After reviewing several articles including the recent FCPA Blog post, "Alleged Och Ziff Africa 'fixer' arrested for FCPA offenses," my focus immediately shifted to due diligence procedures. Specifically, I thought about the risk profile of Samuel Mebiame.
Would pre-engagement due diligence on Mr. Mebiame have revealed red flags? As I asked a few months ago in my FCPA Blog post, How much due diligence is necessary?
Let's first review the engagement:
1. Subject - Samuel Mebiame, reported to be the son of the former Prime Minister of Gabon.
2. Engagement - Mr. Mebiame reportedly worked as a consultant for a joint venture between a U.S. hedge fund and a Turks & Caicos Island entity.
3. Purpose - to obtain the rights to mineral concessions.
4. Location - Africa (specifically Niger, Guinea and Chad).
You don't have to be a compliance expert to appreciate the risk profile of Mr. Mebiame. Not only is he politically exposed, he also worked as a consultant to secure mineral concessions in areas of extremely high corruption risk.
Further, the joint venture in question is reportedly comprised of two entities registered in offshore tax havens.
From a due diligence perspective, not only should an engagement with this risk profile be approached with caution, all available resources should be utilized prior to considering such an engagement.
Out of curiosity, I had one of my investigative analysts conduct cursory open source research to locate any records related to Mr. Mebiame prior to the recent disclosure. While it does not appear that Mr. Mebiame had much of an online presence prior to 2012, it would be interesting to know what would have been found if full due diligence would have been conducted on him in Gabon.
Certainly, anyone having conducted pre-engagement due diligence on Mr. Mebiame between 2012 to 2015 would have had reason to pause before engaging with him.
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Here are a few of the items we found:
A July 2012 article by Robert Magginis in Human Events reported that Guinea's former Minister of Mines, Mahmoud Thiam, had alleged that the "president's son Mohamed Conde and Palladino's Samuel Mebiame" had "tried to raise campaign funds in return for access to state mineral assets." The article also reported that "Palladino partners with U.S. investment fund managers Och-Ziff Capital Management in African Global Capital."
An October 2013 post on gabonenervant.blogspot.com reported that multinational company, Palladino Capital 2, had a "secret business deal" with the government of Guinea where Palladino reportedly lent approximately "$25 million to Guinea, to finance the start-up of Guinea's state mining company, Heritage." However, the "cash allegedly disappeared and the terms of the secret contract included a clause" which gave the lender, Palladino, a "30 percent stake of Guinea's mining assets." According to the post, the individual at the center of the deal was "Gabonese citizen: Samuel Mébiame."
Additionally, the October 2013 post reported that Samuel Mebiame is the "son of Leon Mebiame, former Prime Minister" of Gabon from 1975 to 1990 and "a friend of Mohammed Condé, son of Alpha Condé." (Note: Alpha Condé has been the President of Guinea since December 2010). Samuel Mebiame was also described as a "lobbyist, a matchmaker, [and] a writer of contracts for a network of African policymakers."
Furthermore, according to the October 2013 post, Mahmoud Thiam, a "former Guinean Mines Minister", alleged that the "the contract of 12.5 billion CFA francs" between Palladino Capital 2 and the Republic of Guinea was a "bribe to Guinea President Alpha Condé by the South African Company, via Samuel Mebiame." Interestingly, the post alleged that "Mahmoud Thiam and Samuel Mebiame know each other very well and have met in Miami in the United States in December 2012" at a "luxurious property" associated with Mebiame.
The post further claimed that Thiam and Mebiame met in Miami because both men had "problems with Alpha Condé" and they "discussed how to end [the] Alpha Condé reign." According to the post, Thiam allegedly stated in a recording of the conversation that "he had been betrayed by Alpha Condé" who he claimed was "given between 1 and 2 billion CFA francs for his election."
A witness statement (pdf) from Dag Lars Cramer dated November 25, 2014 was located on the website for the International Centre for the Settlement of Investment Disputes. The statement was reportedly made related to the matter between BSG Resources Limited as Claimant, the Director of the UK Serious Fraud Office (SFO) and the Secretary of State of the Home Department as Defendants/Respondents and Onyx Financial Advisors (UK) Limited as the Interested Party. Mr. Cramer was reportedly served with a notice from the SFO for a request for assistance regarding a criminal investigation into BSG Resources Limited related to "the awarding of mining rights to BSG Resources Limited ("BSGR") over mineral deposits in Simandou and Zogota located in Guinea."
Within the witness statement, Samy Mebiame is mentioned several times and his involvement with Alpha Conde in Guinea is described as follows:
Unknown to BSGR, in around early 2010, Alpha Conde (then a Presidential Candidate) sought assistance with the forthcoming Presidential elections in Guinea from a Mr. Samy Mebiame. Mr. Mebiame is recorded discussing this arrangement in detail with Mr. Mahmoud Thiam and a transcript of their conversation is at DLCI/21 ("The Mebiame Transcripts"). Mr. Mebiame is the son of the former Prime Minister of Gabon and a man of considerable influence in South Africa and other parts of Africa (DLCI/22)....During the recorded conversation, the two men discuss in detail the illicit arrangements made by Mr. Conde to secure the presidency in 2010....it was agreed that Walter Hennig, a wealthy South African businessman, via interests linked to him, would provide significant funds, believed to be around US $50M to Alpha Conde and/or Mohamed Conde; Together with a South African IT company, Waymark, and the SASS, the Walter Hennig Group would provide assistance to rig the forthcoming elections in Guinea to ensure that Alpha Conde was elected President and in return, Alpha Conde agreed that he would, when he became President, grant the Walter Hennig Group shares in the mining assets of Guinea, including in particular the lucrative Simandou... Accordingly, in order to fulfill this corrupt deal, Alpha Conde had to deprive BSGR of its mining rights in Simandou.
A February 2015 article by Craig McKune and Stefaans Brümmer published by Mail & Guardian reported that a December 2012 conversation between Mahmoud Thiam and Samuel Mebiame had been taped and leaked online in 2013. The recorded conversation had allegedly occurred at a mansion in Palm Beach, Florida owned by Walter Hennig. According to the article, Hennig's offshore company, Palladino Capital 2, had "secretly loaned Guinea $25 million to fund the establishment of a state mining company."
Additionally, the article reported that Mebiame was acquainted with Guinean presidential candidate, Alpha Condé, and "brought Condé to South Africa, where he introduced him to [Kgalema] Motlanthe." (Note: Kgalema Petrus Motlanthe was President of South Africa from September 2008 until May 2009).
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Granted, it's quite easy to second guess a transaction after corruption is exposed. And while I cannot speak to the specifics of the engagement back in 2008 or to the availability of information at that time, I can state that based on my 21 years in the investigative field, that a consistent, risk based approach to due diligence will often uncover potential liabilities that are paramount to avoiding problematic relationships.
Not conducting proper due diligence may leave you wondering how you could have missed the signs.
Scott Shaffer is the Managing Director for the Kreller Group in Cincinnati, Ohio. For the past 21 years he has consulted with clients to address due diligence objectives, customizing due diligence programs for new clients, and analyzing current trends regarding regulatory compliance.