Dirty Dealings in Africa Result in SEC and DOJ Settlements for Och-Ziff and Two Executives

After months of speculation, the SEC and DOJ recently announced a settlement with Och-Ziff Capital Management and two of its employees for more than $400 million. The settlement papers indicate that Och-Ziff’s varied dealings in Africa – both in terms of procuring investors and making private equity investments – were characterized by a nonchalant attitude toward compliance. The company routinely worked with intermediaries with questionable backgrounds and known ties to government officials. Once deals were made, little effort was put into ensuring that funds were spent appropriately. According to a team of attorneys at MoloLamken, the settlement is a “significant development” in both the FCPA and hedge fund worlds. “For a number of years, DOJ and the SEC have indicated that their FCPA enforcement efforts are focused on private equity and hedge funds,” they said, “but the Och-Ziff settlement is the first major move in that direction. And it’s a significant one: the case represents one of the largest FCPA settlements in history against one of the world’s largest hedge funds.” A companion article in our next issue will distill further compliance takeaways from the case. See “Addressing Corruption Risks and Compliance Strategies for Co-Investors (Part One of Two)” (Jun. 24, 2015); Part Two (Jul. 8, 2015). 

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