Och-Ziff to Pay $400 Million to Settle U.S. Foreign Bribery Probe
September 28 2016 - 02:50PM
Dow Jones News
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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