The Securities and Exchange Commission has charged two former executives at Och-Ziff Capital Management Group with being the driving forces behind a far-reaching bribery scheme that violated the Foreign Corrupt Practices Act.
Och-Ziff Capital Management Group (NYSE: OZM) is a hedge-fund management firm founded by former Goldman Sachs trader Daniel Och with $35 billion in assets under management. An affiliate of the company, OZ Institutional Credit Management LP, serves as sub-adviser to the NorthStar Corporate Fund, a non-traded closed end fund.
In September, the firm settled with the SEC in a related action for more than $400 million, and two senior executives – including Och, paid $2.2 million without admitting wrongdoing.
The SEC’s complaint alleges that Michael Cohen, who headed Och-Ziff’s European office, and an investment executive on Africa-related deals, Vanja Baros, caused tens of millions of dollars in bribes to be paid to high-level government officials in Africa to secure special access, special opportunities and preferential treatment for Och-Ziff in its pursuit of profitable business in the continent.
According to the complaint, in most instances, the bribes were paid with Och-Ziff Hedge Fund investors’ money rather than Och-Ziff’s own capital. Cohen and Baros allegedly took steps to circumvent Och-Ziff’s internal controls so that Och-Ziff would falsely record the bribes in their records as legitimate investments and/or operating expenses.
Their alleged misconduct induced the Libyan Investment Authority sovereign wealth fund to invest in Och-Ziff managed funds. Cohen and Baros also allegedly directed illicit efforts to secure mining deals to benefit Och-Ziff by directing bribes to corruptly influence high-ranking government officials in Libya, Chad, Niger, Guinea, and the Democratic Republic of the Congo.
“As alleged in our complaint, Cohen and Baros were the masterminds of Och-Ziff’s bribery scheme that improperly used investor funds to pay bribes through agents and partners to officials at the highest levels of foreign governments,” said Kara Brockmeyer, chief of the SEC’s FCPA unit.
The SEC’s complaint charges Cohen and Baros with violating the FCPA and Section 30A of the Securities Exchange Act, and aiding and abetting Och-Ziff’s violations. Cohen also is charged with violating Sections 206(1) and 206(2) of the Investment Advisers Act.
The SEC is seeking monetary penalties against Cohen and Baros among other remedies.