Och-Ziff Capital Management Group will pay nearly $200 million to the Securities and Exchange Commission (SEC) to settle civil charges of violating the Foreign Corrupt Practices Act (FCPA).
Och-Ziff CEO Daniel S. Och will pay nearly $2.2 million to settle SEC charges that he caused certain violations along with CFO Joel M. Frank, who also agreed to settle the charges.
Och-Ziff and OZ Management were represented by Mark Schonfeld of Gibson Dunn in New York.
Dan Och was represented by Alan Vinegrad of Covington in New York.
And Joel Frank was represented by Rich Morvillo of Morvillo LLP in Washington, D.C.
The SEC detected the misconduct while proactively scrutinizing the way that financial services firms were obtaining investments from sovereign wealth funds overseas.
The SEC’s subsequent investigation of Och-Ziff found that the fund used intermediaries, agents, and business partners to pay bribes to high-level government officials in Africa.
According to the SEC’s order, the illicit payments induced the Libyan Investment Authority sovereign wealth fund to invest in Och-Ziff managed funds.
Other bribes were paid to secure mining rights and corruptly influence government officials in Libya, Chad, Niger, Guinea, and the Democratic Republic of the Congo.
The SEC’s order finds that Och-Ziff executives ignored red flags and corruption risks and permitted illicit transactions to proceed.
”Och-Ziff engaged in complicated, far-reaching schemes to get special access and secure significant deals and profits through corruption,” said SEC enforcement chief Andrew J. Ceresney. ”Senior executives cannot turn a blind eye to the acts of their employees or agents when they became aware of suspicious transactions with high-risk partners in foreign countries.”
The SEC’s order finds that Och-Ziff’s books and records did not accurately describe the true purposes for which managed investor funds were used, and the company did not have adequate internal controls to detect or prevent the bribes.
”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 FCPA Unit. ”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.”
As part of its settlement agreement with the SEC, Och-Ziff acknowledged that it expected to enter into a deferred prosecution agreement with the Justice Department in a parallel criminal proceeding, and its subsidiary OZ Africa Management GP LLC agreed to enter into a plea agreement.
Och-Ziff is expected to pay a criminal penalty of $213 million.