Hedge fund giant
Och-Ziff will pay more than $400 million to settle charges that it used
intermediaries and business partners to bribe African government officials.
The firm agreed to
pay nearly $200 million to the US Securities and Exchange Commission (SEC) as part of
the settlement, the regulator said in a statement released Thursday.
“Senior executives cannot turn a blind eye to the acts of their employees or agents.”Och-Ziff CEO Daniel
Och agreed to pay $2.2 million to settle charges that he “caused
certain violations” of the Foreign Corrupt Practices Act (FCPA). Chief
Financial Officer Joel Frank also settled SEC charges, but his penalty is yet
to be decided.
In addition, the
firm has agreed to pay $213 million to settle related charges from the
Department of Justice.
The SEC alleged
that Och-Ziff used “intermediaries, agents, and business partners” to pay
bribes to officials in Libya, Chad, Niger, Guinea, and the Democratic Republic
of the Congo.
In Libya, illicit
payments connected to Och-Ziff induced the Libyan Investment Authority, the
country’s $67 billion sovereign wealth fund, to invest in the company’s
products. Other bribes were used to secure mining rights for Och-Ziff funds and
to influence government officials, the SEC said.
“Och-Ziff engaged in
complicated, far-reaching schemes to get special access and secure significant
deals and profits through corruption,” said Andrew Ceresney, director of the
SEC’s enforcement division. “Senior executives cannot turn a blind eye to the
acts of their employees or agents when they [become] aware of suspicious
transactions with high-risk partners in foreign countries.”
failed to properly record the use of money and did not have adequate internal
checks and controls to prevent the bribes being paid.
“This conduct is inconsistent with our core values and not representative of our hundreds of employees worldwide.”“Firms will be held
accountable for their misconduct no matter how they might structure complex
transactions or attempt to insulate themselves from the conduct of their
employees or agents,” said Kara Brockmeyer, chief of the enforcement division’s
been a deeply disappointing episode,” CEO Och said in a statement. “This
conduct is inconsistent with our core values and not representative of our
hundreds of employees worldwide, who are dedicated to serving our clients with
the utmost integrity. We have learned from this experience and taken
significant steps to strengthen Och-Ziff. We are pleased to bring this matter
to a conclusion and remain focused on generating returns in our funds.”
News of the
regulatory action first
emerged in 2014, when Och-Ziff revealed in a 10-K filing that the SEC had been
issuing subpoenas and the Department of Justice had been requesting information
since 2011 relating to the company’s activities in Africa.
investigation is continuing, and has involved the co-operation of regulators in
the UK, the Channel Islands, Cyprus, and Gibraltar, as well as Switzerland’s
Ministry of Justice.
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