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Harry Cassin
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Richard L. Cassin
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Former Hong Kong official pleads not guilty, denied bail

The former Hong Kong home secretary indicted for allegedly bribing Africa officials on behalf of a Chinese energy company pleaded not guilty Monday.

Patrick Ho, 68, was charged in November with conspiring to violate the FCPA, violating the FCPA, conspiring to commit international money laundering, and committing international money laundering.

He’s been in federal custody since his arrest on November 18.

Ho was first denied bail in federal court in New York on December 1. The DOJ said he was a flight risk.

He faces up to five years in prison on each FCPA-related count, and up to 20 years in prison for each money laundering count.

On Friday, Ho’s lawyers asked Judge Katherine Forrest to release him on bond of $10 million and under house arrest with electronic monitoring. She denied the request and didn’t reconsider it at Monday’s plea hearing.

According to the indictment, Ho, with help from his co-defendant Cheikh Gadio, offered $2 million in bribes to the President of Chad.

Gadio, 61, is the former foreign minister of Senegal.

Ho also allegedly paid a $500,000 bribe to the minister of foreign affairs of Uganda.

The DOJ alleged that an NGO Ho leads — called the China Energy Fund Committee or CEFC — was used to funnel bribes to the officials in Uganda and Chad. CEFC is fully funded by a Shanghai-based oil and gas company called CEFC China Energy Company Limited.

*     *     *

Meanwhile, the press in China has accused the United States of using the Foreign Corrupt Practices Act to achieve political ends.

A commentary in the Hong Kong-based Wen Wei Po (described by the independent South China Morning Post as a “Beijing mouthpiece”) said that the arrests “give rise to the question: was the U.S. action genuinely intended to safeguard fairness and justice or merely a move to head off a perceived threat to its hegemony?”

A report from Beijing’s Global Times quoted a CEFC Energy official that there are “deep international political motives” behind the case.

The SCMP said Ho’s arrest came a day after CEFC Energy and the Russian state oil company Rosneft concluded an oil supply agreement.

“Ho’s defenders are seeking to explain the arrest as an American reaction to warming Sino-Russian trade ties,” the paper said.


Richard L. Cassin is the publisher and editor of the FCPA Blog.

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1 Comment

  1. The Patrick Ho case in NYC threatens to spill the beans on a big Chinese company with ties to Chinese government officials. It could also produce changes in Chinese business practices.

    Ho's lawyers are former prosecutors who recently left the office that is prosecuting Ho. They are know as insiders, not scrappy trial lawyers.

    What's interesting is that both the government's attorneys and the defense attorneys agreed to a very distant trial date — January 2019. Ordinarily under Federal law trial must commence within 70 days from the date of the indictment, which in this case was late December. Defendants who plan to go to trial and contest the charges usually insist on a speedy trial, because their lawyers know that the longer the government is given to prepare, the stronger its case is likely to be. Also, Ho is detained and has been denied bail because he is deemed a flight risk. In such cases a judge would want to start the trial earlier rather than later. But the defense lawyers agreed to a distant trial date.

    The fact that Ho's attorneys have agreed to delay the trial suggests to me that they are already engaged in plea negotiations with the government. I may be wrong, but I believe Ho will eventually plead guilty, and he will do so according to an agreement which stipulates that if he provides "substantial assistance" to prosecutors that helps them to charge or convict other individuals who are as yet unidentified he could get a big sentence reduction. The reason I think this is going to happen is that he faces huge risks if he goes to trial and is convicted — up to 20 years in prison. Even a light sentence after trial would almost certainly be in the 3-5 year range, given the dollar amount of the bribe. Also remember that Ho has been charged with conspiracy to violate the FCPA. Conspiracy law is not recognized in China and Hong Kong, but in the U.S. conspiracy basically makes a person guilty even if the crime is not committed. In Ho's case, all the prosecutors need to prove is that he agreed with others to attempt the bribery scheme, even if the bribes themselves never happened. Historically, there have been very few acquittals of individuals charged with FCPA violations.

    The only way Ho can escape the risk of a long prison term is to plead guilty AND cooperate with federal authorities to identify other guilty persons. If such an agreement is reached, then I think he may make some explosive disclosures about the activities of the Chinese conglomerate CEFC. These disclosures would be particularly embarrassing to the Chinese government which, as the article below notes, has close ties to CEFC. Officials associated with other companies doing similar things could also be identified by Ho pursuant to a plea agreement. So the stakes are high, not only for Ho himself, but for CEFC and other companies that engage in similar practises, to wit, bribing foreign government officials to win contracts.

    U.S. prosecutors have been given huge power through the FCPA to punish non-U.S. citizens for engaging in corruption any place in the world. The Ho prosecution highlights the lack of meaningful enforcement by Hong Kong or Chinese regulators. The Ho case might also be a tool for discouraging Chinese companies from bribing foreign officials in the future.

    Caveat: I could be dead wrong about my prediction of a guilty plea. But given the what appears to be strong evidence in the form of emails and documents, plus the severe prison term he faces, a guilty plea coupled with cooperation with the Federal authorities is certainly a strong possibility. Also, Ho's original co-defendant — Cheikh Gadio — was granted bail. And he was severed from the Ho indictment. His name no longer appears on it. These developments suggest to me that he may have already entered into his own agreement with the government to plead guilty and testify against Ho.

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