PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
MEMORANDUM
March 28, 2025
TO: Conrad Ashby, Responsible Partner, White Collar & Investigations, Calderwood & Harkness LLP
FROM: Steven Hollander, Lead Associate, White Collar & Investigations, Calderwood & Harkness LLP
RE: Summary of Red Flags Identified in Preliminary Review — Torchlight Mining Corp. FCPA Investigation
MATTER NO.: 1039-00005
This memorandum was prepared by Calderwood & Harkness LLP at the direction of and for the benefit of its client, Torchlight Mining Corp., in connection with the provision of legal advice regarding potential violations of the Foreign Corrupt Practices Act. It is protected by the attorney-client privilege and the work product doctrine and should not be disclosed to any third party without the express authorization of counsel.
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I. Purpose and Executive Summary
The purpose of this memorandum is to catalog and summarize the principal red flags identified to date during the preliminary phase of the internal investigation into potential violations of the Foreign Corrupt Practices Act ("FCPA") arising from Torchlight Mining Corp.'s ("Torchlight" or "TMC") West African operations in the Republic of Ganara. This memorandum is intended to provide the engagement team with a consolidated factual record of the most significant areas of concern as they have emerged from the initial review, to inform the prioritization of further investigative steps, and to serve as a foundational reference document as the investigation proceeds into its next phase.
In the course of the preliminary review, Calderwood & Harkness has identified nine discrete red flags arising from an initial examination of available corporate records, the Government Relations Advisory Agreement between Torchlight Ganara Holdings Ltd. ("TGH") and Crestfield Advisory Partners Ltd. ("Crestfield"), financial records of both TGH and Torchlight Ganara Mining S.A. ("TGM"), and preliminary findings from the forensic accounting engagement of Pinnacle Forensic Advisory LLC ("Pinnacle"), which was retained on March 12, 2025 pursuant to direction from this firm.
The red flags identified collectively suggest a pattern of payments totaling approximately $4,730,000 between 2019 and 2024 that may have been directed, in whole or in part, to government officials in the Republic of Ganara in connection with the issuance of mining permits, environmental approvals, and regulatory clearances for the Kousseri Copper-Cobalt Complex and the Dembélé Rare Earths Project. The suspected payments appear to have been channeled through two principal mechanisms: (1) payments routed from TGH through the Mauritius-incorporated intermediary entity Crestfield Advisory Partners Ltd., and (2) direct cash withdrawals and in-kind expenditures by TGM from its local accounts in Ganara, booked under vaguely defined general-ledger codes.
This investigation is being conducted in a context of heightened regulatory scrutiny. The U.S. Securities and Exchange Commission ("SEC") issued a formal order of investigation, File No. HO-14892, dated January 22, 2025, encompassing Torchlight's payments to third-party intermediaries in connection with its West African mining operations. The U.S. Department of Justice ("DOJ") issued a voluntary document preservation request, dated February 14, 2025, directed to Torchlight and its subsidiaries. Both the SEC formal order and the DOJ preservation request remain in effect. These concurrent government inquiries underscore the urgency of completing the internal investigation and reaching a determination regarding voluntary self-disclosure.
This memorandum is intended to inform the engagement team's prioritization of further investigative steps, including witness interviews scheduled to begin April 7, 2025, and the ongoing forensic accounting analysis by Pinnacle. This memorandum does not constitute a final assessment of FCPA liability; such assessment will be provided in subsequent memoranda following completion of witness interviews, full forensic tracing of payment flows, and analysis of applicable legal standards under the FCPA, the Canadian Corruption of Foreign Public Officials Act ("CFPOA"), and Ganaran law.
II. Background
A. The Parties and Relevant Entities
Torchlight Mining Corp. ("Torchlight" or "TMC"). Torchlight Mining Corp. is a Canadian corporation organized under the Canada Business Corporations Act ("CBCA"), with its principal offices located at 200 King Street West, Suite 3400, Toronto, Ontario M5H 3T4, Canada. Torchlight's common shares are dual-listed on the Toronto Stock Exchange (ticker: TMC) and the New York Stock Exchange (ticker: TRCH). For fiscal year 2024, Torchlight reported total consolidated revenue of approximately CAD $2.1 billion across its global mining operations, which span copper, cobalt, gold, and rare earth mineral extraction in jurisdictions including Canada, Chile, Peru, and West Africa. As of March 1, 2025, Torchlight's market capitalization was approximately CAD $5.8 billion, based on approximately 166.7 million common shares outstanding. Torchlight's NYSE listing subjects it to the jurisdiction of the SEC and, critically for purposes of this investigation, to the anti-bribery, books-and-records, and internal controls provisions of the FCPA.
Torchlight Ganara Holdings Ltd. ("TGH"). TGH is a wholly owned subsidiary of Torchlight, incorporated in the British Virgin Islands on March 15, 2017, with a registered address at Wickhams Cay II, Suite 408, Road Town, Tortola, BVI. TGH serves as the intermediate holding company for Torchlight's Ganaran mining operations, holding 100% of the equity of the Ganaran operating subsidiary, TGM. TGH maintained bank accounts at Meridian Commercial Bank (BVI), Account No. 7740-2281-0056. This account was the primary vehicle through which payments to Crestfield Advisory Partners Ltd. were made, as discussed in detail below. TGH's corporate records, board resolutions, and financial statements are the subject of an ongoing records request coordinated with Hargrove Whitfield LLP.
Torchlight Ganara Mining S.A. ("TGM"). TGM is a Ganaran operating subsidiary, 100% owned by TGH, organized under the laws of the Republic of Ganara, with offices at Boulevard du Commerce 14, Quartier Plateau, Libreville, Republic of Ganara. TGM holds the mining concessions for the Kousseri Copper-Cobalt Complex and the Dembélé Rare Earths Project, which are the two principal mining assets at the center of this investigation. TGM employs approximately 2,400 local workers and 85 expatriate staff. For fiscal year 2024, TGM and the broader West African operations generated revenue of approximately CAD $387 million, representing approximately 18.4% of Torchlight's total consolidated revenue. TGM maintained operating accounts at Regency International Bank (Ganara), Account No. GAN-4419-8837. This account was the source of the cash withdrawals and in-kind expenditure payments discussed below.
Crestfield Advisory Partners Ltd. ("Crestfield"). Crestfield Advisory Partners Ltd. is a Mauritius-incorporated consulting firm, with a registered address at 7th Floor, Nexus Tower, Ebène Cybercity, Port Louis, Mauritius. The sole beneficial owner and managing director of Crestfield is Jean-Philippe Renard, a French citizen, age 54, currently residing in Dakar, Senegal. Crestfield was engaged by TGH pursuant to a Government Relations Advisory Agreement dated April 12, 2019, described in further detail below. As discussed in Red Flag No. 3, Crestfield exhibits characteristics of a shell entity. No corporate website has been identified, no other employees or clients are known to exist, and the registered address corresponds to a registered-agent service rather than an operating business premises.
B. Key Personnel Under Investigation
Marcus Delacroix. Marcus Delacroix served as Vice President, Africa Operations, of Torchlight Mining Corp. from November 3, 2018 through November 15, 2024. Delacroix is a French-Canadian dual citizen, age 47. In this role, Delacroix had direct oversight over Torchlight's Ganaran operations and reported to the Senior Vice President of International Operations. Delacroix resigned from Torchlight on November 15, 2024, approximately three months after the whistleblower complaint was submitted. He is currently residing at 47 Rue de la République, 69002 Lyon, France. Delacroix has retained Helen Whitmore of Whitmore & Sharpe LLP, Washington, D.C., as his personal counsel. As discussed in Section III below, Delacroix is a central figure in multiple red flags, including his personal introduction of Jean-Philippe Renard, his apparent circumvention of Torchlight's procurement and competitive bidding requirements, and his use of personal email to communicate with Renard.
Raymond Osei-Bonsu. Raymond Osei-Bonsu served as Country Manager of TGM from February 7, 2019 through January 8, 2025. Osei-Bonsu is a Ganaran citizen, age 44. As Country Manager, Osei-Bonsu was the most senior Torchlight employee based in Ganara and had authority over the day-to-day operations of TGM, including invoice approvals, cash management, and interactions with local government authorities. Osei-Bonsu's employment was terminated by Torchlight on January 8, 2025, following the escalation of the whistleblower complaint and the initial findings of the Audit Committee's preliminary review. Osei-Bonsu is represented by Barrister Emeka Okoro of Okoro Law Chambers in Ganara. As discussed below, Osei-Bonsu is implicated in Red Flags Nos. 4 and 5, relating to his sole approval of invoices exceeding the dual-authorization threshold and his oversight of cash withdrawals under vague general-ledger codes.
Jean-Philippe Renard. Jean-Philippe Renard is the managing director and sole beneficial owner of Crestfield Advisory Partners Ltd. Renard is a French citizen, age 54, with a background as a former French diplomat who served in postings across West and Central Africa, during which time he developed extensive relationships with senior government officials in the Republic of Ganara and neighboring countries. Renard's diplomatic career, his personal relationships with Ganaran officials, and his role as the sole operator of the Crestfield intermediary entity place him at the center of the suspected improper payment scheme.
C. Alleged Recipient Government Officials
Based on the preliminary review, the following individuals have been identified as the probable or suspected recipients of improper payments:
Hon. Boubacar Diallo. Hon. Boubacar Diallo served as the Minister of Mines and Natural Resources of the Republic of Ganara from 2018 to 2023. As the minister responsible for the issuance of mining licenses and concession approvals, Diallo held decision-making authority over several of the permits at issue in this investigation. The estimated total improper payments received by or on behalf of Diallo is approximately $1,850,000, representing the largest share of the suspected payments.
Amadou Traoré. Amadou Traoré has served as the Director of Environmental Permitting at the Ganaran Ministry of Environment from 2017 to the present. Traoré holds authority over the issuance of environmental impact approvals and related clearances. The estimated total payments received by or directed to the benefit of Traoré is approximately $620,000.
Col. Ibrahim Konaté. Col. Ibrahim Konaté served as the Regional Prefect of Kousseri Province from 2019 to 2023. As Regional Prefect, Konaté exercised significant administrative authority over matters affecting mining operations in the Kousseri region, including land access, security, and local regulatory coordination. The estimated total payments received by or directed to the benefit of Konaté is approximately $340,000.
Other and Unidentified Recipients. Approximately $1,920,000 in suspected improper payments has not yet been attributed to specific government officials. Pinnacle Forensic Advisory's ongoing wire transfer tracing analysis is expected to narrow this figure and identify additional recipients as the investigation proceeds.
D. Genesis of the Investigation
The events giving rise to this investigation commenced on August 19, 2024, when an anonymous whistleblower complaint was received through Torchlight's third-party ethics hotline, operated by Sentinel Compliance Solutions Inc. The complaint was assigned Report ID: SCH-2024-08-4417. The complaint stated, in its entirety: "Payments being made to government ministers through a fake consulting company in Mauritius to get mining permits approved faster. The country manager and VP from Toronto both know about it." The complaint did not identify the complainant by name, nor did it provide specific documentation or additional detail beyond this summary allegation.
On August 26, 2024, Nadia Berenson, Torchlight's Vice President of Compliance and Ethics, escalated the complaint to Dr. Eleanor Fiske, Chair of Torchlight's Audit Committee of the Board of Directors. Ms. Berenson's escalation memorandum noted that the allegation, if substantiated, could implicate potential violations of the FCPA, the CFPOA, and Torchlight's own Global Anti-Corruption Policy.
On September 5, 2024, the Audit Committee — comprising Dr. Eleanor Fiske (Chair), Warren Ogilvy, and Marguerite Chen — authorized a preliminary internal review of the allegations. The Audit Committee directed that the review be conducted under the supervision of outside counsel to preserve the attorney-client privilege and work product protections.
Following an initial assessment conducted by Torchlight's in-house legal team between September and December 2024, which yielded sufficient preliminary indicators of potential misconduct to warrant a more comprehensive investigation, Calderwood & Harkness LLP was formally engaged on March 5, 2025 to conduct the internal investigation. Pinnacle Forensic Advisory LLC was retained on March 12, 2025 to perform forensic accounting and financial analysis in support of the investigation; the engagement partner at Pinnacle is Dr. Leonard Strauss. A litigation hold notice was issued on March 17, 2025 to 23 custodians identified as having potentially relevant documents and communications, including current and former employees of Torchlight, TGH, and TGM.
E. Mining Permits at Issue
The following five mining permits and regulatory approvals are at the center of the investigation. Each permit was obtained during the period of the Crestfield engagement and is correlated with suspected improper payments:
1. Kousseri Copper-Cobalt Complex Mining License (License No. KCC-2019-0047), issued by the Ministry of Mines and Natural Resources of the Republic of Ganara on September 14, 2019. This license is a 25-year mining concession covering 14,200 hectares in the Kousseri region.
2. Kousseri Environmental Impact Approval (Approval No. ENV-KCC-2020-113), issued by the Ministry of Environment of the Republic of Ganara on March 27, 2020. This approval authorized the commencement of mining activities at the Kousseri Complex, following the submission of an environmental impact assessment.
3. Dembélé Rare Earths Exploration License (License No. DRE-2021-0092), issued by the Ministry of Mines and Natural Resources on July 8, 2021. This license is a 5-year exploration license covering 8,750 hectares in the Dembélé region.
4. Dembélé Mining License Upgrade (License No. DRE-M-2023-0018), issued by the Ministry of Mines and Natural Resources on February 14, 2023. This upgrade converted the Dembélé exploration license into a full mining license authorizing extraction activities.
5. Kousseri Expansion Permit (Permit No. KCC-2019-0047-A1), issued by the Ministry of Mines and Natural Resources on April 3, 2024. This permit expanded the Kousseri concession by 3,200 hectares, bringing the total licensed area to 17,400 hectares.
F. Scope of Suspected Payments
Based on the preliminary review, the total suspected improper payments are estimated at approximately $4,730,000, comprising three categories:
First, total payments from TGH to Crestfield Advisory Partners Ltd. over the period from April 2019 through October 2024 amounted to $3,210,000, disbursed across 24 invoices. As discussed in Red Flag No. 1, these payments exceeded the contractual maximum of the Crestfield Advisory Agreement by $1,170,000. Pinnacle's preliminary analysis estimates that approximately 75% of the total Crestfield payments — approximately $2,410,000 — were ultimately diverted to Ganaran government officials or their associates.
Second, TGM made cash withdrawals totaling $890,000 from its local accounts at Regency International Bank (Account No. GAN-4419-8837) over the period from 2019 through 2024. These withdrawals were coded under GL 7450 ("Community Relations Expenses"), a vaguely defined general-ledger code with little or no supporting documentation.
Third, in-kind benefits, including vehicle purchases and travel expenses, totaling approximately $630,000 were booked across GL 7200 and GL 7310 over the same period, with minimal supporting detail or documentation.
Taken together, these three categories yield a total of approximately $4,730,000 in suspected improper payments.
III. Summary of Red Flags Identified
The following nine red flags have been identified through the preliminary review of documents, financial records, and available corporate governance materials. They are presented in order of perceived investigative significance, with Red Flag No. 1 representing the finding that the engagement team currently considers most probative of potential FCPA violations. Each red flag is discussed in detail below, with supporting facts and cross-references to source documents where available. The engagement team notes that these red flags are preliminary in nature and that additional red flags may be identified as the investigation proceeds. Nonetheless, the findings presented below are sufficient to warrant the investigative steps outlined in Section V and to inform the team's approach to witness interviews, forensic tracing, and the voluntary self-disclosure assessment.
Red Flag No. 1: Crestfield Invoice Payments Exceeded Contractual Maximum by $1,170,000 Without Contract Amendment
The Government Relations Advisory Agreement dated April 12, 2019, between TGH and Crestfield Advisory Partners Ltd. (the "Crestfield Agreement") established a defined fee structure comprising three components:
(a) Monthly Retainer. A fixed monthly retainer of $15,000 per month for the duration of the engagement. Over the 66-month period from April 2019 through October 2024 (inclusive), this component totals $990,000.
(b) Success Fees. A success fee of $100,000 per permit obtained, payable upon the successful issuance of each mining permit, environmental approval, or regulatory clearance for which Crestfield provided advisory services. Five permits were obtained during the engagement period, yielding a total success fee obligation of $500,000.
(c) Expense Reimbursement. Reimbursement of Crestfield's documented out-of-pocket expenses incurred in connection with the engagement, at cost, subject to a quarterly cap of $25,000. Over the approximately 22 quarters encompassed by the engagement period, this component yields a maximum expense reimbursement of approximately $550,000.
The total contractual maximum under the Crestfield Agreement, calculated as the sum of these three components, is $2,040,000 ($990,000 + $500,000 + $550,000).
However, the actual total amount invoiced by Crestfield and paid by TGH over the engagement period was $3,210,000. This represents an excess of $1,170,000 over the contractual maximum — an overpayment of approximately 57% above the ceiling established by the parties' written agreement.
Calderwood & Harkness has conducted a thorough review of the corporate records of Torchlight, TGH, and TGM and has found no evidence of any written amendment, addendum, side letter, or formal modification to the Crestfield Agreement authorizing payments in excess of the contractual ceiling. No board resolution of TGH or Torchlight authorizing the additional expenditures has been identified. No management memorandum or internal approval documentation explaining or justifying the excess payments has been located.
The excess of $1,170,000 is therefore currently unexplained. It cannot be reconciled with the terms of the written agreement, and its magnitude — exceeding the contractual maximum by more than half — represents a significant indicator that payments were being made outside the scope of legitimate advisory services. This red flag, standing alone, would warrant further investigation. When considered in conjunction with the other red flags described herein — particularly the shell-company characteristics of Crestfield (Red Flag No. 3), the timing correlation with permit issuances (Red Flag No. 6), and the absence of due diligence (Red Flag No. 8) — the excess payments take on heightened significance.
Red Flag No. 2: Absence of Competitive Selection Process for Crestfield
No evidence has been found that TGH, Torchlight, or any affiliate conducted a competitive bidding, request for proposal, or comparative evaluation process before retaining Crestfield Advisory Partners Ltd. as TGH's government relations advisor in Ganara.
The available records indicate that Jean-Philippe Renard was personally introduced to TGH by Marcus Delacroix, then serving as Vice President, Africa Operations. No memoranda, emails, meeting minutes, or other documentation have been located reflecting consideration of alternative government relations advisors, consultants, or intermediaries. No records of any kind suggest that Delacroix or any other Torchlight employee solicited proposals from other firms, obtained reference checks, or benchmarked Crestfield's proposed fee structure against prevailing market rates for comparable advisory services in West Africa.
This absence of process is particularly concerning in light of Torchlight's own internal governance requirements. Torchlight's Procurement Policy, which is applicable to all third-party engagements exceeding $100,000 in annualized value, requires the solicitation of at least three competitive proposals for consulting engagements prior to the selection and retention of a vendor. The Crestfield engagement, with an annualized value well in excess of $100,000, clearly fell within the scope of this policy. The competitive bidding requirement appears to have been entirely bypassed.
The personal introduction by Delacroix, combined with the total absence of any documentation reflecting a selection process, raises concerns about the basis for Crestfield's engagement and Delacroix's motivations in advocating for the retention of this particular entity. The circumstances are consistent with a scenario in which Crestfield was selected not on the basis of its qualifications or capabilities as a government relations advisor, but rather on the basis of Renard's relationships with Ganaran government officials and his willingness to serve as a conduit for payments to those officials.
Red Flag No. 3: Shell-Company Characteristics of Crestfield Advisory Partners Ltd.
Crestfield Advisory Partners Ltd. was incorporated in Mauritius in 2016. Its registered address at 7th Floor, Nexus Tower, Ebène Cybercity, Port Louis, Mauritius, corresponds to a registered-agent office operated by a corporate services provider, rather than a physical business premises with dedicated office space, staff, or operational infrastructure. Mauritius is a jurisdiction frequently selected for the incorporation of offshore entities due to its favorable tax treaty network and limited transparency requirements, and the use of a registered-agent address is consistent with an entity that lacks substantive local operations.
No corporate website for Crestfield has been identified at any time during the engagement period (2019–2024) or currently. An exhaustive search of publicly available business directories, professional networking platforms, and archived web content has failed to identify any online presence or marketing materials associated with Crestfield.
Jean-Philippe Renard is the sole beneficial owner of Crestfield and serves as its only identified officer and director. No evidence of any other employees, staff members, subcontractors, or affiliated professionals has been located. No evidence of any other clients of Crestfield — other than TGH — has been identified during any period. The entity appears to have no substantive operations, no independent revenue streams, and no organizational capacity beyond Renard himself.
Crestfield's sole apparent function, based on the records reviewed to date, was to receive payments from TGH's accounts at Meridian Commercial Bank (BVI) and to disburse funds onward, including — as the investigation is expected to establish — to Ganaran government officials or their intermediaries.
Renard's background as a former French diplomat with postings across West and Central Africa, during which he developed personal relationships with senior Ganaran government officials, combined with the shell-like characteristics of Crestfield, is consistent with the use of an intermediary entity specifically designed to obscure the true destination of payments from TGH. The structure of the arrangement — a BVI holding company paying a Mauritius-registered shell entity operated by a former diplomat — exhibits the hallmarks of a multi-jurisdictional layering scheme of the type commonly encountered in FCPA enforcement actions.
Red Flag No. 4: Single-Approval Violations — 14 of 24 Invoices Exceeded $50,000 Threshold Without Dual Authorization
Torchlight's Delegation of Authority Policy, which governs approval requirements for expenditures across the company and its subsidiaries, establishes $50,000 as the threshold above which invoices require dual approval — that is, the signatures or electronic approvals of two authorized signatories. This internal control is designed to provide a layer of oversight and accountability over significant expenditures, reducing the risk that any single individual can unilaterally authorize large payments without independent review.
Of the 24 invoices submitted by Crestfield and paid by TGH between 2019 and 2024, 14 invoices exceeded the $50,000 dual-approval threshold. The invoiced amounts on these 14 invoices ranged from $55,000 at the low end to $185,000 at the high end. Despite the clear applicability of the dual-approval requirement, all 14 of these invoices were approved solely by Raymond Osei-Bonsu, TGM's Country Manager, without a second authorized signatory. No evidence of escalation, secondary review, exception approval, or management override documentation has been found for any of these 14 invoices.
The remaining 10 invoices fell below the $50,000 threshold and were also approved solely by Osei-Bonsu. While this did not technically violate the Delegation of Authority Policy, the fact that all 24 Crestfield invoices — without exception — were approved by a single individual is itself notable and reinforces the pattern.
This pattern strongly suggests that Osei-Bonsu deliberately structured the approval process to maintain sole control over the Crestfield payments, bypassing the internal control mechanism specifically designed to provide independent oversight over significant expenditures. The systematic nature of the violations — 14 out of 14 applicable invoices — makes it difficult to attribute the pattern to inadvertence or administrative oversight. Rather, the evidence is consistent with an intentional circumvention of internal controls to avoid scrutiny of the Crestfield payments.
Red Flag No. 5: Vague General Ledger Coding of TGM Cash Withdrawals ($890,000 Under GL 7450)
Between 2019 and 2024, TGM made cash withdrawals totaling $890,000 from its local operating accounts at Regency International Bank (Account No. GAN-4419-8837) in the Republic of Ganara. All of these withdrawals were booked under General Ledger code 7450, designated as "Community Relations Expenses."
GL 7450 is a vaguely defined general-ledger code within Torchlight's chart of accounts. It lacks established subcategories, specific allocation methodologies, or defined supporting documentation requirements. The code appears to have been used as a catch-all category for a wide range of local expenditures, with no systematic process for verifying that the funds were actually applied to legitimate community relations purposes.
Calderwood & Harkness has attempted to locate supporting documentation for the disbursements booked under GL 7450. For the majority of these disbursements, limited or no supporting documentation has been found. Specifically, the review has yielded no receipts, no beneficiary lists, no descriptions of community development projects funded, no community acknowledgment records, and no photographs or other evidence of completed community works. The absence of such documentation is inconsistent with legitimate community development expenditures, which would ordinarily be accompanied by grant agreements, project reports, payment receipts, and community acknowledgments.
In addition to the cash withdrawals, in-kind benefits totaling approximately $630,000 were booked during the same period across GL 7200 ("Transportation and Vehicle Expenses") and GL 7310 ("Travel and Entertainment"), with similarly minimal supporting detail. These in-kind benefits included the purchase of vehicles and the payment of travel expenses, but the records do not clearly identify the ultimate recipients or business purposes of many of these expenditures.
The vague coding and pervasive absence of documentation are inconsistent with legitimate business expenditures and consistent with efforts to obscure the true nature and recipients of the payments. The combined total of $1,520,000 ($890,000 in cash withdrawals plus $630,000 in in-kind benefits) constitutes a significant portion of the $4,730,000 in total suspected improper payments. The engagement team considers this category of expenditure to be a high priority for Pinnacle's forensic tracing analysis, particularly with respect to identifying the ultimate recipients of the cash withdrawals.
Red Flag No. 6: Timing Correlation Between Crestfield Invoices and Permit Issuance
Preliminary forensic analysis conducted by Pinnacle Forensic Advisory LLC has identified a significant temporal pattern in the timing of Crestfield invoices relative to the issuance of the five mining permits at the center of this investigation. Specifically, Crestfield invoices spiked materially in the 30- to 60-day period immediately preceding each of the five permit issuance dates. The correlation is present across all five permit events, as follows:
(a) Kousseri Copper-Cobalt Complex Mining License (KCC-2019-0047), issued September 14, 2019: A spike in Crestfield invoicing was observed in July and August 2019, with invoices submitted during this two-month window materially exceeding the monthly retainer amount.
(b) Kousseri Environmental Impact Approval (ENV-KCC-2020-113), issued March 27, 2020: A spike in Crestfield invoicing was observed in January and February 2020.
(c) Dembélé Rare Earths Exploration License (DRE-2021-0092), issued July 8, 2021: A spike in Crestfield invoicing was observed in May and June 2021.
(d) Dembélé Mining License Upgrade (DRE-M-2023-0018), issued February 14, 2023: A spike in Crestfield invoicing was observed in December 2022 and January 2023.
(e) Kousseri Expansion Permit (KCC-2019-0047-A1), issued April 3, 2024: A spike in Crestfield invoicing was observed in February and March 2024.
This five-for-five correlation is a highly probative pattern. It is consistent with payments being made on an as-needed, event-driven basis to facilitate specific government approvals, rather than pursuant to a routine monthly advisory retainer for ongoing government relations services. If the payments were genuinely for advisory services, one would expect a relatively stable invoicing pattern reflecting the monthly retainer, with success fees invoiced upon permit issuance (i.e., after the event, not before). The observed pattern — in which invoicing spikes precede each permit issuance — is instead consistent with payments made in anticipation of, and as consideration for, favorable official action.
Additionally, Pinnacle's preliminary analysis indicates that the Kousseri Copper-Cobalt Complex Mining License was obtained approximately four months faster than the statutory average processing time in the Republic of Ganara for mining licenses of comparable scope and complexity. While processing timelines can vary for legitimate reasons, the accelerated timeline, considered alongside the pre-issuance invoicing spike, further suggests that improper payments may have been made to expedite the approval.
A detailed timeline correlation analysis is currently being prepared by Pinnacle as part of the Payment Flow Analysis Workbook, which will present the invoice-to-permit correlation data in graphical and tabular formats and will be included in the final investigation report.
Red Flag No. 7: Delacroix's Use of Personal Email for 37 Communications with Renard
Calderwood & Harkness's preliminary document review has identified 37 communications between Marcus Delacroix and Jean-Philippe Renard that were conducted via Delacroix's personal email account — that is, a non-Torchlight, non-corporate email address — rather than through Torchlight's corporate email system. These 37 communications span the period from approximately mid-2019 to late 2024 and were identified through metadata analysis of Torchlight's corporate email servers, which captured certain forwarded or referenced messages, as well as through Crestfield records obtained in the preliminary review.
The use of personal email for company business communications relating to a third-party agent operating in a high-corruption-risk jurisdiction is inconsistent with Torchlight's Information Security and Business Communications Policy, which requires that all business-related communications be conducted through company-approved systems and platforms. More significantly, the use of personal email in this context raises several serious concerns:
(a) Deliberate Circumvention of Corporate Monitoring. The use of personal email for communications with Crestfield suggests that Delacroix may have been deliberately circumventing Torchlight's corporate record-keeping and electronic monitoring systems to avoid detection of the substance of his communications with Renard.
(b) Inaccessibility of Content. The content of these 37 communications is largely outside the scope of Torchlight's standard electronic discovery collection. Absent voluntary cooperation from Delacroix or the exercise of compulsory process, Torchlight and Calderwood & Harkness do not have access to the full text of these communications. The substance of the communications between Delacroix and Renard — including any instructions regarding payments, references to government officials, or discussions of the purpose or disposition of funds — remains unknown.
(c) Potential Existence of Additional Unidentified Communications. The identification of 37 personal email communications raises the further concern that additional communications between Delacroix and Renard may exist on other personal platforms, including text messaging applications, encrypted messaging services (such as Meridian Services Inc., Signal, or WhatsApp), or other unmonitored channels. The full scope of the off-platform communications remains unknown.
The engagement team has initiated efforts to obtain access to Delacroix's personal email communications. Delacroix's counsel, Helen Whitmore of Whitmore & Sharpe LLP, Washington, D.C., was contacted via email dated March 25, 2025, with a request for Delacroix's voluntary participation in an interview and for voluntary production of relevant personal email communications. A response was received from Ms. Whitmore on April 2, 2025, declining the interview request on grounds of potential criminal exposure and invoking Delacroix's Fifth Amendment privilege against self-incrimination. Access to Delacroix's personal email content remains an outstanding investigative gap.
Red Flag No. 8: Absence of Due Diligence File on Crestfield in Torchlight's Compliance Records
Calderwood & Harkness has conducted a comprehensive review of Torchlight's compliance and ethics records, including all files maintained by the Compliance and Ethics department under the direction of VP Compliance Nadia Berenson, as well as files maintained by TGH and TGM. This review has found no due diligence file, background check, risk assessment, questionnaire response, or third-party vetting documentation for Crestfield Advisory Partners Ltd. or for Jean-Philippe Renard personally.
This absence is particularly significant in light of Torchlight's own internal policy requirements. Torchlight's Global Anti-Corruption Policy, which was originally adopted in 2020 and updated in 2022, requires the completion of comprehensive third-party due diligence for all agents, consultants, and intermediaries retained to interact with government officials on behalf of the company or any of its subsidiaries. The due diligence requirements set forth in the policy include, at a minimum:
(a) Verification of the beneficial ownership of the third-party entity;
(b) Background and reputation checks on the entity and its principals, including review of adverse media, sanctions lists, and law enforcement databases;
(c) Assessment of corruption risk factors applicable to the engagement, including the jurisdiction, the nature of the services, and the third party's government connections; and
(d) Documentation of the business rationale for the engagement, including the specific services to be provided and the basis for the selected fee structure.
None of these steps appear to have been performed for Crestfield or Renard at any point during the engagement period. The Crestfield engagement predates the formal adoption of the Global Anti-Corruption Policy in 2020, as the Government Relations Advisory Agreement was executed in April 2019. However, the absence of any subsequent retrospective due diligence — even after the policy was adopted in 2020 and updated with enhanced requirements in 2022 — is itself a significant compliance gap. At no point during the three years between the policy's adoption and the end of the Crestfield engagement did Torchlight's compliance function take steps to bring the pre-existing Crestfield relationship into compliance with the new policy requirements.
This failure deprived Torchlight of the opportunity to identify the very red flags that this investigation has now uncovered — including Crestfield's shell-company characteristics, Renard's government connections, and the absence of any substantive business operations — at a time when corrective action could have been taken to prevent or mitigate the suspected improper payments.
Red Flag No. 9: Anti-Corruption Representations in the Crestfield Advisory Agreement Lacked FCPA-Specific Reference and Audit Rights
Clause 9.2 of the Government Relations Advisory Agreement between TGH and Crestfield contains a general warranty by Crestfield to comply with "all applicable anti-corruption laws" in the performance of services under the agreement. While this language facially addresses anti-corruption compliance, it is deficient in several critical respects.
First, the agreement does not specifically reference the U.S. Foreign Corrupt Practices Act (FCPA), despite the fact that Torchlight's listing on the New York Stock Exchange (ticker: TRCH) subjects the company and its subsidiaries, agents, and intermediaries to the anti-bribery, books-and-records, and internal controls provisions of the FCPA. The omission of an express FCPA reference is inconsistent with industry best practice for agreements with government-facing intermediaries and diminishes the contractual force of the anti-corruption representation.
Second, the agreement does not reference the Canadian Corruption of Foreign Public Officials Act (CFPOA), despite Torchlight's incorporation under Canadian law and its primary listing on the Toronto Stock Exchange (ticker: TMC). The CFPOA imposes criminal liability for the bribery of foreign public officials by Canadian persons and entities, and its omission from the agreement represents an additional gap.
Third, and most critically, the agreement contains no audit rights clause. That is, the agreement does not include any contractual right for TGH, Torchlight, or their agents to audit, inspect, or review Crestfield's books, records, accounts, or use of funds disbursed under the agreement. The absence of audit rights effectively precluded Torchlight from monitoring how Crestfield deployed the funds it received — a particularly significant deficiency given that the total payments to Crestfield ultimately reached $3,210,000.
The absence of audit rights, combined with the generic and non-specific nature of the anti-corruption warranty, deprived Torchlight of key contractual tools that would have enabled detection and monitoring of potential diversions of funds to government officials. Both the DOJ's and SEC's published guidance on the Evaluation of Corporate Compliance Programs specifically identify robust contractual anti-corruption clauses — including FCPA representations, termination rights for compliance violations, and audit and inspection rights — in agent agreements as hallmarks of an effective compliance program. The Crestfield Agreement falls materially short of these expectations.
IV. Cross-Cutting Observations
The nine red flags identified above, while each independently significant, also give rise to several cross-cutting observations that inform the overall assessment of the investigation and the likely direction of further analysis.
A. Convergence of Red Flags Around Key Subjects
The red flags identified in this memorandum cluster prominently around two key subjects: Marcus Delacroix and Raymond Osei-Bonsu.
Delacroix is directly implicated in at least three red flags: he personally introduced Jean-Philippe Renard and facilitated Crestfield's engagement without a competitive selection process (Red Flag No. 2); he used his personal email for 37 communications with Renard, circumventing Torchlight's corporate monitoring systems (Red Flag No. 7); and, as the senior executive with oversight over Africa Operations, he bears responsibility for the absence of due diligence on Crestfield (Red Flag No. 8) and the deficiencies in the contractual anti-corruption provisions (Red Flag No. 9). Delacroix's central role in originating the Crestfield relationship and maintaining an off-platform communication channel with Renard places him at the core of the suspected scheme.
Osei-Bonsu is directly implicated in at least two red flags: he served as the sole approver of all 24 Crestfield invoices, including 14 that exceeded the dual-approval threshold in violation of the Delegation of Authority Policy (Red Flag No. 4); and he oversaw the TGM cash withdrawals booked under GL 7450 and directed the general-ledger coding of those withdrawals (Red Flag No. 5). Osei-Bonsu's role as the in-country gatekeeper for payments — both the Crestfield invoices and the direct TGM disbursements — suggests that he exercised operational control over the payment flows at the local level.
Jean-Philippe Renard, as the sole owner and operator of the shell-like Crestfield entity, served as the critical intermediary between company funds and the alleged government recipients. Renard's former diplomatic career and his relationships with Ganaran officials position him as the individual most likely to have had direct contact with the officials to whom payments were allegedly directed.
The convergence of multiple red flags around these three individuals strongly supports the prioritization of witness interviews and the continued pursuit of Delacroix's personal communications and Osei-Bonsu's cooperation, as discussed in Section V below.
B. Internal Controls Failures
Multiple red flags implicate systemic failures of Torchlight's internal controls environment. The Delegation of Authority Policy was violated in connection with 14 of 24 Crestfield invoices (Red Flag No. 4). The Procurement Policy was bypassed entirely in the selection of Crestfield (Red Flag No. 2). The Global Anti-Corruption Policy was not applied to the Crestfield engagement either prospectively or retrospectively (Red Flag No. 8). The Information Security and Business Communications Policy was circumvented through Delacroix's use of personal email (Red Flag No. 7).
These internal controls failures are significant not only as evidence of the environment in which the suspected improper payments occurred, but also as potential independent violations of the FCPA. Section 13(b)(2)(B) of the Securities Exchange Act of 1934, as amended by the FCPA (15 U.S.C. § 78m(b)(2)(B)), requires issuers to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that transactions are executed in accordance with management's general or specific authorization and that access to assets is permitted only in accordance with management's authorization. The pattern of internal controls failures identified in this investigation may constitute violations of Section 13(b)(2)(B), regardless of the outcome of the anti-bribery analysis under Section 78dd-1.
A separate memorandum analyzing Torchlight's FCPA books-and-records and internal controls exposure is in preparation and will be circulated to the engagement team upon completion.
C. Books and Records Implications
The red flags also implicate potential violations of the FCPA's books-and-records provisions. Section 13(b)(2)(A) of the Securities Exchange Act (15 U.S.C. § 78m(b)(2)(A)) requires issuers to make and keep books, records, and accounts which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the issuer.
The vague general-ledger coding of $890,000 in cash withdrawals under GL 7450 and $630,000 in in-kind benefits under GL 7200 and GL 7310 (Red Flag No. 5), the payment of $1,170,000 in excess of the contractual maximum without any documented amendment or authorization (Red Flag No. 1), and the mischaracterization of payments as "Community Relations Expenses" when they may have been directed to government officials collectively suggest that Torchlight's books and records were inaccurate and failed to reflect the true nature, purpose, and recipients of the expenditures. If substantiated, these inaccuracies would constitute violations of Section 13(b)(2)(A).
D. Significance of the Timing Correlation
The timing correlation between Crestfield invoices and permit issuances (Red Flag No. 6) warrants special emphasis because of its probative significance under the FCPA's anti-bribery provisions. Section 78dd-1 prohibits the making of payments to foreign officials for the purpose of influencing official acts or securing an improper advantage in connection with business. A critical element of any anti-bribery case is establishing the nexus between the payments and specific official actions.
The five-for-five correlation between pre-permit invoicing spikes and permit issuance dates provides strong circumstantial evidence that the payments to Crestfield were linked to specific official acts — namely, the issuance of mining permits and environmental approvals — rather than to routine advisory services. This temporal pattern, combined with the accelerated processing time for the Kousseri Mining License, significantly strengthens the inference that the payments were made with corrupt intent. The timing correlation will be a central focus of Pinnacle's detailed Payment Flow Analysis Workbook and is expected to feature prominently in any presentation to the SEC or DOJ.
V. Recommended Next Steps
Based on the red flags identified in this memorandum, the engagement team recommends the following next steps to advance the investigation:
1. Priority Witness Interviews. The following witnesses have been identified as the highest-priority interview subjects to address the red flags described above. Interviews are scheduled as follows:
(a) Nadia Berenson, VP Compliance and Ethics, Torchlight Mining Corp. — Scheduled for April 7, 2025. Ms. Berenson will be questioned regarding compliance program gaps, the absence of due diligence on Crestfield, the whistleblower escalation process, and the application (or non-application) of the Global Anti-Corruption Policy to the Crestfield engagement.
(b) Diane Fournier, Controller, Torchlight Mining Corp. — Scheduled for April 8, 2025. Ms. Fournier will be questioned regarding financial oversight of TGH and TGM expenditures, the GL coding of cash withdrawals and in-kind benefits, and the reconciliation of Crestfield invoices to the contractual maximum.
(c) Patricia Sung, General Counsel, Torchlight Mining Corp. — Scheduled for April 9, 2025. Ms. Sung will be questioned regarding the governance response to the whistleblower complaint, the terms and negotiation of the Crestfield Agreement, and the absence of FCPA/CFPOA-specific contractual provisions.
(d) Thomas Achebe, Finance Manager, TGM — Scheduled for April 28, 2025, via video conference from Ganara. Mr. Achebe will be questioned regarding invoice processing, cash withdrawal procedures, GL coding practices, and the availability of supporting documentation for disbursements under GL 7450, GL 7200, and GL 7310.
(e) Kwame Mensah, Procurement Officer, TGM — Scheduled for April 29, 2025, via video conference from Ganara. Mr. Mensah will be questioned regarding the procurement of in-kind benefits, including vehicle purchases and travel arrangements, and the identification of ultimate recipients.
2. Marcus Delacroix. The engagement team will continue efforts to obtain a voluntary interview with Delacroix notwithstanding the initial declination received from his counsel, Helen Whitmore of Whitmore & Sharpe LLP. Alternative approaches, including a proffer discussion or limited-scope interview, will be explored. In parallel, the team will evaluate alternative means of obtaining Delacroix's personal email communications, including through cooperation requests to Renard's representatives, compulsory process (if available in applicable jurisdictions), and third-party production from email service providers.
3. Raymond Osei-Bonsu. A request for voluntary cooperation from Osei-Bonsu, including a request for an interview, was transmitted via email to his counsel, Barrister Emeka Okoro of Okoro Law Chambers in Ganara, on March 26, 2025. A response is pending as of the date of this memorandum. The engagement team will follow up and evaluate the feasibility of an interview given Osei-Bonsu's location in Ganara and the applicable legal considerations.
4. Forensic Accounting Analysis. Pinnacle Forensic Advisory LLC will be directed to complete the following workstreams as priorities:
(a) Detailed invoice-to-permit timing correlation analysis, to be presented in graphical and tabular format as part of the Payment Flow Analysis Workbook.
(b) Comprehensive tracing of wire transfers from TGH's account at Meridian Commercial Bank (BVI), Account No. 7740-2281-0056, through Crestfield's accounts to ultimate beneficiary accounts, including identification of the final recipients and the jurisdictions in which payments were received.
(c) Analysis of TGM cash withdrawals and in-kind expenditures, including efforts to identify ultimate recipients through bank records, vendor invoices, and available third-party records.
5. Coordination with Foreign Counsel. The engagement team will coordinate with the following firms regarding jurisdictional and regulatory matters:
(a) Bartlett Keene & Ostrander LLP (Richard Bartlett III, Toronto) — regarding CFPOA parallel exposure and Canadian securities disclosure obligations arising under the Ontario Securities Act and TSX listing requirements.
(b) Hargrove Whitfield LLP (Catherine Whitfield, Road Town, BVI) — regarding TGH board resolutions authorizing the Crestfield engagement, BVI corporate records, and any BVI-specific regulatory considerations.
(c) Ndong & Keïta Cabinet Juridique (Maître Salif Ndong, Libreville, Republic of Ganara) — regarding Ganaran anti-corruption statutes, the risk of mining license revocation, and the implications of the investigation for TGM's operating status in Ganara.
6. Interim Audit Committee Report. The engagement team will prepare an interim investigation report for presentation to the Audit Committee, targeted for May 15, 2025. The interim report will summarize the investigative findings to date, including the red flags described herein, the results of initial witness interviews, and Pinnacle's preliminary forensic analysis.
7. Voluntary Self-Disclosure Assessment. The red flag analysis presented in this memorandum will be incorporated into the ongoing assessment of whether Torchlight should make a voluntary self-disclosure to the DOJ and/or the SEC. The engagement team has set a target decision deadline of June 30, 2025 for the VSD determination, which will be informed by the totality of the investigative findings available at that time.
8. D&O Insurance Considerations. The engagement team will consider the implications of these findings for the directors' and officers' insurance claim under the policy issued by Dalton & Mercer Inc., Policy No. DM-0092-FCPA-2024. A notice of claim was filed on March 8, 2025. The scope and potential coverage limitations of the policy should be assessed in light of the red flags identified, including any exclusions that may apply to conduct involving intentional violations of law.
9. Compliance Program Assessment. The engagement team will begin a comprehensive assessment of Torchlight's anti-corruption compliance program against the framework set forth in the DOJ Criminal Division's and SEC Enforcement Division's published guidance on the Evaluation of Corporate Compliance Programs. This assessment will serve as the basis for remediation recommendations and will be an important component of any voluntary self-disclosure or cooperation presentation to the government.
VI. Conclusion
Nine distinct red flags have been identified during the preliminary phase of this investigation. Each red flag independently raises significant concerns regarding potential FCPA violations, and collectively they form a pattern that is highly indicative of an improper payment scheme involving approximately $4,730,000 directed to Ganaran government officials through two principal channels: (1) the Crestfield Advisory Partners Ltd. intermediary entity, which received $3,210,000 from TGH, of which an estimated $2,410,000 was diverted to government officials; and (2) direct TGM disbursements totaling $1,520,000 in cash withdrawals and in-kind benefits, the ultimate recipients of which have not yet been fully identified. These suspected payments occurred over the period from 2019 through 2024 and are connected to the issuance of five mining permits and environmental approvals for the Kousseri Copper-Cobalt Complex and the Dembélé Rare Earths Project.
The red flags implicate potential violations of the FCPA anti-bribery provisions (15 U.S.C. § 78dd-1), the books-and-records provision (Section 13(b)(2)(A) of the Securities Exchange Act of 1934), and the internal controls provision (Section 13(b)(2)(B)), as well as potential exposure under the Canadian Corruption of Foreign Public Officials Act. The pattern of internal controls failures, combined with the circumstantial evidence of corrupt payments to government officials in connection with specific official acts, presents a matter of serious concern that warrants the accelerated investigative timeline outlined above.
The investigation is proceeding in accordance with the timeline set forth in Section V, with key milestones including: priority witness interviews (April 7–9 and April 28–29, 2025); continued efforts to secure cooperation from Marcus Delacroix and Raymond Osei-Bonsu; completion of Pinnacle Forensic Advisory's Payment Flow Analysis Workbook; the interim Audit Committee report (targeted for May 15, 2025); and the voluntary self-disclosure decision (targeted for June 30, 2025).
This memorandum will be supplemented as additional facts are developed through witness interviews, forensic accounting analysis, and coordination with foreign counsel. The engagement team remains available to discuss the findings presented herein at the responsible partner's convenience.
Respectfully submitted,
Steven Hollander Lead Associate White Collar & Investigations Calderwood & Harkness LLP
Appendix A: Summary Table of Red Flags
Appendix B: Crestfield Invoice Summary by Year
Note: The last invoice was paid on October 31, 2024, in the amount of $115,000. No further invoices from Crestfield Advisory Partners Ltd. have been received or paid subsequent to that date.
END OF MEMORANDUM
| Red Flag No. | Description | Key Facts / Figures | Key Subjects Implicated | Source Documents / Data |
| 1 | Excess payments over contractual maximum without contract amendment | $3,210,000 paid vs. $2,040,000 contractual maximum; excess of $1,170,000 (57% overpayment); no written amendment, addendum, or board authorization identified | Delacroix, Osei-Bonsu | Crestfield Advisory Agreement (Apr. 12, 2019); TGH invoice register; Meridian Commercial Bank wire transfer records |
| 2 | No competitive selection process for Crestfield | No RFP, competitive bids, or vendor comparison documentation; Renard personally introduced by Delacroix; Procurement Policy (3+ proposals required for engagements >$100K) bypassed | Delacroix | Compliance and procurement records; Torchlight Procurement Policy |
| 3 | Shell-company characteristics of Crestfield | Registered-agent address in Mauritius; no website; sole owner/employee is Renard; no other clients or staff identified; no substantive business operations | Renard | Crestfield corporate records; Mauritius registered-agent records; public records searches |
| 4 | 14 of 24 invoices exceeded $50,000 dual-approval threshold, approved solely by Osei-Bonsu | 14 invoices ranging from $55,000 to $185,000 approved by single signatory; no escalation, secondary review, or exception documentation | Osei-Bonsu | Invoice approval records; Torchlight Delegation of Authority Policy |
| 5 | $890,000 in cash withdrawals under vague GL 7450; $630,000 in-kind under GL 7200/7310 | Combined $1,520,000 with minimal or no supporting documentation; GL 7450 lacks subcategories or documentation requirements | Osei-Bonsu, Achebe | TGM general ledger; Regency International Bank (Acct. GAN-4419-8837) records |
| 6 | Timing correlation: invoice spikes 30–60 days before each of 5 permit issuances | Five-for-five correlation across all permits (2019–2024); Kousseri Mining License obtained ~4 months faster than statutory average | Delacroix, Osei-Bonsu, Renard | Pinnacle forensic timeline analysis; permit issuance records; Crestfield invoice register |
| 7 | 37 personal email communications between Delacroix and Renard | Communications conducted via non-corporate email (mid-2019 to late 2024); content largely inaccessible; violates Information Security Policy; potential additional unidentified platforms | Delacroix | E-discovery collection; email metadata; corporate email server logs |
| 8 | No due diligence file on Crestfield or Renard | No background check, risk assessment, beneficial ownership verification, or third-party vetting; Global Anti-Corruption Policy (adopted 2020 |