Och-Ziff, the $39 billion New York hedge fund, agreed on Thursday to pay $413 million in fines, penalties and disgorgements to settle US criminal and civil charges that it paid bribes to secure business in Africa over a five-year period.
The publicly traded fund, headed by Daniel Och, is the first hedge fund to be punished for violating the Foreign Corrupt Practices Act.
“Och-Ziff, one of the largest hedge funds, positioned itself to profit from the corruption that is sadly endemic in certain parts of Africa, including in Libya, the Democratic Republic of the Congo, Chad and Niger,” US Attorney Robert Capers said in a statement.
“Despite knowing that bribes were being paid to senior government officials, Och-Ziff repeatedly funded corrupt transactions.”
The hedge fund also entered into a three-year deferred prosecution agreement with the feds after its subsidiary, OZ Africa Management GP, pleaded guilty to paying bribes to DRC officials in order to secure investment opportunities that yielded $90 million in profits.
Under the agreement, Och-Ziff will pay $213 million in criminal penalties, hire a compliance monitor and continue to cooperate with the Department of Justice’s ongoing investigation.
The fund will also pay $200 million to the Securities and Exchange Commission to settle civil charges.
Separately, the 55-year-old investor agreed to pay $2.2 million to the SEC — without admitting or denying wrongdoing — to settle charges that he caused some of the FCPA violations by not heeding warnings from his legal team about business dealings in the DRC.
Och-Ziff CFO Joel Frank also agreed to settle for an amount that will be determined at a later date as the company falsely recorded the bribes in its books.
“This has been a deeply disappointing episode,” Och said in a statement. He added that the conduct was “inconsistent” with the firm’s “core values and not representative of our hundreds of employees worldwide, who are dedicated to serving our clients with the utmost integrity.”
The SEC’s Andrew Ceresney said: “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.”
Shares of Och-Ziff, which are down 28 percent this year, gained 5.7 percent Thursday, to $4.49.
