Gaddafi, bribery, and a $40 billion hedge fund: The key details from the case against Och-Ziff

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Och-Ziff Capital Management has agreed to settle charges of bribery, paying nearly $200 million to the Securities and Exchange Commission, the SEC announced Thursday.

The hedge fund's CEO, Dan Och, agreed to pay nearly $2.2 million to settle the charges with the SEC, as did the firm's CFO, Joel Frank.

The firm was accused of bribery in its financial dealings in Africa, which the SEC says included run-ins with Muammar Gaddafi's relatives.

"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 said.

Here are just some of the details from the SEC order:

Libya

• "In early 2007, Och-Ziff Employee A sought assistance from Libyan Agent to secure an investment mandate whereby the LIA [the Libyan sovereign wealth fund] would invest in Och-Ziff's managed funds. Libyan Agent told Och-Ziff Employee A that he needed to receive a fee if his efforts on behalf of Och-Ziff were successful and resulted in an investment by the LIA. Och-Ziff Employee A agreed to have Och-Ziff pay the fee, knowing that Libyan Agent would use any fee he received to pay bribes."
• "Libyan Agent arranged a meeting for Och-Ziff Employee A in Vienna in March 2007 at which he introduced Och-Ziff Employee A to two Libyan government officials, including one of the sons of Colonel Muammar Gaddafi."
• "Och-Ziff Employee A communicated his progress with the LIA and Libyan Agent to Och. After the meeting in Vienna, Och-Ziff Employee A emailed Och that the '[m]eetings are amazing. They have 77 billion, half in cash and no idea who to give it to.'"
• "Libyan Agent and Och-Ziff Employee A engaged in a scheme with Libyan government officials to funnel bribe payments from Och-Ziff to those officials in exchange for their support for the LIA's investment with Och-Ziff. A third Libyan government official, the head of Libya's powerful state security services and Libyan Agent's longstanding patron in Libya, was also part of the bribery scheme. The scheme was successful. In or about November 2007, the LIA agreed to invest $300 million into Och-Ziff funds and those funds were invested on December 1, 2007."
• "In January and October 2008, Och-Ziff transferred a total of $3.75 million to Libyan Agent's shell company. Libyan Agent then directed the transfer of approximately $2.5 million from those funds to an account held by Tunisian Agent for the benefit of the two senior LIA officials, including the son of Colonel Gaddafi."

South Africa

• "Beginning in 2007, Och-Ziff formed the African Global Capital ('AGC') joint venture to invest in natural resource assets in Africa."
• "Och-Ziff chose a prominent figure in South Africa as a potential partner for AGC. This individual was a former government official as well as a successful businessman through his South African-based conglomerate. Although Och-Ziff envisioned his conglomerate as a part of AGC, it never became part of the joint venture. However, the co-founder of his South African conglomerate became the Chief Executive Officer of AML despite the conglomerate not contributing assets to the joint venture."
• "The first step towards the creation of AGC I took place in May 2007 when Och-Ziff entered into a series of loan agreements with South African Business Partner's entity. These loans, totaling more than $86 million, were ostensibly made to acquire mining rights in Africa which would then be contributed into AGC I upon its formation, to buy out minority shareholders in those assets, and to then fund mining operations. South African Business Partner used part of the funds loaned by Och-Ziff to acquire mining rights in Chad and Niger and to invest in an Africa-focused oil company, Company A. He also used a portion of the funds to pay bribes to facilitate the acquisitions."
• "Och-Ziff knew that South African Business Partner was using Och-Ziff funds to purchase mining rights either from foreign governments or unknown third-parties, buy out minority shareholders in various entities, and pay substantial amounts to “consultants” with no explanation for the work done to justify these payments."
• "Of the total amount contributed by Och-Ziff towards the Chad and Niger mining assets, only a portion went towards mining-related costs. South African Business Partner used a significant portion of the funds he was provided to pay bribes to proxies for high ranking government officials in Chad and Niger in order to secure assets for AGC. These bribes were falsely classified on an AGC I portfolio company's books as consultant payments, law firm payments, house rentals, and charitable contributions, among other designations. "

Democratic Republic of Congo

• "Beginning in 2008, Och-Ziff entered into a partnership an infamous Israeli businessman with close ties to government officials at the highest level within the DRC ('DRC Partner'). Although Och-Ziff did not enter into a written partnership agreement with DRC Partner, Och-Ziff Employee A, Och-Ziff employee B, and DRC Partner all understood the nature of the partnership and its purpose."
• "From Och-Ziff's first contact with DRC Partner in 2006, Och-Ziff Employee A was aware of allegations that DRC Partner used corruption and bribery in his dealings in the DRC. Och-Ziff Employee A emailed a third-party in 2006 that DRC Partner 'has some skeletons,' and that he 'has some suits outstanding regarding him bribing the drc gov.' Undeterred, Och-Ziff Employee A went forward with DRC Partner as Och-Ziff's business partner in the DRC."
• "In a meeting in or about February 2008, Och, Frank, and the senior attorney discussed the risk of corruption that would exist in any relationship with DRC Partner. Och was told that although it was not illegal to transact with DRC Partner, nonetheless both Frank and the senior Och-Ziff attorney expressed the view that Och-Ziff should not enter into any transaction with him because of the significant corruption risk. Och instructed Frank and others to move forward on potential transactions with DRC Partner unless new information was uncovered."

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