US firm slammed with $413m fine for bribing African government officials
Posted by News Express | 30 September 2016 | 1,976 times
Hedge fund Och-Ziff Capital Management Group will pay $413m to settle charges it bribed officials in the DRC, Libya and other African countries, officials said Thursday.
Och-Ziff, which has more than $39bn under management, paid bribes to officials to secure mining rights and to win investment in the company from a Libyan sovereign wealth fund, according to officials from the US Justice Department and Securities and Exchange Commission.
The company passed millions to local officials including a son of Libya’s fallen dictator Muammar Gaddafi, according to the SEC. In addition to bribery in Libya and the Democratic Republic of the Congo, between 2007 and 2011 Och-Ziff also engaged in corruption-tainted transactions in Chad, Niger and Guinea. There were also “suspicious payments” in Zimbabwe, a report said.
The firm will pay $213m in criminal fines to the Justice Department and a further $200m in disgorgement of profits and interest to the SEC. Its Africa unit also entered a guilty plea to a single count of conspiracy to commit foreign bribery.
The company will be subject to the oversight of an outside compliance monitor for three years.
“Och-Ziff engaged in complicated, far-reaching schemes to get special access and secure significant deals and profits through corruption,” Andrew Ceresney, the SEC’s head of the enforcement, said.
According to the Justice Department, the case marked the first time a hedge fund had been held to account under US foreign bribery laws.
Under the 1977 Foreign Corrupt Practices Act, it is illegal for US companies and citizens to pay bribes to foreign officials to win business. Unlike similar laws in other developed countries, the US law is enforced by both criminal authorities and market regulators.
Two executives, the firm’s founder and chief executive officer, Daniel Och, and chief financial officer Joel Frank also agreed to settle civil charges brought by the SEC, which accused the men of ignoring red flags and permitting illegal transactions to proceed.
“Och-Ziff falsely recorded the bribe payments and failed to devise and maintain proper internal controls,” said Kara Brockmeyer, chief of the SEC Enforcement Division’s Foreign Corrupt Practices Act Unit.
Och will pay $2.2m in the SEC case while Frank has agreed to co-operate in the continuing investigation and any penalties against him will be assessed later, according to the SEC.
In a statement, Och expressed regret.
“This has been a deeply disappointing episode,” he said. “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.” He added that the company had taken steps to improve its conduct.
Och was personally involved in the bribery, according to the SEC, authorising two corrupt transactions in the Democratic Republic of the Congo.
The case gained additional notoriety last month when federal agents in Brooklyn detained Samuel Mebiame, a Gabonese consultant to an Och-Ziff joint venture who was arrested on charges of paying bribes to win mineral rights in three African countries.
In a conference call with reporters, the SEC’s Ceresney said the Och-Ziff matter had arisen from a so-called enforcement “sweep” begun in 2011 of the financial services industry’s dealings with sovereign wealth funds.