Och-Ziff Capital Management Group LLC will pay about $400 million and a subsidiary will plead guilty to settle foreign bribery charges with the U.S. authorities in a criminal settlement, according to people familiar with the matter.

The largest publicly traded U.S. hedge fund firm will accept a deferred prosecution agreement, in which any charges would be dismissed after a period if the company stays out of trouble, while an African subsidiary will plead guilty to criminal charges involving bribery overseas, these people said. The settlement could be announced as early as Thursday, the people said.

The $400 million penalty, to be paid to the Justice Department and the Securities and Exchange Commission, will be one of the largest-ever foreign bribery settlements.

Och-Ziff will accept responsibility for bribing high level government officials for business in the Democratic Republic of Congo, Libya and several other African countries after a five-year investigation by the Justice Department and SEC, according to the people.

Criminal and civil investigations of its former employees who allegedly participated in the bribery are ongoing, and prosecutors are considering charges against individuals, the people said.

An Och-Ziff spokesman said the company had no comment.

A Justice Department spokeswoman declined to comment. The SEC had no comment.

The company's lawyers had argued it shouldn't be held criminally liable, and any potentially illegal behavior wasn't widely known at the firm, with profits from the activities in question totaling less than $100 million, people familiar with the matter have said.

Och-Ziff scored a victory of sorts by avoiding a guilty plea by the parent company, which could have carried severe reputational and regulatory consequences.

The settlement will cap a wide-ranging investigation into whether Wall Street firms paid bribes for business from sovereign-wealth funds across the world. Bank of New York Mellon Corp. agreed last year to pay $14.8 million to settle an SEC civil investigation into whether it violated bribery laws by giving internships to relatives of government officials connected to a Middle East sovereign-wealth fund. The bank neither admitted nor denied wrongdoing in the settlement.

The federal Foreign Corrupt Practices Act prohibits U.S. companies or those doing business in the U.S. from making payments or giving gifts to foreign officials in exchange for business, whether directly or through intermediaries. Violators can face both criminal and civil penalties.

News of the settlement first was reported by Bloomberg News.

At the center of the U.S. investigation has been Michael L. Cohen, Och-Ziff's former London-based head of European investing, who oversaw investments in Libya and other African countries, the people said. Mr. Cohen resigned in March 2013 after 15 years at the firm.

Mr. Cohen and an analyst who worked for him, Vanja Baros, received a "Wells notice" from the SEC, indicating that the agency's staff has recommended a civil enforcement action against them, and prosecutors also have investigated them criminally, people familiar with the matter have said.

A lawyer for Mr. Baros didn't immediately respond to requests for comment. A representative for Mr. Cohen declined to comment.

The investigations have focused on whether the men knew that Och-Ziff funds they deployed in deals would be used for bribes. Messrs. Cohen and Baros haven't been charged.

The Wall Street Journal reported in December 2014 that authorities were probing a $300 million investment in Och-Ziff funds from the Libyan Investment Authority in 2007, a fund controlled by the government of dictator Col. Moammar Gadhafi.

Prosecutors have scrutinized a broker's fee paid by Och-Ziff for an investment by Libya authorities believe was funneled in part to one or more officials of the Gadhafi regime, according to people familiar with the matter.

Authorities have also investigated loans by Och-Ziff that U.S. officials think funded illegal payments to members of President Joseph Kabila's government in the Democratic Republic of Congo, where the hedge-fund firm was investing in natural resources, the people said.

Write to Michael Rothfeld at michael.rothfeld@wsj.com and Christopher M. Matthews at christopher.matthews@wsj.com

 

(END) Dow Jones Newswires

September 28, 2016 14:35 ET (18:35 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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