Banking, finance, and taxes

Och-Ziff Settles With SEC Over Bribery Charges

Chris Lange

Published: September 30, 2016 10:45 am

Last Updated: January 13, 2020 2:56 am

The U.S. Securities and Exchange Commission (SEC) recently announced that Och-Ziff Capital Management Group (NYSE: OZM) has agreed to pay nearly $200 million to the SEC to settle civil charges of violating the Foreign Corrupt Practices Act (FCPA).

The agency 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 report, 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 order found 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 CEO Daniel S. Och agreed to 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.

As part of its settlement agreement with the SEC, Och-Ziff acknowledged that it expected to enter into a deferred prosecution agreement with the U.S. Department of Justice in a parallel criminal proceeding.

Andrew J. Ceresney, director of the SEC Enforcement Division, commented:

Och-Ziff engaged in complicated, far-reaching schemes to get special access and secure significant deals and profits through corruption. 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.

Kara Brockmeyer, chief of the SEC Enforcement Division’s FCPA unit, added:

Och-Ziff falsely recorded the bribe payments and failed to devise and maintain proper internal controls. 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.

Shares of Och-Ziff were trading down 1.6% at $4.42 on Friday, with a consensus analyst price target of $4.52 and a 52-week trading range of $2.89 to $8.63.