining rights in Guinea.  In exchange for bribes paid by executives of China Sonangol and CIF, Thiam used his position as Minister of Mines to influence the Guinean government’s decision to enter into those agreements while serving as Guinea’s Minister of Mines and Geology from 2009 to 2010.  The evidence further showed that Thiam participated in a scheme to launder the bribe payments from 2009 to 2011, during which time China Sonangol and CIF paid him $8.5 million through a bank account in Hong Kong.  Thiam then transferred approximately $3.9 million to bank accounts in the U.S. and used the money to pay for luxury goods and other expenses.  To conceal the bribe payments, Thiam falsely claimed to banks in Hong Kong and the U.S. that he was employed as a consultant and that the money was income from the sale of land that he earned before he was a minister. 

 

The trial evidence showed that the purpose of the bribes was to obtain substantial rights and interests in natural resources in Guinea, including the right to be the first and strategic shareholder with Guinea of a national mining company into which Guinea had to, among other things, transfer all of its stakes in various mining projects and future mining permits or concessions that the government decided to develop on its own.  China Sonangol and CIF, through their subsidiaries, also obtained exclusive and valuable rights to conduct business operations in a broad range of sectors of the Guinean economy, including mining. 

 

The FBI’s International Corruption Squads in New York City and Los Angeles investigated the case.  Trial Attorney Lorinda Laryea of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Elisha Kobre and Christopher DiMase of the Southern District of New York prosecuted the case.  Fraud Section Assistant Chief Tarek Helou and Trial Attorney Sarah Edwards, and Money Laundering and Asset Recovery Section Senior Trial Attorney Stephen Parker previously investigated the case.  The Criminal Division’s Office of International Affairs also provided substantial assistance in this matter. 

 

The Fraud Section is responsible for investigating and prosecuting all matters relating to the Foreign Corrupt Practices Act (“FCPA”).  Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.