Two former Och-Ziff Capital Management employees were charged Thursday by the SEC with violations of the anti-bribery provisions of the Foreign Corrupt Practices Act in connection with an alleged bribery scheme they conducted while working for the alternative asset manager.
London-based Michael L. Cohen, executive managing director and head of European investing, and Vanja Baros, a private equity analyst, “directed, caused and arranged for Och-Ziff Capital to pay tens of millions of dollars in bribes to government officials on the continent of Africa through agents, intermediaries and business partners of Och-Ziff. The bribes were paid to secure and attempt to secure special access, special opportunities and preferential treatment for Och-Ziff in its pursuit of profitable business in Africa,” according to the SEC's suit filed in U.S. District Court in New York.
The Securities and Exchange Commission's suit also alleges that Messrs. Cohen and Baros violated the Advisers Act on their own behalf, as well as “aiding and abetting” Och-Ziff Capital to do the same, by making “material misrepresentations and omissions” to the firm's investors regarding bribery transactions to government officials in several African countries; not disclosing conflicts of interest to investors; and using money from Och-Ziff's investment funds to pay for the bribes.
The SEC's case outlined seven corrupt transactions allegedly perpetrated by Messrs. Cohen and Baros, totaling $435 million.
The SEC seeks disgorgement of the “ill-gotten gains” by Messrs. Cohen and Baros, as well as civil penalty fines.
Neither Mr. Cohen nor Mr. Baros could be reached for comment. Joseph Snodgrass, an Och-Ziff spokesman, declined to comment.
Ronald G. White, a partner at Morrison & Foerster and attorney to Mr. Cohen, said: “Michael Cohen has an unblemished reputation built over the course of a career spent creating value for Och-Ziff's investors. Mr. Cohen has done nothing wrong and is confident that when all the evidence is presented it will be shown that the SEC's civil charges are baseless.”
In September, Och-Ziff Capital Management Group agreed to a $200 million settlement with the SEC over charges of bribing African government officials, and a criminal penalty of $213 million as part of a deferred prosecution agreement with the U.S. Department of Justice. A subsidiary, OZ Africa Management GP, pleaded guilty.
Additionally, Och-Ziff Chairman and CEO Daniel S. Och paid nearly $2.2 million to settle charges that he violated certain provisions of the Foreign Corrupt Practices Act. Och-Ziff's Chief Financial Officer Joel M. Frank also settled charges at that time, but the size of his penalty has not been announced. Both men settled without admitting or denying the findings.
Och-Ziff Capital Management's assets under management have fallen 23.4% to $37 billion as of Nov. 1 from a peak of $48.3 billion as of March 31, 2015. The firm's hedge funds have borne the brunt of investor withdrawals, with assets declining 31% to $23.4 billion as of Sept. 30 from $33.9 billion on March 31, 2015.
Och-Ziff has not announced the date of its fourth-quarter earnings call.