On September 29, 2016, the Securities and Exchange Commission announced that Och-Ziff Capital Management Group will pay nearly $200 million to settle civil Foreign Corrupt Practices Act (FCPA) charges. Combined with the expected criminal penalty of $213 million from the U.S. Department of Justice (DOJ), Och-Ziff’s $413 million settlement will land it fourth on the list of the largest FCPA enforcement actions in history. The agreement also requires Och-Ziff to retain a compliance monitor for three years.
Alternative asset management company Och-Ziff was charged with violating the anti-bribery, books and records, and internal controls provisions of the FCPA. The charges alleged that Och-Ziff paid bribes to high-level foreign government officials to win natural resources deals in which the fund invested across Africa, including in Libya, Chad, Niger, Guinea and the Democratic Republic of Congo. As in many recent FCPA enforcement actions, the payments were reportedly made through third parties, such as intermediaries, agents, and business partners in Africa. As one example, Och-Ziff is said to have bribed the Libyan Investment Authority’s sovereign wealth fund to make substantial investments in Och-Ziff managed funds. Such bribes were improperly recorded in Och-Ziff’s books, including as payments for “Professional Services.”
This major enforcement action also serves as an example of the enforcement agencies’ focus on individual FCPA prosecutions. In addition to the substantial corporate penalty, Och-Ziff’s CEO and CFO have also individually settled charges. CEO and founder Daniel Och agreed to pay nearly $2.2 million to the SEC; CFO Joel Frank has agreed to pay a settlement that has not yet been assessed. Both executives allegedly ignored warnings from their legal and compliance teams and approved deals where they were aware of a high risk of corruption.