NEW YORK, N.Y. – A major Wall Street hedge fund has agreed to pay more than $400 million to settle charges accusing it of using a web of brazen middlemen to pay bribes to African officials, authorities said Thursday.
The Securities and Exchange Commission announced in Washington that it reached a $200 million civil settlement in the corruption scandal involving Och-Ziff Capital Management Group, considered the largest publicly traded hedge fund in the U.S. The Manhattan-based firm, which has offices across the globe and tens of billions of dollars under management, was ordered to pay another $213 million in criminal penalties in a related criminal case in federal court in Brooklyn, part of a broader U.S. crackdown on bribery of foreign officials in the world of international finance.
In the criminal case, an Och-Ziff subsidiary pleaded guilty on Thursday to conspiracy to violate the Foreign Corrupt Practices Act. In addition, an independent compliance monitor was appointed to hold Och-Ziff “accountable for placing profits above the law and help ensure that the conduct brought to light here never happens again at this company,” Brooklyn U.S. Attorney Robert Capers said.
The SEC had accused Och-Ziff of being part of a scheme to secure mining rights and influence officials in Libya, Chad, Niger, Guinea and Congo. It said Och-Ziff executives kept facilitating payments despite obvious red flags that something was amiss.
“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,” Andrew J. Ceresney, director of the SEC Enforcement Division, said in statement.
The firm’s chairman and chief executive, Daniel Och, was hit with $2.2 million in SEC penalties related to record-keeping violations in two transactions with Congo. The SEC said that he consented to the settlement without admitting its findings.
The hedge fund had previously disclosed to investors that it was the target of a foreign bribery investigation and that it had set aside more than $400 million to resolve it.
On Thursday, Och called the case “a deeply disappointing episode” and “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.”
Still unresolved is a related criminal case in Brooklyn charging a Gabonese man, Samuel Mebiame, with bribing African countries while a consultant on a joint venture involving Och-Ziff. Federal prosecutors described Mebiame as a “fixer” who routinely paid bribes to officials in Niger, Guinea and Chad, according to a criminal complaint.
The complaint says Mebiame told federal agents that he was “a one-man show” for getting uranium concessions for Och-Ziff and its partners and that his bribes included “nice cars.” His lawyer has declined to comment.
Associated Press writer Paul Wiseman contributed to this report.