by Carol Thompson and Andrew Henderson

The chairman of the board of directors of New York Chocolate & Confections Company has been arrested in the Ivory Coast as part of an alleged coffee and cocoa-bean money-laundering scandal, the United States Embassy in the Ivory Coast reported earlier this week.

Several players within the cocoa-bean sector of the Ivory Coast have been arrested, including New York Chocolate board Chairman Louis Okaigni Okaigni, according to news reports in that country.

San Francisco-based Lion Capital Management CEO Dr. Hausmann-Alain Banet, the minority owner of New York Chocolate, told The Valley News Wednesday that former New York Chocolate CEO Jean Claude Amon and Treasurer Yalle Agbre were also among the 23 people indicted in the scandal.

The indictments were handed down Friday, June 13. Each indictment included charges of embezzlement, breach of trust, looting of corporate assets, swindling, and forgery.

“Amon has been indicted,” said Dr. Banet. “They are waiting for him to take him to prison. They have not seen him. Amon and Agbre have not showed up. These two people who are associated with New York Chocolate are on the run right now. (Officials) called me from the Ivory Coast and asked me where they are. I don’t know where they are.”

Others who were indicted included Firmin Kouakou, president of the Fonds de Régulation et de Contrôle Café Cacao—a cocoa and coffee marketing cooperative created by the government of the Ivory Coast and comprised of growers, banks, insurance companies, investors, and the government—and FRC Chairwoman Angeline Kili. They are also members of the board of directors of New York Chocolate. The FRC owns 80 percent of the plant.

“We are accusing (Kouakou) as being one of the heads of that money laundering,” said Dr. Banet. “These two have been arrested. They are in prison right now. Take a look at a person like Angeline Kili, who is the wife of a former prime minister who is also number-two of the party that is in power in the country. He’s number two after the president of the country. She gets arrested, handcuffed, and thrown in jail as the result of New York Chocolate. That means that this is very, very serious.

“We were surprised a little bit because we didn’t believe that that country would actually arrest some people who are very, very close to the current president,” added. Dr. Banet. “They are very, very, very, very close to the current president. Actually, Firmin Kouakou was the director of campaign for the president’s re-election that is scheduled for next October.”

As of Wednesday, 13 or 14 people have turned themselves in on the indictment charges, Dr. Banet said. “All of them who have come in so far have been arrested,” he noted. “For Amon and Agbre, maybe you guys can tell us if they are still in the Fulton area. I know that they have been served. The Ivory Coast just called me today that they were supposed to be there yesterday for a hearing along with Okaigni, but only Okaigni showed up. They handcuffed him after a 55-minute hearing and they put him in jail.”

Some people involved tried to run and hide from the government, Dr. Banet added. “One tried to run and he went and hid in a church,” he related. “They got him last week. Another one is actually on the run right now, plus Amon and Agbre, who they can’t find.”

Citing several reports from Ivory Coast newspapers, the U.S. embassy also noted that the U.S. Federal Bureau of Investigations has started an investigation into the purchase of a former Nestle Company plant in Fulton. That investigation is evidently aimed at finding out if the purchase was used as a way for the cocoa and coffee industry to launder money, according to the embassy.

Dr. Banet confirmed that the FBI is investigating the situation surrounding the purchase of the chocolate plant.

“I can tell you that that was requested by us here,” said Dr. Banet regarding the FBI involvement. “We informed them of what has been going on and they interviewed us here. This chocolate factory was supposed to be producing since 2003. We are talking millions of dollars that were transferred. The point is, we are there to produce—to make this a success. Nothing has been produced at the plant.”

Arrests follow visit to Fulton

The arrests in the Ivory Coast come on the heels of a visit to Fulton by a delegation from that country last month. Those officials conducted a fact-finding investigation at the New York Chocolate and Confections plant and met with county and economic-development officials.

Representatives of the new president of the Ivory Coast traveled to Oswego County to confirm that the chocolate plant does indeed exist. One of the visiting representatives is the equivalent of the U.S. attorney general. Other representatives included judges and magistrates.

Dr. Banet said that he met with the country’s top prosecutor. “We gave them every investigation that we started here,” he said. “This is the conclusion of that. I think this is good news for Fulton.”

The Valley News first learned of the money-laundering allegations from a French reporter who contacted the newspaper about the Fulton plant in October of 2007. The Valley News became the first American media to break the news of the alleged scandal in the U.S.

Following The Valley News’ report, Amon and Agbre gathered a press conference at the chocolate plant and both adamantly denied to area news media any wrong-doing and money laundering. They further blamed the minority ownership of the plant for the allegations.

“No one wanted to believe us—even the local elected officials,” said Dr. Banet. “People keep supporting them. This is not politics. This is our business. We came there to make this a success. Unfortunately, we were involved with crooks. Now, their government is recognizing this.

“From all the bank accounts that were opened on behalf of New York Chocolate, we came up with somewhere around $60 million dollars,” said Dr. Banet regarding the money that was allegedly laundered. “There are also rumors of somewhere around $250 million that was sent. Maybe it’s true; I don’t know. The chief prosecutor said what they have found out so far is between $48 and $65 million.

“They used a company that our name is associated with and brought money into this country and had that money diverted to another location—and that’s a federal crime,” he added. “That’s why we contacted the FBI.”

Uncertain and controversial

From almost the beginning of its presence in Fulton after taking over operations of the former Nestle plant, New York Chocolate has been mired in controversy over ownership and allegations of impropriety.

The status of chocolate plant has been uncertain and controversial since Nestle left in 2003. In May of 2003, Nestle corporate officials closed the plant and transferred production to Brazil in South America. Nestle had been producing chocolate locally for more than 100 years when the plant closed.

After Nestle pulled out, two companies, taking the names “New York Chocolate” and “The Fulton Chocolate Company,” purchased the assets and expressed the intention to produce chocolate in Fulton very soon.

New York Chocolate purchased the building and most of the equipment. The Fulton Chocolate Company had planned to lease approximately 250,000 square feet of the plant to produce low-carbohydrate and private-label candy bars.

In July of 2004, however, New York Chocolate purchased the assets of The Fulton Chocolate Company to become the sole owner and operator of the plant.

Lion Capital Management, based in California, owns 20-percent of the plant after selling 80 percent to the Fonds de Régulation et de Contrôle Café Cacao—a cocoa and coffee marketing cooperative created by the government of the Ivory Coast and comprised of growers, banks, insurance companies, investors, and the government.

The Ivory Coast produces 1.2 million tons of cocoa beans per year, mostly from small family farms averaging 300 acres each. About 800,000 farmers are involved in the activity and together account for 40 percent of the world’s production of cocoa beans, making the Ivory Coast the world’s largest producer.

The Fulton factory, however, soon became submerged in debt. In April of 2005, government officials from the Ivory Coast traveled to Fulton to tour the plant and address the company’s debt.

Because of outstanding debt to National Grid, the power company had shut off natural gas to the plant. The chocolate company also owed a substantial amount of money to the Oswego County Industrial Development Agency as well to the City of Fulton.

Soon after the Ivory Coast delegation’s visit, the company paid its bills, including $170,000 to cover what the company owed for water-and-sewer services as well as $450,000 to cover what the company owed in county, city, and school taxes.

The plant, however, has remained idle and chocolate production has not been brought back to substantial operation.

Delaware court decision

Lion Capital Management and the FRC became involved in a legal dispute over ownership of New York Chocolate & Confections Co. A January 2007 Delaware court decision confirmed that New York Chocolate is 80-percent owned by the FRC and 20-percent owned by Lion Capital Management.

Fonds de Régulation et de Controle Café Cacao was the plaintiff in the civil litigation and Lion Capital Management was the defendant. The case was filed in Delaware because New York Chocolate & Confections is incorporated in that state.

The Ivory Coast group was seeking 100-percent ownership of New York Chocolate, and Lion Capital Management offered several counterclaims, including “fraud” and “unjust enrichment.” Central to the dispute was the validity of business conducted at a shareholders’ meeting held May 14, 2004 in Syracuse that included the appointment of ten directors and other key organizational decisions.

The judge in the case, William B. Chandler III, determined that the plaintiff failed to persuade the court that Lion Capital Management had no claim of ownership, but also determined that Lion Capital failed to prove its counterclaims. Hence, both entities left the court with the previously understood stock ownership intact.

As for Lion Capital Management’s counterclaim of “unjust enrichment,” although the judge stated that the defendant failed to prove this allegation, he did not go as far as to suggest no impropriety had occurred.

“(The) defendant has not shown that plaintiff (as opposed to employees of plaintiff) has been unjustly enriched,” he noted. He goes on to state, “Any remedy the defendant seeks should be sought from the directors, and the company derivatively.”

A footnote to this statement includes the following: “Such dividends, if distributed only to FRC, would constitute unjust enrichment of FRC, but payments to individual directors do not.…If one assumes, arguendo, that defendant is correct and that various FRC-appointed directors and executives have looted corporate assets, the FRC’s injuries are possibly greater than defendant’s.”