Investors claiming to have been harmed in a foreign bribery scheme involving Och-Ziff Capital Management Group's Africa subsidiary will get $136 million in restitution, a U.S. District Court in New York ruled Wednesday.
The ruling represents the last chapter in a multijurisdiction case against the publicly traded alternative investment and hedge fund firm now known as Sculptor Capital Management Ltd. The company disclosed the potential settlement in a July 24 8-K filing.
In September 2016, Och-Ziff and OZ Africa Management agreed to pay a combined $412 million in criminal and regulatory penalties imposed by the Department of Justice and the Securities and Exchange Commission for a bribery scheme involving officials in the Democratic Republic of the Congo, which caused the investors to lose mining rights in an African mine. The investors are former shareholders of now-defunct Canadian mining company Africo Resources Ltd.
In addition to the criminal settlement and a $213 million penalty, Och-Ziff and founder and CEO Daniel Och settled parallel civil charges by the SEC, with Mr. Och agreeing to pay a nearly $2.2 million fine and the company agreeing to disgorge $199 million.
Justice officials at first resisted the idea of restitution to the investors in part because of differing valuations that made it difficult to prove the cause and degree of harm caused by the bribery scandal. In 2019, DOJ officials were ordered to recognize the harm and they concluded that Sculptor should pay "at least $150 million" to the investors.
The case marked the first time a hedge fund was held accountable for violating the Foreign Corrupt Practices Act, according to the Justice Department.
It was also the first time that a court ruled that victims of a FCPA violation should be awarded restitution. In August 2019, the judge overseeing the settlement, District Court Judge Nicholas Garaufis, ruled that the Mandatory Victims Restitution Act applies to conspiracies to violate the FCPA.
"I think people will be thinking about it more in FCPA cases and the government will be thinking about it," said Moe Fodeman, partner of Wilson Sonsini Goodrich & Rosati, the law firm representing the investors.
A Sculptor spokesman declined to comment on the restitution ruling.