1044-00007 · Client 1044 · Memoranda

interim-status-memo.docx DOCUMENT Litigation

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PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED ATTORNEY WORK PRODUCT

CALDERWOOD & HARKNESS LLP 1400 New York Avenue NW, Suite 900 Washington, DC 20005

MEMORANDUM

This memorandum provides an interim status report on Calderwood & Harkness LLP's ("C&H") ongoing internal review of potential Foreign Corrupt Practices Act ("FCPA") issues involving Thalassa Shipping & Logistics SA ("TSL") and its West African subsidiaries, Thalassa West Africa SARL ("TWA") and Thalassa Nigeria Limited ("TNL"). This memorandum is intended to update Ms. Karavelis-Stavrou on the current state of document collection, to set forth our preliminary observations based on the partial production received to date, and to recommend certain immediate actions that we believe are necessary and prudent in light of the issues identified thus far. This memorandum is protected by the attorney-client privilege, the work-product doctrine, and the common-interest privilege, and should not be disclosed to any person outside of TSL's legal department without the prior written consent of C&H.

I. STATUS OF DOCUMENT COLLECTION

A. Summary of Partial Production

On September 2, 2022, TSL produced to C&H a partial set of responsive documents comprising approximately 340 pages. While we appreciate the effort involved in assembling even this initial tranche, the production represents only a fraction of the documents identified in our August 5, 2022 Document Preservation and Collection Request as necessary to conduct a thorough and credible internal review. We note that the August 5 request letter established a target date of August 26, 2022 for production of the first priority categories, meaning the partial production was received approximately one week past the initial deadline.

The items included in the September 2 partial production are as follows:

(i) Twenty-three (23) Goldenshore Maritime Consultants Ltd. ("Goldenshore") invoices characterized as "expediting fees." We estimate the total population of Goldenshore expediting-fee invoices for the period under review (January 1, 2018 through present) to be approximately 150 to 200 invoices. Accordingly, the 23 invoices produced represent approximately 12–15% of the anticipated universe.

(ii) A Thalassa West Africa SARL organizational chart, indicated as current through January 2022.

(iii) A delegation-of-authority matrix governing TWA vendor payments, setting forth signatory thresholds and approval chains for disbursements from TWA's operating accounts.

(iv) TWA general-ledger extracts for fiscal year 2021, limited to the port-agency cost center only. No general-ledger data has been produced for fiscal years 2018, 2019, 2020, or 2022 year-to-date, nor has any general-ledger data been produced for cost centers outside of port agency.

(v) TSL's Global Anti-Bribery Policy, dated November 2016, consisting of 14 pages.

(vi) Compliance training attendance records for calendar years 2019 and 2020 only. No training attendance records have been produced for calendar years 2018, 2021, or 2022. TSL has indicated that it is uncertain whether any such records exist for those years.

B. Outstanding Critical Categories

The following categories of documents, each of which was identified as a first-priority item in our August 5 request, remain outstanding in their entirety. We consider each of these categories critical to advancing the investigation, and the continued absence of these materials significantly constrains our ability to assess the nature, scope, and severity of the conduct at issue:

1. TWA bank statements from Banque Equatoriale de Commerce SA ("BEC"). We have requested all bank statements for all TWA accounts held at BEC, Abidjan, for the period from January 1, 2018 through the present. No bank statements have been produced for any period. These records are essential for tracing the flow of funds from TWA to Goldenshore and, ultimately, to any downstream recipients, including any foreign government officials.

2. TNL bank statements (all periods). Similarly, no bank statements have been produced for any TNL account at any financial institution for any period. We understand TNL maintains accounts at both Harborview Commerce Bank and Aldermere Bancorp. Records from both institutions are required.

3. TWA and TNL petty-cash ledgers and cash-disbursement vouchers. Given the nature of port-agency operations in the West Africa region, petty-cash disbursements represent a significant corruption risk. No petty-cash ledgers or supporting cash-disbursement vouchers have been produced for either TWA or TNL.

4. Complete set of Goldenshore invoices (both commissions and expediting fees). As noted above, only 23 of an estimated 150–200 expediting-fee invoices have been produced. Additionally, no Goldenshore commission invoices have been produced. The commission invoices are necessary for us to understand the full scope of the commercial relationship between TWA/TNL and Goldenshore and to evaluate whether commission payments may have been inflated or structured in a manner designed to generate funds available for improper payments.

5. Goldenshore corporate registry filings from the Ghana Registrar-General's Department. These filings are necessary to identify Goldenshore's beneficial owners, directors, and shareholders, and to determine whether any of those individuals are current or former government officials or relatives thereof. No such filings have been produced.

6. Wire-transfer confirmations for all payments made to Goldenshore. Wire-transfer confirmations would identify the originating and receiving accounts, the beneficiary name and address, and any intermediary banks involved in the transaction. No wire-transfer confirmations have been produced.

7. Vessel-call logs and customs-clearance records. These records are necessary to correlate Goldenshore expediting-fee invoices with specific vessel arrivals at ports in Côte d'Ivoire and Nigeria, and to assess whether the fees paid bear any reasonable relationship to the services purportedly rendered.

8. Email and messaging communications involving Cédric Anouma and Emeka Obiora. Mr. Anouma (Managing Director, TWA) and Mr. Obiora (Country Manager, TNL) are the two individuals most directly involved in the engagement and management of Goldenshore. Collection and review of their email and messaging communications — including business and personal email accounts, Meridian Services Inc. messages, and any other messaging platforms used for business purposes — is essential to understanding the nature and purpose of the payments at issue.

9. Employment files and conflict-of-interest disclosures for key custodians. We have requested the employment files (including hiring records, compensation history, and annual conflict-of-interest disclosures, if any) for Mr. Anouma, Mr. Obiora, and the following additional custodians: Amara Diallo (Finance Manager, TWA), Chukwuemeka Nwosu (Finance Controller, TNL), and Kofi Mensah-Bonsu (Operations Director, TWA). No employment files have been produced.

C. Reasons for Delay

Ms. Karavelis-Stavrou has advised C&H that the delays in document production are attributable to three principal factors:

(a) Incomplete physical and electronic recordkeeping at the Abidjan office. The TWA Abidjan office has historically maintained a significant portion of its financial records in paper form, and the office's physical filing system is reported to be disorganized and incomplete. Electronic records are maintained on local servers without a centralized document-management system, and backup practices have been inconsistent.

(b) Cédric Anouma's reported difficulty in locating historical petty-cash records. Mr. Anouma has informed TSL's finance department that historical petty-cash ledgers and supporting documentation for the period prior to mid-2020 cannot be readily located. He has indicated that certain records may have been lost during a renovation of the TWA Abidjan office in early 2020. We note that Mr. Anouma's status as a key custodian and potential subject of this investigation raises concerns about the reliability of his representations regarding the availability of records that may be adverse to his interests.

(c) Data-privacy and employment-law concerns under Ivorian and Nigerian law. TSL's compliance team has flagged potential legal constraints under Côte d'Ivoire's data-privacy legislation (Loi n° 2013-450 du 19 juin 2013 relative à la protection des données à caractère personnel) and Nigeria's data-protection framework (Nigeria Data Protection Regulation, 2019) that may restrict the collection, processing, and cross-border transfer of employee personal data, including email and messaging communications. Additionally, Ivorian and Nigerian employment law may impose procedural requirements or limitations on the monitoring and review of employee communications. Ms. Karavelis-Stavrou has indicated that TSL requires guidance from local counsel in each jurisdiction before proceeding with the collection of employee communications. We address the retention of Ivorian local counsel in our recommendations below.

We understand and appreciate the complexities involved, particularly with respect to the cross-border data-privacy and employment-law issues. However, we wish to emphasize that the current pace of document production is not sufficient to advance this investigation in a timely manner. The longer the investigation remains open without material progress, the greater the risk that documents may be lost or destroyed, that witnesses' memories will fade, and that any ultimate disclosure to the U.S. Department of Justice ("DOJ") or the Securities and Exchange Commission ("SEC") will be viewed less favorably on the question of TSL's cooperation.

II. OBSERVATIONS ON PARTIAL PRODUCTION

Set forth below are our preliminary observations on selected categories of documents received in the September 2 partial production. These observations are preliminary in nature, are based on an incomplete record, and are subject to revision as additional documents are produced and reviewed.

A. Expediting-Fee Invoices

The 23 Goldenshore expediting-fee invoices produced in the September 2 production collectively present several patterns that, in our experience with FCPA matters, are consistent with the indicia of potential corrupt payments. We emphasize that the presence of these red flags does not, standing alone, establish that any improper payments were in fact made to foreign government officials. However, taken together, these patterns warrant heightened scrutiny and further investigation.

The 23 invoices range in amount from €4,500 to €18,750. Each invoice bears only a single-line description of services, typically stating "Expediting services — Port of Abidjan" or "Port facilitation services — Tema" or similar generic language. No invoice is accompanied by a work order, a description of the specific services performed, an identification of any third party to whom Goldenshore may have disbursed funds in connection with the purported services, or any other supporting documentation. Each invoice bears only the handwritten initials "C.A." in the approval block, which we understand to correspond to Cédric Anouma. No second-level approval signature appears on any of the invoices, notwithstanding that the delegation-of-authority matrix produced in the same production indicates that vendor payments in excess of €10,000 require dual approval by the Managing Director and the Finance Manager.

We have identified the following specific patterns among the 23 invoices:

(i) Round-number invoicing. Eleven of the 23 invoices (47.8%) are denominated in round-number amounts — specifically, €5,000, €7,500, €10,000, and €15,000. In our experience, legitimate port-agency and facilitation services, which typically involve the reimbursement of specific governmental fees, port charges, and labor costs, tend to produce invoiced amounts that reflect the aggregation of varied underlying costs and therefore rarely result in round figures. The prevalence of round-number amounts is a recognized red flag in FCPA enforcement guidance and may suggest that the invoiced amounts were set by arrangement rather than calculated based on actual costs incurred.

(ii) Timing of invoices relative to vessel arrivals. Based on the limited vessel-call data available to us from publicly accessible maritime databases, the invoices are typically dated one to three business days prior to a vessel's scheduled arrival at port. This timing pattern is suggestive of pre-arranged payment — that is, the invoices appear to have been generated in anticipation of a vessel's arrival rather than upon the completion of any identifiable service. This pattern is consistent with a scenario in which payments are made to ensure that port-clearance and customs processes proceed without delay or obstruction, which may constitute improper payments to foreign government officials responsible for those processes.

(iii) Absence of VAT and withholding tax. None of the 23 invoices reflects any value-added tax ("VAT") or withholding tax, despite the legal requirements of both Ghana (where Goldenshore is incorporated) and Côte d'Ivoire (where the majority of the invoiced services were purportedly rendered). Under Ghanaian law, VAT is levied at a standard rate of 15% (inclusive of the National Health Insurance Levy and the Ghana Education Trust Fund Levy) on the supply of services. Under Ivorian law, VAT is levied at a rate of 18% on services rendered within the territory. The absence of any reference to these taxes on any of the 23 invoices raises questions about whether Goldenshore is a legitimate operating entity that complies with local tax obligations, or whether it functions primarily as a conduit for payments that are ultimately directed to other recipients.

We intend to conduct a detailed reconciliation of these invoices against vessel-call logs, customs-clearance records, and bank-statement entries once those documents are produced. We also intend to commission a background investigation of Goldenshore and its principals, including beneficial-ownership analysis, through Northpoint Forensic Advisors LLC or a separate investigative firm, as appropriate.

B. Anti-Bribery Policy

The November 2016 Global Anti-Bribery Policy produced in the September 2 production is a 14-page document that, upon review, presents several significant deficiencies. We recognize that the existence of an anti-bribery policy is one factor that the DOJ and the SEC will consider in evaluating a company's compliance program. However, the DOJ's Evaluation of Corporate Compliance Programs guidance, most recently updated in June 2020, makes clear that the mere existence of a policy is insufficient; enforcement authorities will assess whether the policy is well-designed, adequately resourced, and effectively implemented. In its current form, the TSL policy falls short on all three of these criteria.

The specific deficiencies we have identified are as follows:

(i) No reference to the FCPA. The policy prohibits bribery "in accordance with applicable law" but does not mention the Foreign Corrupt Practices Act of 1977 by name. Nor does it reference the UK Bribery Act 2010 or any other specific anti-bribery statute. The absence of a specific reference to the FCPA is particularly significant given that TSL securities are listed on the New York Stock Exchange and the company is subject to FCPA jurisdiction as an issuer.

(ii) No third-party agent or intermediary provisions. The policy does not address the use of third-party agents, intermediaries, customs brokers, freight forwarders, port agents, or other commercial representatives — the very category of relationships that gives rise to the greatest FCPA risk in the shipping and maritime logistics industry. The policy does not require due diligence on agents' beneficial owners, shareholders, or directors. It does not require any inquiry into whether agents or their principals have affiliations with foreign government entities. It does not require written anti-corruption representations or certifications from third-party agents.

(iii) No gift-and-hospitality thresholds or approval requirements. The policy does not establish monetary thresholds for permissible gifts, meals, entertainment, or travel provided to foreign government officials or commercial counterparties. Nor does it require pre-approval for such expenditures.

(iv) No reporting mechanism. The policy does not provide a mechanism for reporting suspected violations of the policy or of applicable anti-bribery law. There is no reference to a compliance hotline, whistleblower email address, or other channel through which employees may raise concerns on a confidential or anonymous basis. The absence of a reporting mechanism is a significant deficiency under current DOJ and SEC guidance and best practices.

(v) No updates since adoption. The policy has not been revised, updated, or supplemented at any time since its initial adoption in November 2016 — a period of nearly six years. During this period, there have been significant developments in FCPA enforcement practice, DOJ policy (including the revised Corporate Enforcement Policy and the updated Evaluation of Corporate Compliance Programs guidance), and industry practice with respect to anti-corruption compliance. The failure to update the policy suggests that it has not been the subject of ongoing management attention.

We will address the remediation of TSL's anti-bribery compliance program, including a comprehensive revision of the policy, in a separate memorandum that we anticipate delivering upon completion of the investigation. In the interim, we recommend that Ms. Karavelis-Stavrou consider whether any immediate enhancements to the policy — particularly the addition of third-party due-diligence requirements and a reporting mechanism — can be implemented without raising premature concerns among employees or third parties about the existence of the investigation.

C. Training Records

The compliance training attendance records produced for calendar years 2019 and 2020 present a picture of a training program that is inadequate in both scope and penetration. No records exist — or, at minimum, no records have been produced — for calendar years 2018, 2021, or 2022, suggesting either that no training was conducted in those years or that no records of any training were maintained. Either scenario is problematic.

With respect to the training that was documented:

(i) 2019 training. A single one-hour training session was conducted in French at the TWA Abidjan office. The attendance log reflects that 38 of 145 TWA employees participated, representing a participation rate of 26.2%. The session covered general concepts of bribery and corruption but did not address the FCPA, did not address the particular risks associated with the use of third-party agents in port operations, and did not reference TSL's own Global Anti-Bribery Policy by name. There is no indication that any training was provided to TNL employees in Nigeria during 2019.

(ii) 2020 training. Training was conducted remotely via videoconference, apparently in response to COVID-19-related workplace restrictions. The attendance log reflects that only 22 employees participated, representing a participation rate of 15.2% (based on the 2019 headcount of 145; the 2020 headcount has not been confirmed). As with the 2019 session, the training did not address the FCPA or third-party agent risk. There is no indication that training materials were distributed to employees who did not attend the live session.

Neither of the documented training sessions was conducted by a qualified compliance professional or outside counsel. The training appears to have been led by Mr. Anouma himself, which is particularly concerning given his apparent centrality to the conduct under review. The DOJ's Evaluation of Corporate Compliance Programs guidance emphasizes that training should be tailored to the risks specific to the employees' roles and geographies and should be delivered with sufficient frequency and coverage to be effective. The training program documented in the records produced falls materially short of these standards.

III. INTERIM RECOMMENDATIONS

Based on our review of the partial production received to date and the patterns and deficiencies identified above, we set forth the following interim recommendations for discussion with Ms. Karavelis-Stavrou. These recommendations are designed to mitigate ongoing risk, preserve evidence, and position TSL to advance the investigation in a timely and credible manner.

1. Immediate Suspension of Expediting-Fee Payments to Goldenshore

In light of the red flags identified in the expediting-fee invoices, we strongly recommend that TSL instruct TWA management to immediately suspend all "expediting fee" payments to Goldenshore Maritime Consultants Ltd. pending completion of this internal review. The invoices reviewed to date lack adequate supporting documentation, reflect patterns consistent with pre-arranged or fabricated charges, and fail to comply with applicable tax requirements. Continuing to make these payments while the investigation is underway would expose TSL to additional potential liability and would undermine the credibility of any eventual remediation narrative presented to the DOJ or SEC.

Commission payments to Goldenshore under the existing port-agency agreement may continue at the existing contractual rate of 3.5% of port-disbursement costs, subject to enhanced documentation and approval requirements that we will work with Ms. Karavelis-Stavrou to implement. These enhanced requirements should include, at a minimum, dual approval by both the TWA Managing Director (or an alternative senior officer, if Mr. Anouma's authority is restricted) and the TSL Group Finance department in Athens, together with supporting documentation for each underlying port disbursement.

We recognize that any directive to suspend expediting-fee payments must be communicated to Mr. Anouma with care. If Mr. Anouma is directed to cease these payments, he may alert Goldenshore to the existence of the investigation, which could prompt the destruction of documents or the coordination of testimony. We recommend that appropriate communication be prepared in advance of any such directive, and we are available to advise on the framing and delivery of that communication.

2. Activation of Northpoint Forensic Advisors LLC

We strongly recommend that TSL authorize the immediate activation of Northpoint Forensic Advisors LLC ("Northpoint") to conduct a forensic review of TWA and TNL bank accounts and payment records. Northpoint is a Washington, DC-based forensic accounting and financial advisory firm with extensive experience in FCPA investigations in the extractive, maritime, and logistics industries. Northpoint has been on standby since the engagement was opened in July 2022 and has confirmed that it can mobilize a field team within approximately two weeks of receiving authorization to proceed.

Northpoint's proposed scope of work encompasses the forensic review of all TWA and TNL bank account records, cash-flow tracing through Goldenshore and, to the extent ascertainable, to ultimate payment recipients, a review of petty-cash ledgers and cash-disbursement vouchers, reconciliation of Goldenshore invoices to bank-statement entries, and the identification of any additional intermediaries, related-party transactions, or undisclosed payment channels. The proposed scope and fee estimate are attached to this memorandum as Exhibit A.

The Northpoint team will be led by Sandra Bellingham, CPA, CFE, a former Senior Forensic Accountant with the SEC's Division of Enforcement who has led the forensic-accounting workstream on more than two dozen FCPA investigations in sub-Saharan Africa. Northpoint's work will be conducted under the direction and supervision of C&H and will be protected by the attorney-client privilege and the work-product doctrine.

Without Northpoint's involvement, C&H will not be able to conduct a meaningful assessment of the flow of funds from TSL through its West African subsidiaries and intermediaries. The forensic-accounting component is the core of this investigation, and further delay in initiating this work will extend the overall timeline of the review and increase total costs.

3. Retention of Ivorian Local Counsel

We recommend that TSL formally retain the law firm of Dossou & Mensah Avocats in Abidjan, Côte d'Ivoire, to advise on the legal requirements applicable to the collection and cross-border transfer of employee communications and personal data under Ivorian law, including specifically Loi n° 2013-450 du 19 juin 2013 relative à la protection des données à caractère personnel, as well as any applicable provisions of Ivorian employment law, including the Ivorian Labour Code (Loi n° 2015-532 du 20 juillet 2015 portant Code du travail), that may affect TSL's ability to review Mr. Anouma's email and messaging communications, to conduct interviews with TWA employees, or to take disciplinary action against any employee in connection with the findings of this investigation.

Dossou & Mensah is a well-regarded firm with recognized expertise in data-privacy and employment law in Côte d'Ivoire. C&H has worked with Dossou & Mensah on two prior matters involving data collection in the Francophone West Africa region and can attest to the quality and responsiveness of their work. The resolution of the data-privacy and employment-law issues is a gating item for the collection of Mr. Anouma's communications, and we recommend that this retention be authorized without further delay.

4. Escalation of Document Collection

As noted above, the current pace of document production is not sufficient to advance the investigation in a manner consistent with the timeline set forth in our Preliminary Scoping Memorandum of August 1, 2022. We recommend that Ms. Karavelis-Stavrou or Alexandros Fitsakis, Chief Financial Officer of TSL, travel to Abidjan in person to oversee the collection of outstanding documents. Alternatively, TSL may designate a trusted senior employee — one who is not a subject or custodian of the investigation — to travel to Abidjan for this purpose.

The physical presence of a senior TSL executive or designee in Abidjan would serve multiple objectives: it would communicate the seriousness of the document requests to the TWA team; it would allow for direct oversight of the search-and-collection process; and it would provide an opportunity to assess the state of TWA's physical and electronic recordkeeping systems firsthand. We also note that the involvement of a senior TSL representative may help mitigate the risk that Mr. Anouma, who is currently the primary point of contact for document collection, may selectively produce or withhold documents.

5. Credit-Facility Analysis

Liam Donahue, an associate in C&H's banking and finance group, has completed a preliminary review of the credit agreement between TSL and Meridian Atlantic Bank NA, executed on January 15, 2020. The credit agreement provides for a $120 million senior secured revolving credit facility with a maturity date of January 15, 2025. As of the most recent compliance certificate filed by TSL (for the quarter ending June 30, 2022), approximately $74 million is outstanding under the facility.

Section 5.18 of the credit agreement ("Anti-Corruption Laws") requires TSL to represent and warrant that neither it nor any of its subsidiaries has:

"directly or indirectly, used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; or violated or is in violation of any provision of the United States Foreign Corrupt Practices Act of 1977, as amended, or any other applicable anti-corruption or anti-bribery law."

This representation is a "bring-down" representation that is deemed repeated on each date on which a borrowing request or compliance certificate is delivered to the lender. A breach of this representation would constitute an "Event of Default" under Section 8.01(d) of the credit agreement, which provides that any representation or warranty that is materially incorrect when made or deemed made constitutes an Event of Default. Upon the occurrence of an Event of Default, the administrative agent may, and upon the request of the Required Lenders shall, (i) terminate the revolving commitments and (ii) declare all outstanding principal, accrued interest, and other amounts immediately due and payable. Acceleration of the $74 million currently outstanding would have a material adverse effect on TSL's liquidity and could trigger cross-default provisions in other TSL financing arrangements.

We recommend that C&H and TSL engage in a detailed discussion of how and when to address this issue with Meridian Atlantic. The options include, but are not limited to: (a) proactive disclosure to the bank at an appropriate point in the investigation, before any formal finding is made; (b) disclosure upon the conclusion of the investigation, if the findings warrant it; or (c) a more measured approach in which TSL initially engages in preliminary discussions with Gerald Fontaine, Managing Director, Shipping & Offshore Finance at Meridian Atlantic, to assess the bank's likely posture. Each option carries distinct advantages and risks. We are prepared to discuss these options with Ms. Karavelis-Stavrou and, if appropriate, with TSL's Greek legal counsel at Papadakis & Lekkas LLP, who may have views on the implications of any disclosure under Greek corporate law and securities regulation.

IV. BUDGET AND TIMELINE

We set forth below a summary of fees and costs incurred to date, together with our current estimates for the total professional fees anticipated in connection with this internal review.

C&H Fees Billed to Date. Through August 31, 2022, C&H has billed approximately $87,500 in professional fees in connection with this matter. This amount reflects work performed during the initial scoping phase, including the preparation and delivery of the Document Preservation and Collection Request, preliminary research on FCPA jurisdiction and enforcement precedent applicable to the maritime and shipping industry, analysis of TSL's corporate structure and subsidiary relationships, and the preparation of this interim memorandum.

Estimated Total C&H Fees. If the investigation proceeds along the path outlined in the Preliminary Scoping Memorandum dated August 1, 2022, we estimate total C&H professional fees in the range of $400,000 to $600,000. This estimate assumes a complete document review, multiple rounds of witness interviews (including interviews of Mr. Anouma, Mr. Obiora, Ms. Diallo, Mr. Nwosu, Mr. Mensah-Bonsu, and additional witnesses as warranted), preparation of a final written report, and advisory support in connection with any voluntary disclosure to the DOJ and/or SEC, if such disclosure is recommended and authorized. The estimate does not include the cost of defending against any enforcement action, which would be the subject of a separate engagement.

Estimated Northpoint Forensic Costs. As set forth in greater detail in Exhibit A, Northpoint Forensic Advisors LLC has estimated its fees for the forensic-accounting workstream at $175,000 to $300,000, based on a blended hourly rate of $475 per hour and an estimated range of 370 to 630 billable hours. The range reflects uncertainty regarding the volume and quality of the bank records and financial data that will ultimately be produced.

Estimated Local-Counsel Fees. We anticipate retaining or have already retained local counsel in three jurisdictions — Greece, Côte d'Ivoire, and Nigeria — and estimate aggregate local-counsel fees in the range of $50,000 to $100,000. The specific firms and lead counsel are as follows:

• Greek local counsel: Papadakis & Lekkas LLP, 28 Vasilissis Sofias Avenue, Athens 106 74, Greece. Lead partner: Stavros Lekkas. Scope: Greek corporate-law and securities-regulation issues, including director and officer obligations in connection with internal investigations, regulatory-notification requirements, and privilege considerations under Greek law.

• Nigerian local counsel: Okafor Bassey & Partners, 4th Floor, Marina Towers, 22 Marina Street, Lagos Island, Lagos, Nigeria. Lead partner: Ngozi Okafor. Scope: Nigerian data-protection and employment-law issues, including the Nigeria Data Protection Regulation 2019, as well as assistance with document collection from TNL and, if necessary, engagement with Nigerian regulatory authorities.

• Ivorian local counsel: Dossou & Mensah Avocats, Abidjan, Côte d'Ivoire. Retention to be formalized upon Ms. Karavelis-Stavrou's authorization. Scope: Ivorian data-privacy law (Loi n° 2013-450), employment law (Loi n° 2015-532), and assistance with document collection from TWA, employee communications, and potential disciplinary proceedings.

Total Estimated Professional Fees. Aggregating the foregoing components, we estimate total professional fees for the internal review in the range of $625,000 to $1,000,000. This range is necessarily broad at this stage, as the ultimate cost will be significantly influenced by the volume and complexity of the documents produced, the number and location of witness interviews required, and whether a voluntary disclosure to the DOJ and/or SEC is ultimately recommended and undertaken.

Fee Arrangement. As a reminder, C&H's engagement in this matter is on an hourly-fee basis at the following rates:

A 10% volume discount applies to aggregate C&H fees exceeding $500,000 in any calendar year. This discount is reflected in the upper end of the fee-estimate range set forth above.

V. OPEN ITEMS AND NEXT STEPS

We respectfully request a call with Ms. Karavelis-Stavrou during the week of September 19, 2022, to discuss the following items. We suggest scheduling at least 90 minutes for this call to allow adequate time for a substantive discussion of each topic.

(a) Timeline for completing document production. We wish to discuss a realistic but accelerated timeline for production of the outstanding critical document categories identified in Section I.B above, and to discuss the logistical measures — including a potential visit to the Abidjan office — necessary to achieve that timeline.

(b) Authorization to activate Northpoint Forensic Advisors LLC. We seek authorization to formally activate Northpoint's engagement and to direct Northpoint to begin mobilizing its field team. Northpoint has estimated a mobilization period of approximately two weeks from the date of activation.

(c) Authorization to retain Dossou & Mensah Avocats in Abidjan. We seek authorization to formalize the retention of Dossou & Mensah to advise on Ivorian data-privacy and employment-law issues, which are currently the principal impediment to the collection of Mr. Anouma's communications.

(d) Suspension of expediting-fee payments to Goldenshore. We wish to discuss the implementation of our recommendation to immediately suspend all expediting-fee payments to Goldenshore, including the content and delivery of any communication to Mr. Anouma regarding the suspension.

(e) Meridian Atlantic credit-facility issue. We wish to discuss the implications of the Section 5.18 anti-corruption representation and the Section 8.01(d) Event of Default provision in the Meridian Atlantic credit agreement, and to begin developing a strategy for addressing this issue with the bank at an appropriate time.

We will circulate a calendar invitation separately. In the interim, please do not hesitate to contact Victoria Chambers at (202) 555-8100 or Jasmine Thornton at (202) 555-8247 with any questions or comments.

This memorandum has been prepared at the direction of the General Counsel of Thalassa Shipping & Logistics SA in connection with anticipated litigation and enforcement proceedings. It is protected by the attorney-client privilege, the attorney work-product doctrine, and the common-interest privilege, and its contents should not be disclosed to any person outside the TSL legal department without the prior written consent of Calderwood & Harkness LLP.

EXHIBIT A

NORTHPOINT FORENSIC ADVISORS LLC Proposed Scope of Work and Fee Estimate

FCPA Internal Review — Thalassa Shipping & Logistics SA Matter No. 1044-00007

PRIVILEGED AND CONFIDENTIAL — PREPARED AT THE DIRECTION OF COUNSEL

I. Scope of Work

Northpoint Forensic Advisors LLC ("Northpoint") has been engaged by Calderwood & Harkness LLP, acting as outside counsel to Thalassa Shipping & Logistics SA ("TSL"), to perform forensic accounting and financial advisory services in connection with C&H's internal review of potential FCPA issues involving TSL's West African subsidiaries, Thalassa West Africa SARL ("TWA") and Thalassa Nigeria Limited ("TNL"), and their engagement of Goldenshore Maritime Consultants Ltd. ("Goldenshore"), a port-agency intermediary incorporated in Ghana.

The proposed scope of Northpoint's engagement encompasses the following workstreams:

1. Forensic review of TWA bank statements. Northpoint will obtain and analyze all available bank statements for TWA's accounts at Banque Equatoriale de Commerce SA ("BEC"), Abidjan, Côte d'Ivoire, for the period from January 1, 2018 through the present. The analysis will focus on identifying all payments to Goldenshore and any other intermediaries, agents, or vendors involved in port-agency or customs-facilitation services, and on identifying any unusual or unexplained payment patterns, including payments to unidentified or unverified recipients.

2. Forensic review of TNL bank statements. Northpoint will obtain and analyze all available bank statements for TNL's accounts at Harborview Commerce Bank and Aldermere Bancorp for the same period. The analysis will parallel the TWA bank-statement review described above.

3. Cash-flow tracing. Northpoint will trace the flow of funds from TWA and TNL through Goldenshore and, to the extent ascertainable from available records, to the ultimate recipients of those funds. This workstream is designed to determine whether payments made by TWA or TNL to Goldenshore were ultimately directed, in whole or in part, to foreign government officials, political parties, or other prohibited recipients.

4. Petty-cash review. Northpoint will review all available petty-cash ledgers and cash-disbursement vouchers maintained by TWA and TNL for the review period. Petty-cash disbursements represent a significant corruption risk in port-agency operations and will be analyzed for evidence of unsubstantiated or improperly documented payments.

5. Invoice reconciliation. Northpoint will reconcile all available Goldenshore invoices — including both commission invoices and expediting-fee invoices — to corresponding entries in TWA and TNL bank statements, general ledgers, and accounts-payable records. Discrepancies will be documented and investigated.

6. Identification of additional intermediaries and related-party transactions. In the course of the foregoing workstreams, Northpoint will identify any additional intermediaries, related-party transactions, or undisclosed payment channels that may warrant further investigation.

II. Estimated Timeline

Northpoint estimates that the foregoing scope of work can be completed in approximately 8 to 12 weeks from the date of activation, subject to the timely receipt of complete bank records, general-ledger data, petty-cash documentation, and invoices. Delays in the production of underlying records will extend the timeline proportionally. Northpoint will provide bi-weekly status reports to C&H during the engagement.

III. Fee Estimate

Northpoint estimates its total professional fees for this engagement at $175,000 to $300,000, based on a blended hourly rate of $475 per hour and an estimated total of 370 to 630 billable hours. The breadth of the range reflects the current uncertainty regarding the volume of records to be reviewed and the complexity of the tracing analysis, both of which are contingent on the completeness of the document production. Out-of-pocket expenses, including travel to Abidjan and Lagos, are estimated at an additional $15,000 to $25,000 and will be billed at cost.

IV. Engagement Team

The Northpoint engagement will be led by:

Sandra Bellingham, CPA, CFE Managing Director, Forensic & Dispute Advisory Services Northpoint Forensic Advisors LLC 1700 K Street NW, Suite 600 Washington, DC 20006 Telephone: (202) 555-4300

Email: sbellingham@northpointforensic.com

Ms. Bellingham is a Certified Public Accountant and Certified Fraud Examiner with over 18 years of experience in forensic accounting and financial investigations, including more than two dozen FCPA-related engagements in sub-Saharan Africa. Prior to joining Northpoint, Ms. Bellingham served as a Senior Forensic Accountant in the Division of Enforcement of the U.S. Securities and Exchange Commission, where she was responsible for the financial analysis supporting several significant FCPA enforcement actions.

The engagement team will also include a senior manager and two to three staff accountants with relevant experience in forensic-accounting engagements in the maritime, logistics, and extractive industries.

End of Exhibit A

TO:	Dimitra Karavelis-Stavrou, General Counsel & Chief Compliance Officer, Thalassa Shipping & Logistics SA
FROM:	Victoria Chambers, Partner; Jasmine Thornton, Senior Associate
DATE:	September 12, 2022
RE:	Interim Status Report — FCPA Internal Review, Matter No. 1044-00007
Timekeeper Level	Hourly Rate
Partner	$1,450
Senior Associate	$975
Associate	$725

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 1400 New York Avenue NW, Suite 900 Washington, DC 20005
MEMORANDUM
This memorandum provides an interim status report on Calderwood & Harkness LLP's ("C&H") ongoing internal review of potential Foreign Corrupt Practices Act ("FCPA") issues involving Thalassa Shipping & Logistics SA ("TSL") and its West African subsidiaries, Thalassa West Africa SARL ("TWA") and Thalassa Nigeria Limited ("TNL"). This memorandum is intended to update Ms. Karavelis-Stavrou on the current state of document collection, to set forth our preliminary observations based on the partial production received to date, and to recommend certain immediate actions that we believe are necessary and prudent in light of the issues identified thus far. This memorandum is protected by the attorney-client privilege, the work-product doctrine, and the common-interest privilege, and should not be disclosed to any person outside of TSL's legal department without the prior written consent of C&H.
I. STATUS OF DOCUMENT COLLECTION
A. Summary of Partial Production
On September 2, 2022, TSL produced to C&H a partial set of responsive documents comprising approximately 340 pages. While we appreciate the effort involved in assembling even this initial tranche, the production represents only a fraction of the documents identified in our August 5, 2022 Document Preservation and Collection Request as necessary to conduct a thorough and credible internal review. We note that the August 5 request letter established a target date of August 26, 2022 for production of the first priority categories, meaning the partial production was received approximately one week past the initial deadline.
The items included in the September 2 partial production are as follows:
(i) Twenty-three (23) Goldenshore Maritime Consultants Ltd. ("Goldenshore") invoices characterized as "expediting fees." We estimate the total population of Goldenshore expediting-fee invoices for the period under review (January 1, 2018 through present) to be approximately 150 to 200 invoices. Accordingly, the 23 invoices produced represent approximately 12–15% of the anticipated universe.
(ii) A Thalassa West Africa SARL organizational chart, indicated as current through January 2022.
(iii) A delegation-of-authority matrix governing TWA vendor payments, setting forth signatory thresholds and approval chains for disbursements from TWA's operating accounts.
(iv) TWA general-ledger extracts for fiscal year 2021, limited to the port-agency cost center only. No general-ledger data has been produced for fiscal years 2018, 2019, 2020, or 2022 year-to-date, nor has any general-ledger data been produced for cost centers outside of port agency.
(v) TSL's Global Anti-Bribery Policy, dated November 2016, consisting of 14 pages.
(vi) Compliance training attendance records for calendar years 2019 and 2020 only. No training attendance records have been produced for calendar years 2018, 2021, or 2022. TSL has indicated that it is uncertain whether any such records exist for those years.
B. Outstanding Critical Categories
The following categories of documents, each of which was identified as a first-priority item in our August 5 request, remain outstanding in their entirety. We consider each of these categories critical to advancing the investigation, and the continued absence of these materials significantly constrains our ability to assess the nature, scope, and severity of the conduct at issue:
1. TWA bank statements from Banque Equatoriale de Commerce SA ("BEC"). We have requested all bank statements for all TWA accounts held at BEC, Abidjan, for the period from January 1, 2018 through the present. No bank statements have been produced for any period. These records are essential for tracing the flow of funds from TWA to Goldenshore and, ultimately, to any downstream recipients, including any foreign government officials.
2. TNL bank statements (all periods). Similarly, no bank statements have been produced for any TNL account at any financial institution for any period. We understand TNL maintains accounts at both Harborview Commerce Bank and Aldermere Bancorp. Records from both institutions are required.
3. TWA and TNL petty-cash ledgers and cash-disbursement vouchers. Given the nature of port-agency operations in the West Africa region, petty-cash disbursements represent a significant corruption risk. No petty-cash ledgers or supporting cash-disbursement vouchers have been produced for either TWA or TNL.
4. Complete set of Goldenshore invoices (both commissions and expediting fees). As noted above, only 23 of an estimated 150–200 expediting-fee invoices have been produced. Additionally, no Goldenshore commission invoices have been produced. The commission invoices are necessary for us to understand the full scope of the commercial relationship between TWA/TNL and Goldenshore and to evaluate whether commission payments may have been inflated or structured in a manner designed to generate funds available for improper payments.
5. Goldenshore corporate registry filings from the Ghana Registrar-General's Department. These filings are necessary to identify Goldenshore's beneficial owners, directors, and shareholders, and to determine whether any of those individuals are current or former government officials or relatives thereof. No such filings have been produced.
6. Wire-transfer confirmations for all payments made to Goldenshore. Wire-transfer confirmations would identify the originating and receiving accounts, the beneficiary name and address, and any intermediary banks involved in the transaction. No wire-transfer confirmations have been produced.
7. Vessel-call logs and customs-clearance records. These records are necessary to correlate Goldenshore expediting-fee invoices with specific vessel arrivals at ports in Côte d'Ivoire and Nigeria, and to assess whether the fees paid bear any reasonable relationship to the services purportedly rendered.
8. Email and messaging communications involving Cédric Anouma and Emeka Obiora. Mr. Anouma (Managing Director, TWA) and Mr. Obiora (Country Manager, TNL) are the two individuals most directly involved in the engagement and management of Goldenshore. Collection and review of their email and messaging communications — including business and personal email accounts, Meridian Services Inc. messages, and any other messaging platforms used for business purposes — is essential to understanding the nature and purpose of the payments at issue.
9. Employment files and conflict-of-interest disclosures for key custodians. We have requested the employment files (including hiring records, compensation history, and annual conflict-of-interest disclosures, if any) for Mr. Anouma, Mr. Obiora, and the following additional custodians: Amara Diallo (Finance Manager, TWA), Chukwuemeka Nwosu (Finance Controller, TNL), and Kofi Mensah-Bonsu (Operations Director, TWA). No employment files have been produced.
C. Reasons for Delay
Ms. Karavelis-Stavrou has advised C&H that the delays in document production are attributable to three principal factors:
(a) Incomplete physical and electronic recordkeeping at the Abidjan office. The TWA Abidjan office has historically maintained a significant portion of its financial records in paper form, and the office's physical filing system is reported to be disorganized and incomplete. Electronic records are maintained on local servers without a centralized document-management system, and backup practices have been inconsistent.
(b) Cédric Anouma's reported difficulty in locating historical petty-cash records. Mr. Anouma has informed TSL's finance department that historical petty-cash ledgers and supporting documentation for the period prior to mid-2020 cannot be readily located. He has indicated that certain records may have been lost during a renovation of the TWA Abidjan office in early 2020. We note that Mr. Anouma's status as a key custodian and potential subject of this investigation raises concerns about the reliability of his representations regarding the availability of records that may be adverse to his interests.
(c) Data-privacy and employment-law concerns under Ivorian and Nigerian law. TSL's compliance team has flagged potential legal constraints under Côte d'Ivoire's data-privacy legislation (Loi n° 2013-450 du 19 juin 2013 relative à la protection des données à caractère personnel) and Nigeria's data-protection framework (Nigeria Data Protection Regulation, 2019) that may restrict the collection, processing, and cross-border transfer of employee personal data, including email and messaging communications. Additionally, Ivorian and Nigerian employment law may impose procedural requirements or limitations on the monitoring and review of employee communications. Ms. Karavelis-Stavrou has indicated that TSL requires guidance from local counsel in each jurisdiction before proceeding with the collection of employee communications. We address the retention of Ivorian local counsel in our recommendations below.
We understand and appreciate the complexities involved, particularly with respect to the cross-border data-privacy and employment-law issues. However, we wish to emphasize that the current pace of document production is not sufficient to advance this investigation in a timely manner. The longer the investigation remains open without material progress, the greater the risk that documents may be lost or destroyed, that witnesses' memories will fade, and that any ultimate disclosure to the U.S. Department of Justice ("DOJ") or the Securities and Exchange Commission ("SEC") will be viewed less favorably on the question of TSL's cooperation.
II. OBSERVATIONS ON PARTIAL PRODUCTION
Set forth below are our preliminary observations on selected categories of documents received in the September 2 partial production. These observations are preliminary in nature, are based on an incomplete record, and are subject to revision as additional documents are produced and reviewed.
A. Expediting-Fee Invoices
The 23 Goldenshore expediting-fee invoices produced in the September 2 production collectively present several patterns that, in our experience with FCPA matters, are consistent with the indicia of potential corrupt payments. We emphasize that the presence of these red flags does not, standing alone, establish that any improper payments were in fact made to foreign government officials. However, taken together, these patterns warrant heightened scrutiny and further investigation.
The 23 invoices range in amount from €4,500 to €18,750. Each invoice bears only a single-line description of services, typically stating "Expediting services — Port of Abidjan" or "Port facilitation services — Tema" or similar generic language. No invoice is accompanied by a work order, a description of the specific services performed, an identification of any third party to whom Goldenshore may have disbursed funds in connection with the purported services, or any other supporting documentation. Each invoice bears only the handwritten initials "C.A." in the approval block, which we understand to correspond to Cédric Anouma. No second-level approval signature appears on any of the invoices, notwithstanding that the delegation-of-authority matrix produced in the same production indicates that vendor payments in excess of €10,000 require dual approval by the Managing Director and the Finance Manager.
We have identified the following specific patterns among the 23 invoices:
(i) Round-number invoicing. Eleven of the 23 invoices (47.8%) are denominated in round-number amounts — specifically, €5,000, €7,500, €10,000, and €15,000. In our experience, legitimate port-agency and facilitation services, which typically involve the reimbursement of specific governmental fees, port charges, and labor costs, tend to produce invoiced amounts that reflect the aggregation of varied underlying costs and therefore rarely result in round figures. The prevalence of round-number amounts is a recognized red flag in FCPA enforcement guidance and may suggest that the invoiced amounts were set by arrangement rather than calculated based on actual costs incurred.
(ii) Timing of invoices relative to vessel arrivals. Based on the limited vessel-call data available to us from publicly accessible maritime databases, the invoices are typically dated one to three business days prior to a vessel's scheduled arrival at port. This timing pattern is suggestive of pre-arranged payment — that is, the invoices appear to have been generated in anticipation of a vessel's arrival rather than upon the completion of any identifiable service. This pattern is consistent with a scenario in which payments are made to ensure that port-clearance and customs processes proceed without delay or obstruction, which may constitute improper payments to foreign government officials responsible for those processes.
(iii) Absence of VAT and withholding tax. None of the 23 invoices reflects any value-added tax ("VAT") or withholding tax, despite the legal requirements of both Ghana (where Goldenshore is incorporated) and Côte d'Ivoire (where the majority of the invoiced services were purportedly rendered). Under Ghanaian law, VAT is levied at a standard rate of 15% (inclusive of the National Health Insurance Levy and the Ghana Education Trust Fund Levy) on the supply of services. Under Ivorian law, VAT is levied at a rate of 18% on services rendered within the territory. The absence of any reference to these taxes on any of the 23 invoices raises questions about whether Goldenshore is a legitimate operating entity that complies with local tax obligations, or whether it functions primarily as a conduit for payments that are ultimately directed to other recipients.
We intend to conduct a detailed reconciliation of these invoices against vessel-call logs, customs-clearance records, and bank-statement entries once those documents are produced. We also intend to commission a background investigation of Goldenshore and its principals, including beneficial-ownership analysis, through Northpoint Forensic Advisors LLC or a separate investigative firm, as appropriate.
B. Anti-Bribery Policy
The November 2016 Global Anti-Bribery Policy produced in the September 2 production is a 14-page document that, upon review, presents several significant deficiencies. We recognize that the existence of an anti-bribery policy is one factor that the DOJ and the SEC will consider in evaluating a company's compliance program. However, the DOJ's Evaluation of Corporate Compliance Programs guidance, most recently updated in June 2020, makes clear that the mere existence of a policy is insufficient; enforcement authorities will assess whether the policy is well-designed, adequately resourced, and effectively implemented. In its current form, the TSL policy falls short on all three of these criteria.
The specific deficiencies we have identified are as follows:
(i) No reference to the FCPA. The policy prohibits bribery "in accordance with applicable law" but does not mention the Foreign Corrupt Practices Act of 1977 by name. Nor does it reference the UK Bribery Act 2010 or any other specific anti-bribery statute. The absence of a specific reference to the FCPA is particularly significant given that TSL securities are listed on the New York Stock Exchange and the company is subject to FCPA jurisdiction as an issuer.
(ii) No third-party agent or intermediary provisions. The policy does not address the use of third-party agents, intermediaries, customs brokers, freight forwarders, port agents, or other commercial representatives — the very category of relationships that gives rise to the greatest FCPA risk in the shipping and maritime logistics industry. The policy does not require due diligence on agents' beneficial owners, shareholders, or directors. It does not require any inquiry into whether agents or their principals have affiliations with foreign government entities. It does not require written anti-corruption representations or certifications from third-party agents.
(iii) No gift-and-hospitality thresholds or approval requirements. The policy does not establish monetary thresholds for permissible gifts, meals, entertainment, or travel provided to foreign government officials or commercial counterparties. Nor does it require pre-approval for such expenditures.
(iv) No reporting mechanism. The policy does not provide a mechanism for reporting suspected violations of the policy or of applicable anti-bribery law. There is no reference to a compliance hotline, whistleblower email address, or other channel through which employees may raise concerns on a confidential or anonymous basis. The absence of a reporting mechanism is a significant deficiency under current DOJ and SEC guidance and best practices.
(v) No updates since adoption. The policy has not been revised, updated, or supplemented at any time since its initial adoption in November 2016 — a period of nearly six years. During this period, there have been significant developments in FCPA enforcement practice, DOJ policy (including the revised Corporate Enforcement Policy and the updated Evaluation of Corporate Compliance Programs guidance), and industry practice with respect to anti-corruption compliance. The failure to update the policy suggests that it has not been the subject of ongoing management attention.
We will address the remediation of TSL's anti-bribery compliance program, including a comprehensive revision of the policy, in a separate memorandum that we anticipate delivering upon completion of the investigation. In the interim, we recommend that Ms. Karavelis-Stavrou consider whether any immediate enhancements to the policy — particularly the addition of third-party due-diligence requirements and a reporting mechanism — can be implemented without raising premature concerns among employees or third parties about the existence of the investigation.
C. Training Records
The compliance training attendance records produced for calendar years 2019 and 2020 present a picture of a training program that is inadequate in both scope and penetration. No records exist — or, at minimum, no records have been produced — for calendar years 2018, 2021, or 2022, suggesting either that no training was conducted in those years or that no records of any training were maintained. Either scenario is problematic.
With respect to the training that was documented:
(i) 2019 training. A single one-hour training session was conducted in French at the TWA Abidjan office. The attendance log reflects that 38 of 145 TWA employees participated, representing a participation rate of 26.2%. The session covered general concepts of bribery and corruption but did not address the FCPA, did not address the particular risks associated with the use of third-party agents in port operations, and did not reference TSL's own Global Anti-Bribery Policy by name. There is no indication that any training was provided to TNL employees in Nigeria during 2019.
(ii) 2020 training. Training was conducted remotely via videoconference, apparently in response to COVID-19-related workplace restrictions. The attendance log reflects that only 22 employees participated, representing a participation rate of 15.2% (based on the 2019 headcount of 145; the 2020 headcount has not been confirmed). As with the 2019 session, the training did not address the FCPA or third-party agent risk. There is no indication that training materials were distributed to employees who did not attend the live session.
Neither of the documented training sessions was conducted by a qualified compliance professional or outside counsel. The training appears to have been led by Mr. Anouma himself, which is particularly concerning given his apparent centrality to the conduct under review. The DOJ's Evaluation of Corporate Compliance Programs guidance emphasizes that training should be tailored to the risks specific to the employees' roles and geographies and should be delivered with sufficient frequency and coverage to be effective. The training program documented in the records produced falls materially short of these standards.
III. INTERIM RECOMMENDATIONS
Based on our review of the partial production received to date and the patterns and deficiencies identified above, we set forth the following interim recommendations for discussion with Ms. Karavelis-Stavrou. These recommendations are designed to mitigate ongoing risk, preserve evidence, and position TSL to advance the investigation in a timely and credible manner.
1. Immediate Suspension of Expediting-Fee Payments to Goldenshore
In light of the red flags identified in the expediting-fee invoices, we strongly recommend that TSL instruct TWA management to immediately suspend all "expediting fee" payments to Goldenshore Maritime Consultants Ltd. pending completion of this internal review. The invoices reviewed to date lack adequate supporting documentation, reflect patterns consistent with pre-arranged or fabricated charges, and fail to comply with applicable tax requirements. Continuing to make these payments while the investigation is underway would expose TSL to additional potential liability and would undermine the credibility of any eventual remediation narrative presented to the DOJ or SEC.
Commission payments to Goldenshore under the existing port-agency agreement may continue at the existing contractual rate of 3.5% of port-disbursement costs, subject to enhanced documentation and approval requirements that we will work with Ms. Karavelis-Stavrou to implement. These enhanced requirements should include, at a minimum, dual approval by both the TWA Managing Director (or an alternative senior officer, if Mr. Anouma's authority is restricted) and the TSL Group Finance department in Athens, together with supporting documentation for each underlying port disbursement.
We recognize that any directive to suspend expediting-fee payments must be communicated to Mr. Anouma with care. If Mr. Anouma is directed to cease these payments, he may alert Goldenshore to the existence of the investigation, which could prompt the destruction of documents or the coordination of testimony. We recommend that appropriate communication be prepared in advance of any such directive, and we are available to advise on the framing and delivery of that communication.
2. Activation of Northpoint Forensic Advisors LLC
We strongly recommend that TSL authorize the immediate activation of Northpoint Forensic Advisors LLC ("Northpoint") to conduct a forensic review of TWA and TNL bank accounts and payment records. Northpoint is a Washington, DC-based forensic accounting and financial advisory firm with extensive experience in FCPA investigations in the extractive, maritime, and logistics industries. Northpoint has been on standby since the engagement was opened in July 2022 and has confirmed that it can mobilize a field team within approximately two weeks of receiving authorization to proceed.
Northpoint's proposed scope of work encompasses the forensic review of all TWA and TNL bank account records, cash-flow tracing through Goldenshore and, to the extent ascertainable, to ultimate payment recipients, a review of petty-cash ledgers and cash-disbursement vouchers, reconciliation of Goldenshore invoices to bank-statement entries, and the identification of any additional intermediaries, related-party transactions, or undisclosed payment channels. The proposed scope and fee estimate are attached to this memorandum as Exhibit A.
The Northpoint team will be led by Sandra Bellingham, CPA, CFE, a former Senior Forensic Accountant with the SEC's Division of Enforcement who has led the forensic-accounting workstream on more than two dozen FCPA investigations in sub-Saharan Africa. Northpoint's work will be conducted under the direction and supervision of C&H and will be protected by the attorney-client privilege and the work-product doctrine.
Without Northpoint's involvement, C&H will not be able to conduct a meaningful assessment of the flow of funds from TSL through its West African subsidiaries and intermediaries. The forensic-accounting component is the core of this investigation, and further delay in initiating this work will extend the overall timeline of the review and increase total costs.
3. Retention of Ivorian Local Counsel
We recommend that TSL formally retain the law firm of Dossou & Mensah Avocats in Abidjan, Côte d'Ivoire, to advise on the legal requirements applicable to the collection and cross-border transfer of employee communications and personal data under Ivorian law, including specifically Loi n° 2013-450 du 19 juin 2013 relative à la protection des données à caractère personnel, as well as any applicable provisions of Ivorian employment law, including the Ivorian Labour Code (Loi n° 2015-532 du 20 juillet 2015 portant Code du travail), that may affect TSL's ability to review Mr. Anouma's email and messaging communications, to conduct interviews with TWA employees, or to take disciplinary action against any employee in connection with the findings of this investigation.
Dossou & Mensah is a well-regarded firm with recognized expertise in data-privacy and employment law in Côte d'Ivoire. C&H has worked with Dossou & Mensah on two prior matters involving data collection in the Francophone West Africa region and can attest to the quality and responsiveness of their work. The resolution of the data-privacy and employment-law issues is a gating item for the collection of Mr. Anouma's communications, and we recommend that this retention be authorized without further delay.
4. Escalation of Document Collection
As noted above, the current pace of document production is not sufficient to advance the investigation in a manner consistent with the timeline set forth in our Preliminary Scoping Memorandum of August 1, 2022. We recommend that Ms. Karavelis-Stavrou or Alexandros Fitsakis, Chief Financial Officer of TSL, travel to Abidjan in person to oversee the collection of outstanding documents. Alternatively, TSL may designate a trusted senior employee — one who is not a subject or custodian of the investigation — to travel to Abidjan for this purpose.
The physical presence of a senior TSL executive or designee in Abidjan would serve multiple objectives: it would communicate the seriousness of the document requests to the TWA team; it would allow for direct oversight of the search-and-collection process; and it would provide an opportunity to assess the state of TWA's physical and electronic recordkeeping systems firsthand. We also note that the involvement of a senior TSL representative may help mitigate the risk that Mr. Anouma, who is currently the primary point of contact for document collection, may selectively produce or withhold documents.
5. Credit-Facility Analysis
Liam Donahue, an associate in C&H's banking and finance group, has completed a preliminary review of the credit agreement between TSL and Meridian Atlantic Bank NA, executed on January 15, 2020. The credit agreement provides for a $120 million senior secured revolving credit facility with a maturity date of January 15, 2025. As of the most recent compliance certificate filed by TSL (for the quarter ending June 30, 2022), approximately $74 million is outstanding under the facility.
Section 5.18 of the credit agreement ("Anti-Corruption Laws") requires TSL to represent and warrant that neither it nor any of its subsidiaries has:
"directly or indirectly, used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; or violated or is in violation of any provision of the United States Foreign Corrupt Practices Act of 1977, as amended, or any other applicable anti-corruption or anti-bribery law."
This representation is a "bring-down" representation that is deemed repeated on each date on which a borrowing request or compliance certificate is delivered to the lender. A breach of this representation would constitute an "Event of Default" under Section 8.01(d) of the credit agreement, which provides that any representation or warranty that is materially incorrect when made or deemed made constitutes an Event of Default. Upon the occurrence of an Event of Default, the administrative agent may, and upon the request of the Required Lenders shall, (i) terminate the revolving commitments and (ii) declare all outstanding principal, accrued interest, and other amounts immediately due and payable. Acceleration of the $74 million currently outstanding would have a material adverse effect on TSL's liquidity and could trigger cross-default provisions in other TSL financing arrangements.
We recommend that C&H and TSL engage in a detailed discussion of how and when to address this issue with Meridian Atlantic. The options include, but are not limited to: (a) proactive disclosure to the bank at an appropriate point in the investigation, before any formal finding is made; (b) disclosure upon the conclusion of the investigation, if the findings warrant it; or (c) a more measured approach in which TSL initially engages in preliminary discussions with Gerald Fontaine, Managing Director, Shipping & Offshore Finance at Meridian Atlantic, to assess the bank's likely posture. Each option carries distinct advantages and risks. We are prepared to discuss these options with Ms. Karavelis-Stavrou and, if appropriate, with TSL's Greek legal counsel at Papadakis & Lekkas LLP, who may have views on the implications of any disclosure under Greek corporate law and securities regulation.
IV. BUDGET AND TIMELINE
We set forth below a summary of fees and costs incurred to date, together with our current estimates for the total professional fees anticipated in connection with this internal review.
C&H Fees Billed to Date. Through August 31, 2022, C&H has billed approximately $87,500 in professional fees in connection with this matter. This amount reflects work performed during the initial scoping phase, including the preparation and delivery of the Document Preservation and Collection Request, preliminary research on FCPA jurisdiction and enforcement precedent applicable to the maritime and shipping industry, analysis of TSL's corporate structure and subsidiary relationships, and the preparation of this interim memorandum.
Estimated Total C&H Fees. If the investigation proceeds along the path outlined in the Preliminary Scoping Memorandum dated August 1, 2022, we estimate total C&H professional fees in the range of $400,000 to $600,000. This estimate assumes a complete document review, multiple rounds of witness interviews (including interviews of Mr. Anouma, Mr. Obiora, Ms. Diallo, Mr. Nwosu, Mr. Mensah-Bonsu, and additional witnesses as warranted), preparation of a final written report, and advisory support in connection with any voluntary disclosure to the DOJ and/or SEC, if such disclosure is recommended and authorized. The estimate does not include the cost of defending against any enforcement action, which would be the subject of a separate engagement.
Estimated Northpoint Forensic Costs. As set forth in greater detail in Exhibit A, Northpoint Forensic Advisors LLC has estimated its fees for the forensic-accounting workstream at $175,000 to $300,000, based on a blended hourly rate of $475 per hour and an estimated range of 370 to 630 billable hours. The range reflects uncertainty regarding the volume and quality of the bank records and financial data that will ultimately be produced.
Estimated Local-Counsel Fees. We anticipate retaining or have already retained local counsel in three jurisdictions — Greece, Côte d'Ivoire, and Nigeria — and estimate aggregate local-counsel fees in the range of $50,000 to $100,000. The specific firms and lead counsel are as follows:
• Greek local counsel: Papadakis & Lekkas LLP, 28 Vasilissis Sofias Avenue, Athens 106 74, Greece. Lead partner: Stavros Lekkas. Scope: Greek corporate-law and securities-regulation issues, including director and officer obligations in connection with internal investigations, regulatory-notification requirements, and privilege considerations under Greek law.
• Nigerian local counsel: Okafor Bassey & Partners, 4th Floor, Marina Towers, 22 Marina Street, Lagos Island, Lagos, Nigeria. Lead partner: Ngozi Okafor. Scope: Nigerian data-protection and employment-law issues, including the Nigeria Data Protection Regulation 2019, as well as assistance with document collection from TNL and, if necessary, engagement with Nigerian regulatory authorities.
• Ivorian local counsel: Dossou & Mensah Avocats, Abidjan, Côte d'Ivoire. Retention to be formalized upon Ms. Karavelis-Stavrou's authorization. Scope: Ivorian data-privacy law (Loi n° 2013-450), employment law (Loi n° 2015-532), and assistance with document collection from TWA, employee communications, and potential disciplinary proceedings.
Total Estimated Professional Fees. Aggregating the foregoing components, we estimate total professional fees for the internal review in the range of $625,000 to $1,000,000. This range is necessarily broad at this stage, as the ultimate cost will be significantly influenced by the volume and complexity of the documents produced, the number and location of witness interviews required, and whether a voluntary disclosure to the DOJ and/or SEC is ultimately recommended and undertaken.
Fee Arrangement. As a reminder, C&H's engagement in this matter is on an hourly-fee basis at the following rates:
A 10% volume discount applies to aggregate C&H fees exceeding $500,000 in any calendar year. This discount is reflected in the upper end of the fee-estimate range set forth above.
V. OPEN ITEMS AND NEXT STEPS
We respectfully request a call with Ms. Karavelis-Stavrou during the week of September 19, 2022, to discuss the following items. We suggest scheduling at least 90 minutes for this call to allow adequate time for a substantive discussion of each topic.
(a) Timeline for completing document production. We wish to discuss a realistic but accelerated timeline for production of the outstanding critical document categories identified in Section I.B above, and to discuss the logistical measures — including a potential visit to the Abidjan office — necessary to achieve that timeline.
(b) Authorization to activate Northpoint Forensic Advisors LLC. We seek authorization to formally activate Northpoint's engagement and to direct Northpoint to begin mobilizing its field team. Northpoint has estimated a mobilization period of approximately two weeks from the date of activation.
(c) Authorization to retain Dossou & Mensah Avocats in Abidjan. We seek authorization to formalize the retention of Dossou & Mensah to advise on Ivorian data-privacy and employment-law issues, which are currently the principal impediment to the collection of Mr. Anouma's communications.
(d) Suspension of expediting-fee payments to Goldenshore. We wish to discuss the implementation of our recommendation to immediately suspend all expediting-fee payments to Goldenshore, including the content and delivery of any communication to Mr. Anouma regarding the suspension.
(e) Meridian Atlantic credit-facility issue. We wish to discuss the implications of the Section 5.18 anti-corruption representation and the Section 8.01(d) Event of Default provision in the Meridian Atlantic credit agreement, and to begin developing a strategy for addressing this issue with the bank at an appropriate time.
We will circulate a calendar invitation separately. In the interim, please do not hesitate to contact Victoria Chambers at (202) 555-8100 or Jasmine Thornton at (202) 555-8247 with any questions or comments.
This memorandum has been prepared at the direction of the General Counsel of Thalassa Shipping & Logistics SA in connection with anticipated litigation and enforcement proceedings. It is protected by the attorney-client privilege, the attorney work-product doctrine, and the common-interest privilege, and its contents should not be disclosed to any person outside the TSL legal department without the prior written consent of Calderwood & Harkness LLP.
EXHIBIT A
NORTHPOINT FORENSIC ADVISORS LLC Proposed Scope of Work and Fee Estimate
FCPA Internal Review — Thalassa Shipping & Logistics SA Matter No. 1044-00007
PRIVILEGED AND CONFIDENTIAL — PREPARED AT THE DIRECTION OF COUNSEL
I. Scope of Work
Northpoint Forensic Advisors LLC ("Northpoint") has been engaged by Calderwood & Harkness LLP, acting as outside counsel to Thalassa Shipping & Logistics SA ("TSL"), to perform forensic accounting and financial advisory services in connection with C&H's internal review of potential FCPA issues involving TSL's West African subsidiaries, Thalassa West Africa SARL ("TWA") and Thalassa Nigeria Limited ("TNL"), and their engagement of Goldenshore Maritime Consultants Ltd. ("Goldenshore"), a port-agency intermediary incorporated in Ghana.
The proposed scope of Northpoint's engagement encompasses the following workstreams:
1. Forensic review of TWA bank statements. Northpoint will obtain and analyze all available bank statements for TWA's accounts at Banque Equatoriale de Commerce SA ("BEC"), Abidjan, Côte d'Ivoire, for the period from January 1, 2018 through the present. The analysis will focus on identifying all payments to Goldenshore and any other intermediaries, agents, or vendors involved in port-agency or customs-facilitation services, and on identifying any unusual or unexplained payment patterns, including payments to unidentified or unverified recipients.
2. Forensic review of TNL bank statements. Northpoint will obtain and analyze all available bank statements for TNL's accounts at Harborview Commerce Bank and Aldermere Bancorp for the same period. The analysis will parallel the TWA bank-statement review described above.
3. Cash-flow tracing. Northpoint will trace the flow of funds from TWA and TNL through Goldenshore and, to the extent ascertainable from available records, to the ultimate recipients of those funds. This workstream is designed to determine whether payments made by TWA or TNL to Goldenshore were ultimately directed, in whole or in part, to foreign government officials, political parties, or other prohibited recipients.
4. Petty-cash review. Northpoint will review all available petty-cash ledgers and cash-disbursement vouchers maintained by TWA and TNL for the review period. Petty-cash disbursements represent a significant corruption risk in port-agency operations and will be analyzed for evidence of unsubstantiated or improperly documented payments.
5. Invoice reconciliation. Northpoint will reconcile all available Goldenshore invoices — including both commission invoices and expediting-fee invoices — to corresponding entries in TWA and TNL bank statements, general ledgers, and accounts-payable records. Discrepancies will be documented and investigated.
6. Identification of additional intermediaries and related-party transactions. In the course of the foregoing workstreams, Northpoint will identify any additional intermediaries, related-party transactions, or undisclosed payment channels that may warrant further investigation.
II. Estimated Timeline
Northpoint estimates that the foregoing scope of work can be completed in approximately 8 to 12 weeks from the date of activation, subject to the timely receipt of complete bank records, general-ledger data, petty-cash documentation, and invoices. Delays in the production of underlying records will extend the timeline proportionally. Northpoint will provide bi-weekly status reports to C&H during the engagement.
III. Fee Estimate
Northpoint estimates its total professional fees for this engagement at $175,000 to $300,000, based on a blended hourly rate of $475 per hour and an estimated total of 370 to 630 billable hours. The breadth of the range reflects the current uncertainty regarding the volume of records to be reviewed and the complexity of the tracing analysis, both of which are contingent on the completeness of the document production. Out-of-pocket expenses, including travel to Abidjan and Lagos, are estimated at an additional $15,000 to $25,000 and will be billed at cost.
IV. Engagement Team
The Northpoint engagement will be led by:
Sandra Bellingham, CPA, CFE Managing Director, Forensic & Dispute Advisory Services Northpoint Forensic Advisors LLC 1700 K Street NW, Suite 600 Washington, DC 20006 Telephone: (202) 555-4300
Email: sbellingham@northpointforensic.com
Ms. Bellingham is a Certified Public Accountant and Certified Fraud Examiner with over 18 years of experience in forensic accounting and financial investigations, including more than two dozen FCPA-related engagements in sub-Saharan Africa. Prior to joining Northpoint, Ms. Bellingham served as a Senior Forensic Accountant in the Division of Enforcement of the U.S. Securities and Exchange Commission, where she was responsible for the financial analysis supporting several significant FCPA enforcement actions.
The engagement team will also include a senior manager and two to three staff accountants with relevant experience in forensic-accounting engagements in the maritime, logistics, and extractive industries.
End of Exhibit A
TO: | Dimitra Karavelis-Stavrou, General Counsel & Chief Compliance Officer, Thalassa Shipping & Logistics SA
FROM: | Victoria Chambers, Partner; Jasmine Thornton, Senior Associate
DATE: | September 12, 2022
RE: | Interim Status Report — FCPA Internal Review, Matter No. 1044-00007
Timekeeper Level | Hourly Rate
Partner | $1,450
Senior Associate | $975
Associate | $725

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED ATTORNEY WORK PRODUCT

MEMORANDUM

I. STATUS OF DOCUMENT COLLECTION

II. OBSERVATIONS ON PARTIAL PRODUCTION

III. INTERIM RECOMMENDATIONS

IV. BUDGET AND TIMELINE

V. OPEN ITEMS AND NEXT STEPS

EXHIBIT A

Record

Parties

Dates

Amounts