1044-00007 · Client 1044 · Correspondence

hold-status-letter.docx DOCUMENT Litigation

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PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP 600 Lexington Avenue, 38th Floor New York, New York 10022

September 30, 2022

VIA EMAIL (d.karavelis@thalassasl.gr)

Ms. Dimitra Karavelis-Stavrou General Counsel & Chief Compliance Officer Thalassa Shipping & Logistics SA 14 Poseidonos Avenue Piraeus 185 31 Greece

Re: Hold Status — FCPA Internal Review, Matter No. 1044-00007

Dear Ms. Karavelis-Stavrou:

This letter confirms the mutual understanding we reached during our telephone call of September 27, 2022, regarding the status of the internal review being conducted by Calderwood & Harkness LLP ("C&H" or the "Firm") on behalf of Thalassa Shipping & Logistics SA ("TSL" or the "Company") concerning port-facilitation payments made by Thalassa West Africa SARL ("TWA"), the Company's wholly owned Ivorian subsidiary, to Goldenshore Maritime Consultants Ltd. ("Goldenshore"), a Ghana-registered intermediary. Effective as of the date of this letter, the FCPA internal review is placed on hold status (the "Dormancy Period"). The investigation will be reactivated upon the satisfaction of the following two conditions precedent: (a) the completion of the outstanding document production described in the Interim Status Memorandum dated September 12, 2022, which was transmitted to you under separate cover; and (b) the conclusion of internal budget discussions within TSL's executive leadership team and the issuance of client authorization to proceed. We note that this dormancy follows the request of Mr. Nikolaos Karavelis, Chairman and Chief Executive Officer of TSL, communicated to us on September 19, 2022, for a pause on external legal spend pending an internal budget review. While we respect the Company's prerogative to manage its legal expenditures, we write to place on the record several matters of continuing importance that require the Company's attention notwithstanding the hold status of this engagement. We address each in turn below.

1. Litigation Hold Remains in Full Force and Effect.

The Document Preservation and Litigation Hold directive issued by C&H and distributed by your office on July 5, 2022 (the "Hold") remains in full force and effect during the Dormancy Period. The suspension of active investigative work does not alter, diminish, or in any way relieve the Company or any of its subsidiaries, affiliates, directors, officers, employees, or agents of their preservation obligations under the Hold. All custodians and information-technology personnel who received the Hold notice must continue to comply with its terms in their entirety, including but not limited to the obligation to preserve, in their original form and format, all documents, communications, and electronically stored information ("ESI") that are potentially responsive to the subject matter of this review.

We draw particular attention to the following key custodians, each of whom bears specific and heightened preservation responsibilities given their roles in the matters under review:

(a) Dimitra Karavelis-Stavrou, General Counsel & Chief Compliance Officer, TSL (Piraeus);

(b) Alexandros Fitsakis, Chief Financial Officer, TSL (Piraeus);

(d) Emeka Obiora, Country Manager, Thalassa Nigeria Ltd. ("TNL") (Lagos, Nigeria);

(e) Yves Kouadio, Finance Manager, TWA (Abidjan, Côte d'Ivoire); and

(f) Adama Coulibaly, Operations Coordinator, TWA (Abidjan, Côte d'Ivoire).

Each of these individuals has been identified as a custodian of potentially responsive documents and must continue to segregate and preserve all materials within their custody, possession, or control that relate in any way to Goldenshore, the services provided by Goldenshore, the payments made to Goldenshore, port-facilitation or expediting services in any West African port, and all communications with government officials in Côte d'Ivoire, Nigeria, Ghana, Togo, or any other jurisdiction in which TWA or TNL conducts business.

We remind the Company that all auto-deletion policies, retention schedules, and automated purge routines applicable to email, instant messaging, and any other electronic communication platforms — including, without limitation, Hollowell Systems, Northgate Data Systems, Meridian Services Inc., and any enterprise resource planning ("ERP") system — must remain suspended for all identified custodians. This suspension must remain in place for the duration of the Hold, which extends indefinitely until C&H provides written notice that the Hold has been released. The Company's IT department should confirm, in writing, that these suspension protocols remain operative. We recommend that your office issue a reminder notice to all custodians and IT personnel no less frequently than once every ninety (90) days to ensure ongoing awareness of and compliance with the Hold.

In addition, we reiterate that all physical files, including original invoices, receipts, contract files, correspondence, and handwritten notes located at TWA's offices in Abidjan and TNL's offices in Lagos, must remain secured and inventoried in the manner described in the Hold directive. No physical files should be relocated, reorganized, shredded, discarded, or otherwise disturbed without prior written authorization from C&H.

We are compelled to emphasize the following: any destruction, alteration, concealment, or deletion of responsive documents or ESI — whether intentional or through negligence — could constitute spoliation of evidence and may result in adverse inferences, evidentiary sanctions, or other penalties in any subsequent governmental proceeding, including any investigation or enforcement action by the U.S. Department of Justice ("DOJ") or the U.S. Securities and Exchange Commission ("SEC"). The consequences of spoliation in the FCPA context are particularly severe. Federal prosecutors and regulators have consistently treated evidence destruction as an aggravating factor in assessing penalties, and such conduct may independently give rise to charges of obstruction of justice under 18 U.S.C. § 1519 or related statutes. Accordingly, the Company must treat its preservation obligations with the utmost seriousness throughout the Dormancy Period.

2. Expediting-Fee Payments to Goldenshore.

We take this opportunity to strongly reiterate our recommendation, first set forth in the Interim Status Memorandum of September 12, 2022, that TWA immediately suspend all "expediting fee" payments to Goldenshore Maritime Consultants Ltd. during the pendency of this review, including during the Dormancy Period. This recommendation is based upon our preliminary assessment that these payments present significant FCPA risk, and we believe it is imprudent for the Company to continue making such payments while the nature, purpose, and ultimate destination of these funds remain under review.

As detailed in the Interim Status Memorandum, based on the partial document production received to date, expediting fees paid by TWA to Goldenshore from March 2018 through May 2022 total approximately €876,000, broken down as follows:

These figures are preliminary and may increase as additional invoices and bank records are produced. We note in particular that the expediting fees increased substantially in 2021 and that the first five months of 2022 placed the Company on a pace to exceed 2021 levels on an annualized basis.

Commission payments to Goldenshore under the Goldenshore Port Agency and Facilitation Services Agreement — which are compensatory in nature and, based on our preliminary review, appear to be within the range of market rates for port-agency services in West Africa — may continue at the existing rate of 3.5% of invoiced charter revenue for West African port calls. However, we reiterate our strong recommendation that each such commission payment be subject to enhanced documentation and approval requirements, including: (i) written certification by the TWA Managing Director that the underlying port-call services were actually performed; (ii) sign-off by the TSL Chief Financial Officer or his designee; and (iii) contemporaneous documentation of the specific services rendered by Goldenshore in connection with each port call. These enhanced procedures should be implemented immediately if they have not been already.

We caution the Company in the strongest possible terms: to the extent that TWA continues to make expediting-fee payments to Goldenshore during the Dormancy Period or otherwise, each additional payment increases the Company's potential exposure under the FCPA and may be viewed unfavorably by the DOJ and the SEC in any future enforcement proceeding. Regulators routinely consider whether a company continued questionable payments after becoming aware of potential compliance issues. Continued payments during a period in which the Company has been placed on notice of a potential FCPA violation — by virtue of this very internal review — could be characterized as willful or deliberate conduct, which would substantially increase the severity of any enforcement outcome.

For context, we note that aggregate payments to Goldenshore since the inception of the Port Agency and Facilitation Services Agreement in March 2018 already total approximately €3,016,000, comprising approximately €2,140,000 in commissions and the €876,000 in expediting fees referenced above. The magnitude of these payments — and, in particular, the absence of adequate documentation supporting the expediting-fee category — will be a focal point of any governmental inquiry.

3. SEC Whistleblower Tip.

We remind the Company that the SEC whistleblower tip bearing TCR No. 2022-WB-08341, filed on or about May 15, 2022, remains pending with the SEC's Office of the Whistleblower. The existence of this tip, which to our understanding alleges FCPA violations in connection with TWA's operations in West Africa, introduces a dimension of urgency and unpredictability that the Company should not disregard during the Dormancy Period.

While the SEC has not, to C&H's knowledge as of the date of this letter, initiated a formal investigation or issued a formal order of investigation in connection with the matters described in the whistleblower tip, the existence of the tip means that the SEC may open a formal order of investigation at any time and without prior notice to the Company. The SEC's Division of Enforcement routinely evaluates whistleblower tips received through its online tip, complaint, and referral system, and tips involving FCPA allegations — particularly those involving intermediaries in high-risk jurisdictions — receive heightened scrutiny. There is no prescribed timeline for the SEC's evaluation of such tips, and the Company should operate on the assumption that the matter may be escalated at any point.

We note that the whistleblower's counsel has been identified as Marcus Hartwell of Hartwell & Crane PLLC, located at 1225 Connecticut Avenue NW, Suite 800, Washington, DC 20036. Mr. Hartwell transmitted a letter to you, in your capacity as TSL General Counsel, on June 3, 2022, which was received by your office on June 7, 2022. As discussed during our earlier calls, the substance of Mr. Hartwell's letter suggested that his client possesses detailed knowledge of TWA's payment practices with respect to Goldenshore, which may indicate that the whistleblower is a current or former employee of TWA, TNL, Goldenshore, or TSL itself. The identity of the whistleblower remains unknown to us, and any attempt by the Company to identify or retaliate against the whistleblower would be strictly prohibited under the anti-retaliation provisions of Section 21F of the Securities Exchange Act of 1934, as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The dormancy of this internal review does not in any way reduce the risk of a governmental inquiry. To the contrary, the SEC and DOJ operate on their own timelines and are not constrained by the pace of the Company's internal processes. It is entirely possible — and, in our professional judgment, not unlikely — that the SEC could initiate an inquiry during the Dormancy Period while the Company's own internal review is suspended and incomplete.

For the avoidance of doubt, we confirm that, as of the date of this letter, no DOJ or SEC formal inquiry, subpoena, document request, voluntary information request, enforcement action, or other governmental process has been initiated against TSL, TWA, TNL, or any of their respective officers, directors, or employees in connection with the matters under review. However, as noted above, this state of affairs may change at any time and without advance notice.

4. Voluntary Self-Disclosure.

We have previously discussed with you and with Mr. Fitsakis the potential benefits and risks of making a voluntary self-disclosure ("VSD") to the DOJ and/or SEC. We reiterate those considerations here in light of the Dormancy Period.

The DOJ's revised Corporate Enforcement Policy (originally codified at U.S. Attorneys' Manual § 9-47.120, updated in June 2020, and further revised in January 2023) provides significant sentencing credit — including, in appropriate cases, a presumption of a declination of prosecution — for companies that: (i) voluntarily self-disclose FCPA violations to the DOJ before the government becomes aware of the misconduct from another source; (ii) cooperate fully with the government's investigation; and (iii) remediate the underlying compliance deficiencies in a timely manner. Each of these three pillars — disclosure, cooperation, and remediation — is independently assessed by the DOJ, and the availability and magnitude of credit depends on the Company's performance across all three dimensions.

We caution the Company that delay in completing the internal review — and, if warranted by the facts uncovered, making a voluntary self-disclosure to the DOJ and/or SEC — may significantly reduce the credit available to TSL under the Corporate Enforcement Policy. The policy places a premium on timeliness, and the DOJ has made clear in public statements and in its resolution of recent FCPA matters that companies that delay disclosure after becoming aware of potential violations receive substantially less credit than those that act promptly. The SEC's Enforcement Division has adopted a similar posture under its own cooperation framework. The Dormancy Period, while perhaps necessary for internal budgetary reasons, will be visible to prosecutors and regulators if a disclosure is ultimately made, and the Company should be prepared to explain the delay in a manner that is credible and supported by the record.

We further note that, as a practical matter, a completed or substantially advanced internal investigation should be in hand before any voluntary self-disclosure is made. The purpose of the VSD is not merely to notify the government of potential wrongdoing, but to present a credible, well-documented factual narrative that demonstrates the Company's good faith and its commitment to uncovering the full scope of any violations. Approaching the DOJ or SEC without a developed factual record could be counterproductive and could invite a more adversarial investigative posture from the government. This underscores the importance of resuming the internal review promptly so that the Company is in a position to make informed decisions about the path forward.

For planning purposes, we reference the following preliminary exposure estimates, which are subject to revision as additional facts emerge:

(a) DOJ Anti-Bribery Fine Range: Based on the approximately €876,000 in expediting fees (equivalent to approximately $920,000 USD at the June 2022 EUR/USD exchange rate of €1 = $1.05), the DOJ fine under the Alternative Fines Act (18 U.S.C. § 3571(d)) could range from approximately $920,000 to $1,840,000, representing up to two times the gross gain or gross loss resulting from the offense. These figures are based solely on the expediting-fee payments and do not account for potential liability associated with the commission payments, which could increase the fine range substantially if commission payments are found to have been, in whole or in part, conduits for improper payments.

(b) SEC Disgorgement Range: The SEC's Division of Enforcement may seek disgorgement of profits attributable to the underlying misconduct. Based on our preliminary analysis of TWA's revenue attributable to West African port calls where Goldenshore facilitated customs clearance and related activities, the potential disgorgement range is estimated at approximately $1,260,000 to $3,675,000, inclusive of prejudgment interest. These estimates are preliminary and will be refined as additional financial data becomes available.

We emphasize that these are estimates only, and actual penalties could be lower or higher depending on a range of factors, including the scope of any violations ultimately identified, the Company's cooperation posture, and the specific enforcement priorities of the DOJ and SEC at the time any action is brought.

5. Credit Facility Considerations.

We draw the Company's attention to certain provisions of the Credit Agreement dated January 15, 2020 (as amended, the "Credit Agreement"), by and among Thalassa Shipping & Logistics SA, as Borrower, Meridian Atlantic Bank NA, as Administrative Agent, and the lenders party thereto, providing for a $120 million senior secured revolving credit facility with a maturity date of January 15, 2025.

Section 5.18 of the Credit Agreement contains anti-corruption representations and warranties pursuant to which TSL represents that neither it nor any of its subsidiaries, nor any director, officer, employee, or, to the Company's knowledge, agent of the Company or any of its subsidiaries, has taken any action, directly or indirectly, that would result in a violation of the FCPA, the U.K. Bribery Act 2010, or any other applicable anti-corruption law. These representations are not limited in time and are made on a continuing basis. Critically, pursuant to Section 4.02(c) of the Credit Agreement, each borrowing request submitted by TSL under the revolving credit facility constitutes a deemed reaffirmation by the Company of all representations and warranties set forth in Article V, including the anti-corruption representation in Section 5.18, as of the date of such borrowing request.

If the underlying facts developed in this internal review establish that TWA's expediting-fee payments to Goldenshore constitute or facilitated a violation of the FCPA, the continued submission of borrowing requests without disclosure to Meridian Atlantic Bank NA may create additional legal exposure for the Company. Each borrowing request that triggers a reaffirmation of the Section 5.18 representation, at a time when the Company has reason to believe that the representation may not be accurate, could be characterized as a false statement to a financial institution — a matter of independent legal concern. Moreover, even setting aside the question of independent liability, the Company's failure to disclose material compliance issues to its lenders raises significant questions of commercial good faith and fiduciary responsibility.

As of June 30, 2022, outstanding borrowings under the facility totaled approximately $74 million drawn on the $120 million commitment. We note that a breach of the Section 5.18 representation, if deemed material by the Administrative Agent or the Required Lenders, could trigger an Event of Default under Section 8.01(d) of the Credit Agreement (breach of representation or warranty). An Event of Default under the Credit Agreement would entitle the Administrative Agent, upon the direction of the Required Lenders, to accelerate all outstanding obligations, terminate further commitments, and exercise all remedies available under the Credit Agreement and applicable law, potentially resulting in the acceleration and immediate repayment of the outstanding $74 million.

We recommend that the Company engage in a careful analysis, in consultation with its banking counsel, of its disclosure obligations under the Credit Agreement as additional facts emerge from this review. The relationship manager for the TSL account at Meridian Atlantic Bank NA is Gerald Fontaine, Managing Director, Shipping & Offshore Finance, whose offices are located at 383 Madison Avenue, New York, NY 10179. Any communication with Mr. Fontaine or other representatives of Meridian Atlantic regarding these matters should be carefully coordinated with C&H.

Finally, we note that TSL's commercial relationships with U.S.-based counterparties — including Ironwood Commodity Trading LLC (Houston, Texas) and Cascadia Grain Exports Inc. (Portland, Oregon), which together generate approximately $34 million in annual charter revenue for the Company — further underscore the U.S. jurisdictional nexus for purposes of FCPA enforcement. These relationships involve regular use of U.S. dollar wire transfers routed through U.S. correspondent banks, U.S.-based contractual counterparties, and commercial activities touching U.S. commerce, each of which independently provides a basis for the assertion of U.S. jurisdiction under the FCPA's alternative jurisdictional provisions.

6. Reactivation.

Calderwood & Harkness is prepared to reactivate this matter promptly upon: (i) the Company's completion and delivery to C&H of the outstanding document production described in the Interim Status Memorandum of September 12, 2022; and (ii) the Company's written authorization to proceed with the next phases of the internal review. We understand that both conditions are within the Company's control and that the timing of reactivation is therefore a decision for the Company to make, informed by the considerations set forth in this letter.

For the avoidance of doubt, the following categories of documents remain outstanding as of the date of this letter:

(a) TWA bank statements from Banque Equatoriale de Commerce SA for all account periods (from inception of the TWA banking relationship through the most recent available statement);

(b) TNL bank statements for all accounts (from inception of the TNL banking relationship through the most recent available statement);

(d) The complete set of Goldenshore invoices, which are estimated to total between 150 and 200 individual invoices — of which only 23 have been received as part of the partial production of approximately 340 pages delivered on September 2, 2022;

(e) Goldenshore corporate registry filings from the Ghana Registrar-General's Department, including the certificate of incorporation, annual returns, particulars of directors and shareholders, and any amendments thereto;

(f) Wire-transfer confirmations for all payments to Goldenshore, including both commission and expediting-fee payments;

(g) Vessel-call logs and customs-clearance records for all West African port calls by TSL-controlled vessels during the period March 2018 to present; and

(h) Email and messaging communications (including Meridian Services Inc., SMS, and any other platform) involving Cédric Anouma and Emeka Obiora relating to Goldenshore, expediting fees, port-facilitation payments, customs clearance, and interactions with government officials or agents.

We stress that the completeness and quality of the document production will materially affect C&H's ability to conduct a thorough review and to develop the kind of credible factual narrative that would support a voluntary self-disclosure, should one be warranted.

Upon reactivation, our immediate priorities would be as follows:

(i) Completion of document review. The full document production, once received, will be reviewed and analyzed by the C&H investigative team, with documents processed through our review platform and coded for relevance, privilege, and subject matter. We anticipate that the expanded production will generate a substantially larger review universe, and we will provide revised budget estimates upon receipt of the documents.

(ii) Activation of Northpoint Forensic Advisors LLC. As you are aware, C&H has retained Northpoint Forensic Advisors LLC ("Northpoint"), under the direction of Sandra Bellingham, CPA, CFE (1700 K Street NW, Suite 600, Washington, DC 20006), to serve as forensic accounting consultants for this review. Northpoint has been retained at the direction of counsel and its work product will be protected by the attorney-client privilege and the work-product doctrine. However, Northpoint has not yet been activated — that is, substantive forensic work has not commenced. Estimated forensic accounting costs for the Northpoint engagement range from $175,000 to $300,000, depending on the scope and complexity of the financial analysis required. Northpoint has advised that it requires an estimated two-week mobilization period from the date of activation to staff the engagement and commence substantive work.

(iii) Key-custodian interviews. Following completion of the document review and initial forensic analysis, we intend to conduct interviews with the following key custodians: Cédric Anouma, Emeka Obiora, Yves Kouadio, and Adama Coulibaly. Each interview will be conducted subject to appropriate Upjohn warnings, making clear to each individual that C&H represents TSL and not the individual personally, that the purpose of the interview is to gather facts for the benefit of the Company, that the attorney-client privilege belongs to the Company and may be waived by the Company at its discretion, and that the individual may wish to retain separate personal counsel. A draft Upjohn warning script was prepared by C&H on August 22, 2022, and circulated to your office for review. We request your comments on the draft script at your earliest convenience so that it is finalized and ready for use upon reactivation.

(iv) Formal retention of Ivorian local counsel. We intend to formally retain Dossou & Mensah Avocats (Abidjan, Côte d'Ivoire) to advise on local law issues arising from the investigation, including but not limited to data-privacy compliance under Loi n° 2013-450 relative à la protection des données à caractère personnel and employment-law considerations under the Code du Travail (Loi n° 2015-532 du 20 juillet 2015 portant Code du Travail). C&H has held preliminary consultations with Dossou & Mensah on these issues, and the firm has confirmed its capacity and willingness to serve in this role. Formal engagement will require execution of an engagement letter and, potentially, conflict clearance, both of which can be completed promptly upon reactivation.

In addition to the above, we will continue to coordinate with existing local counsel in other relevant jurisdictions:

• Greece: Papadakis & Lekkas LLP (contact: Stavros Lekkas, Partner, 28 Vasilissis Sofias Avenue, Athens 106 74, Greece), who are advising on Greek law matters, including corporate governance, regulatory reporting obligations, and any implications under Greek anti-corruption law.

• Nigeria: Okafor Bassey & Partners (contact: Ngozi Okafor, Senior Partner, 4th Floor, Marina Towers, 22 Marina Street, Lagos Island, Lagos, Nigeria), who are advising on Nigerian regulatory and anti-corruption law, including the Corrupt Practices and Other Related Offences Act, 2000, and any obligations under the Nigerian Financial intelligence Unit framework.

In closing, we strongly encourage the Company to resume this internal review at the earliest practicable date. The risks associated with delay — including the potential erosion of VSD credit, the continuing SEC whistleblower exposure, the ongoing accumulation of potentially problematic payments, and the credit-facility implications described above — are substantial and grow more acute with the passage of time.

We also draw the Company's attention to a time-sensitive contractual matter. The Goldenshore Port Agency and Facilitation Services Agreement, which became effective on March 1, 2018, auto-renewed on March 1, 2022, for an additional twelve-month period through February 28, 2023. Under the terms of that Agreement, 90 days' written notice is required to prevent a further automatic renewal. This means that notice of non-renewal must be given to Goldenshore no later than December 1, 2022, to avoid a further auto-renewal through February 28, 2024. We recommend that the Company consider whether it is prudent to allow this agreement to auto-renew under the circumstances, and we are available to assist in the preparation of a notice of non-renewal if the Company so directs.

For budgeting purposes, we provide the following summary of estimated total professional fees and costs for the completion of this internal review:

Fees billed to date by C&H through September 30, 2022, total approximately $110,000. For reference, C&H's current hourly rates for this engagement are as follows: Partner, $1,450 per hour; Senior Associate, $975 per hour; Associate, $725 per hour. A 10% volume discount applies to aggregate fees exceeding $500,000 per calendar year, as set forth in the engagement letter dated June 28, 2022.

Please do not hesitate to contact me at any time to discuss the matters addressed in this letter or any other aspect of this engagement. I am available by email at vchambers@calderwoodharkness.com or by telephone at +1 (212) 555-0147.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Victoria Chambers Partner, White Collar & Investigations

Email: vchambers@calderwoodharkness.com

Phone: +1 (212) 555-0147

cc: Howard Quinn, Calderwood & Harkness LLP

Jasmine Thornton, Calderwood & Harkness LLP

Period	Expediting Fees Paid (€)
March – December 2018	127,000
January – December 2019	189,000
January – December 2020	164,000
January – December 2021	238,000
January – May 2022	158,000
Total	876,000
Category	Estimated Range
Calderwood & Harkness LLP (legal fees)	$400,000 – $600,000
Northpoint Forensic Advisors LLC (forensic accounting)	$175,000 – $300,000
Local counsel (Greece, Côte d'Ivoire, Nigeria)	$50,000 – $100,000
Total professional fees	$625,000 – $1,000,000
Remediation costs (compliance program, training, controls)	$350,000 – $750,000

PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 600 Lexington Avenue, 38th Floor New York, New York 10022
September 30, 2022
VIA EMAIL (d.karavelis@thalassasl.gr)
Ms. Dimitra Karavelis-Stavrou General Counsel & Chief Compliance Officer Thalassa Shipping & Logistics SA 14 Poseidonos Avenue Piraeus 185 31 Greece
Re: Hold Status — FCPA Internal Review, Matter No. 1044-00007
Dear Ms. Karavelis-Stavrou:
This letter confirms the mutual understanding we reached during our telephone call of September 27, 2022, regarding the status of the internal review being conducted by Calderwood & Harkness LLP ("C&H" or the "Firm") on behalf of Thalassa Shipping & Logistics SA ("TSL" or the "Company") concerning port-facilitation payments made by Thalassa West Africa SARL ("TWA"), the Company's wholly owned Ivorian subsidiary, to Goldenshore Maritime Consultants Ltd. ("Goldenshore"), a Ghana-registered intermediary. Effective as of the date of this letter, the FCPA internal review is placed on hold status (the "Dormancy Period"). The investigation will be reactivated upon the satisfaction of the following two conditions precedent: (a) the completion of the outstanding document production described in the Interim Status Memorandum dated September 12, 2022, which was transmitted to you under separate cover; and (b) the conclusion of internal budget discussions within TSL's executive leadership team and the issuance of client authorization to proceed. We note that this dormancy follows the request of Mr. Nikolaos Karavelis, Chairman and Chief Executive Officer of TSL, communicated to us on September 19, 2022, for a pause on external legal spend pending an internal budget review. While we respect the Company's prerogative to manage its legal expenditures, we write to place on the record several matters of continuing importance that require the Company's attention notwithstanding the hold status of this engagement. We address each in turn below.
1. Litigation Hold Remains in Full Force and Effect.
The Document Preservation and Litigation Hold directive issued by C&H and distributed by your office on July 5, 2022 (the "Hold") remains in full force and effect during the Dormancy Period. The suspension of active investigative work does not alter, diminish, or in any way relieve the Company or any of its subsidiaries, affiliates, directors, officers, employees, or agents of their preservation obligations under the Hold. All custodians and information-technology personnel who received the Hold notice must continue to comply with its terms in their entirety, including but not limited to the obligation to preserve, in their original form and format, all documents, communications, and electronically stored information ("ESI") that are potentially responsive to the subject matter of this review.
We draw particular attention to the following key custodians, each of whom bears specific and heightened preservation responsibilities given their roles in the matters under review:
(a) Dimitra Karavelis-Stavrou, General Counsel & Chief Compliance Officer, TSL (Piraeus);
(b) Alexandros Fitsakis, Chief Financial Officer, TSL (Piraeus);
(c) Cédric Anouma, Managing Director, TWA (Abidjan, Côte d'Ivoire);
(d) Emeka Obiora, Country Manager, Thalassa Nigeria Ltd. ("TNL") (Lagos, Nigeria);
(e) Yves Kouadio, Finance Manager, TWA (Abidjan, Côte d'Ivoire); and
(f) Adama Coulibaly, Operations Coordinator, TWA (Abidjan, Côte d'Ivoire).
Each of these individuals has been identified as a custodian of potentially responsive documents and must continue to segregate and preserve all materials within their custody, possession, or control that relate in any way to Goldenshore, the services provided by Goldenshore, the payments made to Goldenshore, port-facilitation or expediting services in any West African port, and all communications with government officials in Côte d'Ivoire, Nigeria, Ghana, Togo, or any other jurisdiction in which TWA or TNL conducts business.
We remind the Company that all auto-deletion policies, retention schedules, and automated purge routines applicable to email, instant messaging, and any other electronic communication platforms — including, without limitation, Hollowell Systems, Northgate Data Systems, Meridian Services Inc., and any enterprise resource planning ("ERP") system — must remain suspended for all identified custodians. This suspension must remain in place for the duration of the Hold, which extends indefinitely until C&H provides written notice that the Hold has been released. The Company's IT department should confirm, in writing, that these suspension protocols remain operative. We recommend that your office issue a reminder notice to all custodians and IT personnel no less frequently than once every ninety (90) days to ensure ongoing awareness of and compliance with the Hold.
In addition, we reiterate that all physical files, including original invoices, receipts, contract files, correspondence, and handwritten notes located at TWA's offices in Abidjan and TNL's offices in Lagos, must remain secured and inventoried in the manner described in the Hold directive. No physical files should be relocated, reorganized, shredded, discarded, or otherwise disturbed without prior written authorization from C&H.
We are compelled to emphasize the following: any destruction, alteration, concealment, or deletion of responsive documents or ESI — whether intentional or through negligence — could constitute spoliation of evidence and may result in adverse inferences, evidentiary sanctions, or other penalties in any subsequent governmental proceeding, including any investigation or enforcement action by the U.S. Department of Justice ("DOJ") or the U.S. Securities and Exchange Commission ("SEC"). The consequences of spoliation in the FCPA context are particularly severe. Federal prosecutors and regulators have consistently treated evidence destruction as an aggravating factor in assessing penalties, and such conduct may independently give rise to charges of obstruction of justice under 18 U.S.C. § 1519 or related statutes. Accordingly, the Company must treat its preservation obligations with the utmost seriousness throughout the Dormancy Period.
2. Expediting-Fee Payments to Goldenshore.
We take this opportunity to strongly reiterate our recommendation, first set forth in the Interim Status Memorandum of September 12, 2022, that TWA immediately suspend all "expediting fee" payments to Goldenshore Maritime Consultants Ltd. during the pendency of this review, including during the Dormancy Period. This recommendation is based upon our preliminary assessment that these payments present significant FCPA risk, and we believe it is imprudent for the Company to continue making such payments while the nature, purpose, and ultimate destination of these funds remain under review.
As detailed in the Interim Status Memorandum, based on the partial document production received to date, expediting fees paid by TWA to Goldenshore from March 2018 through May 2022 total approximately €876,000, broken down as follows:
These figures are preliminary and may increase as additional invoices and bank records are produced. We note in particular that the expediting fees increased substantially in 2021 and that the first five months of 2022 placed the Company on a pace to exceed 2021 levels on an annualized basis.
Commission payments to Goldenshore under the Goldenshore Port Agency and Facilitation Services Agreement — which are compensatory in nature and, based on our preliminary review, appear to be within the range of market rates for port-agency services in West Africa — may continue at the existing rate of 3.5% of invoiced charter revenue for West African port calls. However, we reiterate our strong recommendation that each such commission payment be subject to enhanced documentation and approval requirements, including: (i) written certification by the TWA Managing Director that the underlying port-call services were actually performed; (ii) sign-off by the TSL Chief Financial Officer or his designee; and (iii) contemporaneous documentation of the specific services rendered by Goldenshore in connection with each port call. These enhanced procedures should be implemented immediately if they have not been already.
We caution the Company in the strongest possible terms: to the extent that TWA continues to make expediting-fee payments to Goldenshore during the Dormancy Period or otherwise, each additional payment increases the Company's potential exposure under the FCPA and may be viewed unfavorably by the DOJ and the SEC in any future enforcement proceeding. Regulators routinely consider whether a company continued questionable payments after becoming aware of potential compliance issues. Continued payments during a period in which the Company has been placed on notice of a potential FCPA violation — by virtue of this very internal review — could be characterized as willful or deliberate conduct, which would substantially increase the severity of any enforcement outcome.
For context, we note that aggregate payments to Goldenshore since the inception of the Port Agency and Facilitation Services Agreement in March 2018 already total approximately €3,016,000, comprising approximately €2,140,000 in commissions and the €876,000 in expediting fees referenced above. The magnitude of these payments — and, in particular, the absence of adequate documentation supporting the expediting-fee category — will be a focal point of any governmental inquiry.
3. SEC Whistleblower Tip.
We remind the Company that the SEC whistleblower tip bearing TCR No. 2022-WB-08341, filed on or about May 15, 2022, remains pending with the SEC's Office of the Whistleblower. The existence of this tip, which to our understanding alleges FCPA violations in connection with TWA's operations in West Africa, introduces a dimension of urgency and unpredictability that the Company should not disregard during the Dormancy Period.
While the SEC has not, to C&H's knowledge as of the date of this letter, initiated a formal investigation or issued a formal order of investigation in connection with the matters described in the whistleblower tip, the existence of the tip means that the SEC may open a formal order of investigation at any time and without prior notice to the Company. The SEC's Division of Enforcement routinely evaluates whistleblower tips received through its online tip, complaint, and referral system, and tips involving FCPA allegations — particularly those involving intermediaries in high-risk jurisdictions — receive heightened scrutiny. There is no prescribed timeline for the SEC's evaluation of such tips, and the Company should operate on the assumption that the matter may be escalated at any point.
We note that the whistleblower's counsel has been identified as Marcus Hartwell of Hartwell & Crane PLLC, located at 1225 Connecticut Avenue NW, Suite 800, Washington, DC 20036. Mr. Hartwell transmitted a letter to you, in your capacity as TSL General Counsel, on June 3, 2022, which was received by your office on June 7, 2022. As discussed during our earlier calls, the substance of Mr. Hartwell's letter suggested that his client possesses detailed knowledge of TWA's payment practices with respect to Goldenshore, which may indicate that the whistleblower is a current or former employee of TWA, TNL, Goldenshore, or TSL itself. The identity of the whistleblower remains unknown to us, and any attempt by the Company to identify or retaliate against the whistleblower would be strictly prohibited under the anti-retaliation provisions of Section 21F of the Securities Exchange Act of 1934, as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The dormancy of this internal review does not in any way reduce the risk of a governmental inquiry. To the contrary, the SEC and DOJ operate on their own timelines and are not constrained by the pace of the Company's internal processes. It is entirely possible — and, in our professional judgment, not unlikely — that the SEC could initiate an inquiry during the Dormancy Period while the Company's own internal review is suspended and incomplete.
For the avoidance of doubt, we confirm that, as of the date of this letter, no DOJ or SEC formal inquiry, subpoena, document request, voluntary information request, enforcement action, or other governmental process has been initiated against TSL, TWA, TNL, or any of their respective officers, directors, or employees in connection with the matters under review. However, as noted above, this state of affairs may change at any time and without advance notice.
4. Voluntary Self-Disclosure.
We have previously discussed with you and with Mr. Fitsakis the potential benefits and risks of making a voluntary self-disclosure ("VSD") to the DOJ and/or SEC. We reiterate those considerations here in light of the Dormancy Period.
The DOJ's revised Corporate Enforcement Policy (originally codified at U.S. Attorneys' Manual § 9-47.120, updated in June 2020, and further revised in January 2023) provides significant sentencing credit — including, in appropriate cases, a presumption of a declination of prosecution — for companies that: (i) voluntarily self-disclose FCPA violations to the DOJ before the government becomes aware of the misconduct from another source; (ii) cooperate fully with the government's investigation; and (iii) remediate the underlying compliance deficiencies in a timely manner. Each of these three pillars — disclosure, cooperation, and remediation — is independently assessed by the DOJ, and the availability and magnitude of credit depends on the Company's performance across all three dimensions.
We caution the Company that delay in completing the internal review — and, if warranted by the facts uncovered, making a voluntary self-disclosure to the DOJ and/or SEC — may significantly reduce the credit available to TSL under the Corporate Enforcement Policy. The policy places a premium on timeliness, and the DOJ has made clear in public statements and in its resolution of recent FCPA matters that companies that delay disclosure after becoming aware of potential violations receive substantially less credit than those that act promptly. The SEC's Enforcement Division has adopted a similar posture under its own cooperation framework. The Dormancy Period, while perhaps necessary for internal budgetary reasons, will be visible to prosecutors and regulators if a disclosure is ultimately made, and the Company should be prepared to explain the delay in a manner that is credible and supported by the record.
We further note that, as a practical matter, a completed or substantially advanced internal investigation should be in hand before any voluntary self-disclosure is made. The purpose of the VSD is not merely to notify the government of potential wrongdoing, but to present a credible, well-documented factual narrative that demonstrates the Company's good faith and its commitment to uncovering the full scope of any violations. Approaching the DOJ or SEC without a developed factual record could be counterproductive and could invite a more adversarial investigative posture from the government. This underscores the importance of resuming the internal review promptly so that the Company is in a position to make informed decisions about the path forward.
For planning purposes, we reference the following preliminary exposure estimates, which are subject to revision as additional facts emerge:
(a) DOJ Anti-Bribery Fine Range: Based on the approximately €876,000 in expediting fees (equivalent to approximately $920,000 USD at the June 2022 EUR/USD exchange rate of €1 = $1.05), the DOJ fine under the Alternative Fines Act (18 U.S.C. § 3571(d)) could range from approximately $920,000 to $1,840,000, representing up to two times the gross gain or gross loss resulting from the offense. These figures are based solely on the expediting-fee payments and do not account for potential liability associated with the commission payments, which could increase the fine range substantially if commission payments are found to have been, in whole or in part, conduits for improper payments.
(b) SEC Disgorgement Range: The SEC's Division of Enforcement may seek disgorgement of profits attributable to the underlying misconduct. Based on our preliminary analysis of TWA's revenue attributable to West African port calls where Goldenshore facilitated customs clearance and related activities, the potential disgorgement range is estimated at approximately $1,260,000 to $3,675,000, inclusive of prejudgment interest. These estimates are preliminary and will be refined as additional financial data becomes available.
We emphasize that these are estimates only, and actual penalties could be lower or higher depending on a range of factors, including the scope of any violations ultimately identified, the Company's cooperation posture, and the specific enforcement priorities of the DOJ and SEC at the time any action is brought.
5. Credit Facility Considerations.
We draw the Company's attention to certain provisions of the Credit Agreement dated January 15, 2020 (as amended, the "Credit Agreement"), by and among Thalassa Shipping & Logistics SA, as Borrower, Meridian Atlantic Bank NA, as Administrative Agent, and the lenders party thereto, providing for a $120 million senior secured revolving credit facility with a maturity date of January 15, 2025.
Section 5.18 of the Credit Agreement contains anti-corruption representations and warranties pursuant to which TSL represents that neither it nor any of its subsidiaries, nor any director, officer, employee, or, to the Company's knowledge, agent of the Company or any of its subsidiaries, has taken any action, directly or indirectly, that would result in a violation of the FCPA, the U.K. Bribery Act 2010, or any other applicable anti-corruption law. These representations are not limited in time and are made on a continuing basis. Critically, pursuant to Section 4.02(c) of the Credit Agreement, each borrowing request submitted by TSL under the revolving credit facility constitutes a deemed reaffirmation by the Company of all representations and warranties set forth in Article V, including the anti-corruption representation in Section 5.18, as of the date of such borrowing request.
If the underlying facts developed in this internal review establish that TWA's expediting-fee payments to Goldenshore constitute or facilitated a violation of the FCPA, the continued submission of borrowing requests without disclosure to Meridian Atlantic Bank NA may create additional legal exposure for the Company. Each borrowing request that triggers a reaffirmation of the Section 5.18 representation, at a time when the Company has reason to believe that the representation may not be accurate, could be characterized as a false statement to a financial institution — a matter of independent legal concern. Moreover, even setting aside the question of independent liability, the Company's failure to disclose material compliance issues to its lenders raises significant questions of commercial good faith and fiduciary responsibility.
As of June 30, 2022, outstanding borrowings under the facility totaled approximately $74 million drawn on the $120 million commitment. We note that a breach of the Section 5.18 representation, if deemed material by the Administrative Agent or the Required Lenders, could trigger an Event of Default under Section 8.01(d) of the Credit Agreement (breach of representation or warranty). An Event of Default under the Credit Agreement would entitle the Administrative Agent, upon the direction of the Required Lenders, to accelerate all outstanding obligations, terminate further commitments, and exercise all remedies available under the Credit Agreement and applicable law, potentially resulting in the acceleration and immediate repayment of the outstanding $74 million.
We recommend that the Company engage in a careful analysis, in consultation with its banking counsel, of its disclosure obligations under the Credit Agreement as additional facts emerge from this review. The relationship manager for the TSL account at Meridian Atlantic Bank NA is Gerald Fontaine, Managing Director, Shipping & Offshore Finance, whose offices are located at 383 Madison Avenue, New York, NY 10179. Any communication with Mr. Fontaine or other representatives of Meridian Atlantic regarding these matters should be carefully coordinated with C&H.
Finally, we note that TSL's commercial relationships with U.S.-based counterparties — including Ironwood Commodity Trading LLC (Houston, Texas) and Cascadia Grain Exports Inc. (Portland, Oregon), which together generate approximately $34 million in annual charter revenue for the Company — further underscore the U.S. jurisdictional nexus for purposes of FCPA enforcement. These relationships involve regular use of U.S. dollar wire transfers routed through U.S. correspondent banks, U.S.-based contractual counterparties, and commercial activities touching U.S. commerce, each of which independently provides a basis for the assertion of U.S. jurisdiction under the FCPA's alternative jurisdictional provisions.
6. Reactivation.
Calderwood & Harkness is prepared to reactivate this matter promptly upon: (i) the Company's completion and delivery to C&H of the outstanding document production described in the Interim Status Memorandum of September 12, 2022; and (ii) the Company's written authorization to proceed with the next phases of the internal review. We understand that both conditions are within the Company's control and that the timing of reactivation is therefore a decision for the Company to make, informed by the considerations set forth in this letter.
For the avoidance of doubt, the following categories of documents remain outstanding as of the date of this letter:
(a) TWA bank statements from Banque Equatoriale de Commerce SA for all account periods (from inception of the TWA banking relationship through the most recent available statement);
(b) TNL bank statements for all accounts (from inception of the TNL banking relationship through the most recent available statement);
(c) TWA and TNL petty-cash ledgers and cash-disbursement vouchers for all periods;
(d) The complete set of Goldenshore invoices, which are estimated to total between 150 and 200 individual invoices — of which only 23 have been received as part of the partial production of approximately 340 pages delivered on September 2, 2022;
(e) Goldenshore corporate registry filings from the Ghana Registrar-General's Department, including the certificate of incorporation, annual returns, particulars of directors and shareholders, and any amendments thereto;
(f) Wire-transfer confirmations for all payments to Goldenshore, including both commission and expediting-fee payments;
(g) Vessel-call logs and customs-clearance records for all West African port calls by TSL-controlled vessels during the period March 2018 to present; and
(h) Email and messaging communications (including Meridian Services Inc., SMS, and any other platform) involving Cédric Anouma and Emeka Obiora relating to Goldenshore, expediting fees, port-facilitation payments, customs clearance, and interactions with government officials or agents.
We stress that the completeness and quality of the document production will materially affect C&H's ability to conduct a thorough review and to develop the kind of credible factual narrative that would support a voluntary self-disclosure, should one be warranted.
Upon reactivation, our immediate priorities would be as follows:
(i) Completion of document review. The full document production, once received, will be reviewed and analyzed by the C&H investigative team, with documents processed through our review platform and coded for relevance, privilege, and subject matter. We anticipate that the expanded production will generate a substantially larger review universe, and we will provide revised budget estimates upon receipt of the documents.
(ii) Activation of Northpoint Forensic Advisors LLC. As you are aware, C&H has retained Northpoint Forensic Advisors LLC ("Northpoint"), under the direction of Sandra Bellingham, CPA, CFE (1700 K Street NW, Suite 600, Washington, DC 20006), to serve as forensic accounting consultants for this review. Northpoint has been retained at the direction of counsel and its work product will be protected by the attorney-client privilege and the work-product doctrine. However, Northpoint has not yet been activated — that is, substantive forensic work has not commenced. Estimated forensic accounting costs for the Northpoint engagement range from $175,000 to $300,000, depending on the scope and complexity of the financial analysis required. Northpoint has advised that it requires an estimated two-week mobilization period from the date of activation to staff the engagement and commence substantive work.
(iii) Key-custodian interviews. Following completion of the document review and initial forensic analysis, we intend to conduct interviews with the following key custodians: Cédric Anouma, Emeka Obiora, Yves Kouadio, and Adama Coulibaly. Each interview will be conducted subject to appropriate Upjohn warnings, making clear to each individual that C&H represents TSL and not the individual personally, that the purpose of the interview is to gather facts for the benefit of the Company, that the attorney-client privilege belongs to the Company and may be waived by the Company at its discretion, and that the individual may wish to retain separate personal counsel. A draft Upjohn warning script was prepared by C&H on August 22, 2022, and circulated to your office for review. We request your comments on the draft script at your earliest convenience so that it is finalized and ready for use upon reactivation.
(iv) Formal retention of Ivorian local counsel. We intend to formally retain Dossou & Mensah Avocats (Abidjan, Côte d'Ivoire) to advise on local law issues arising from the investigation, including but not limited to data-privacy compliance under Loi n° 2013-450 relative à la protection des données à caractère personnel and employment-law considerations under the Code du Travail (Loi n° 2015-532 du 20 juillet 2015 portant Code du Travail). C&H has held preliminary consultations with Dossou & Mensah on these issues, and the firm has confirmed its capacity and willingness to serve in this role. Formal engagement will require execution of an engagement letter and, potentially, conflict clearance, both of which can be completed promptly upon reactivation.
In addition to the above, we will continue to coordinate with existing local counsel in other relevant jurisdictions:
•  Greece: Papadakis & Lekkas LLP (contact: Stavros Lekkas, Partner, 28 Vasilissis Sofias Avenue, Athens 106 74, Greece), who are advising on Greek law matters, including corporate governance, regulatory reporting obligations, and any implications under Greek anti-corruption law.
•  Nigeria: Okafor Bassey & Partners (contact: Ngozi Okafor, Senior Partner, 4th Floor, Marina Towers, 22 Marina Street, Lagos Island, Lagos, Nigeria), who are advising on Nigerian regulatory and anti-corruption law, including the Corrupt Practices and Other Related Offences Act, 2000, and any obligations under the Nigerian Financial intelligence Unit framework.
In closing, we strongly encourage the Company to resume this internal review at the earliest practicable date. The risks associated with delay — including the potential erosion of VSD credit, the continuing SEC whistleblower exposure, the ongoing accumulation of potentially problematic payments, and the credit-facility implications described above — are substantial and grow more acute with the passage of time.
We also draw the Company's attention to a time-sensitive contractual matter. The Goldenshore Port Agency and Facilitation Services Agreement, which became effective on March 1, 2018, auto-renewed on March 1, 2022, for an additional twelve-month period through February 28, 2023. Under the terms of that Agreement, 90 days' written notice is required to prevent a further automatic renewal. This means that notice of non-renewal must be given to Goldenshore no later than December 1, 2022, to avoid a further auto-renewal through February 28, 2024. We recommend that the Company consider whether it is prudent to allow this agreement to auto-renew under the circumstances, and we are available to assist in the preparation of a notice of non-renewal if the Company so directs.
For budgeting purposes, we provide the following summary of estimated total professional fees and costs for the completion of this internal review:
Fees billed to date by C&H through September 30, 2022, total approximately $110,000. For reference, C&H's current hourly rates for this engagement are as follows: Partner, $1,450 per hour; Senior Associate, $975 per hour; Associate, $725 per hour. A 10% volume discount applies to aggregate fees exceeding $500,000 per calendar year, as set forth in the engagement letter dated June 28, 2022.
Please do not hesitate to contact me at any time to discuss the matters addressed in this letter or any other aspect of this engagement. I am available by email at vchambers@calderwoodharkness.com or by telephone at +1 (212) 555-0147.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Victoria Chambers Partner, White Collar & Investigations
Email: vchambers@calderwoodharkness.com
Phone: +1 (212) 555-0147
cc: Howard Quinn, Calderwood & Harkness LLP
Jasmine Thornton, Calderwood & Harkness LLP
Period | Expediting Fees Paid (€)
March – December 2018 | 127,000
January – December 2019 | 189,000
January – December 2020 | 164,000
January – December 2021 | 238,000
January – May 2022 | 158,000
Total | 876,000
Category | Estimated Range
Calderwood & Harkness LLP (legal fees) | $400,000 – $600,000
Northpoint Forensic Advisors LLC (forensic accounting) | $175,000 – $300,000
Local counsel (Greece, Côte d'Ivoire, Nigeria) | $50,000 – $100,000
Total professional fees | $625,000 – $1,000,000
Remediation costs (compliance program, training, controls) | $350,000 – $750,000

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