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Sunday, June 23, 2024 | Back issues
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Och-Ziff Pays $213M Over African Bribery Scheme

BROOKLYN, N.Y. (CN) — A hedge fund manager will pay $213 million to settle claims that it bribed officials in Libya and Congo to get an edge on mineral mining rights, the first to have its feet held to the fire for violating the Foreign Corrupt Practices Act.

Och-Ziff Capital Management also struck a three-year deal with the Justice Department to defer prosecution, federal prosecutors said Thursday.

The publicly traded company pleaded guilty in Brooklyn Federal Court to at least one count of conspiracy to violate the Foreign Corrupt Practices Act before U.S. District Judge Nicholas Garaufis. Its parent company, OZ Africa, faces sentencing next March.

"Gaining the upper hand in a business venture by engaging in corrupt practices is bribery in its purest form," said Federal Bureau of Investigation Assistant Director in Charge William Sweeny. "Doing so with the intention of influencing a foreign official is nothing short of corruption.

Under the scheme, Och-Ziff paid out millions of dollars to senior officials in several parts of Africa in exchange for access to profitable investment opportunities.

"This type of behavior can't and won't be tolerated," Sweeny said.

U.S. Attorney Robert Capers said that "despite knowing that bribes were being paid to senior government officials, Och-Ziff repeatedly funded corrupt transactions," adding that the company was "so bold" in its practices that it removed language from its internal audit when an investigation by feds got underway.

"This case marks the first time a hedge fund has been held to account for violating the Foreign Corrupt Practices," noted U.S. Attorney Deputy Assistant U.S. Attorney David Bitkower.

The company had been hit with a four-count criminal complaint over the scheme to get valuable mining rights in African nations between 2005 and 2012. Shareholders slapped them with a lawsuit in New York Supreme County Court in June 2014.

The scam began in Libya in 2007 after a senior Och-Ziff employee helped secure an investment from Libyan sovereigns. In that deal, the company secured a $300 million agreement and landed a $3.7 million payoff as a so-called "finder's fee."

In a "parallel" proceeding announced Thursday. The U.S. Securities and Exchange Commission also announced that it has filed a cease-and-desist order against the company, and seeks an additional $199 million.

That brings the total amount sought to $412 million.

The FBI and the Internal Revenue Service continue to investigate the case. Also roped into the fray are the Swiss Federal Office of Justice, the British Virgin Islands Central Authority, and Maltese authorities who are helping in the investigation, the government said.

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