Hedge fund Sculptor Capital Management Ltd. should pay a group of former investors "at least $150 million" to restore losses suffered when the firm formally known as Och-Ziff Capital Management was convicted in a bribery scheme, said lawyers for the Department of Justice.
The government's position in a court filing Nov. 22 represents a departure from a March 2018 filing that it had not concluded the former shareholders of the now-defunct Canadian mining company Africo Resources Ltd. were entitled to restitution because they had not proved the cause and degree of harm after they lost rights to an African mine during the bribery scandal.
In September 2016, Och-Ziff and its wholly owned subsidiary, OZ Africa Management GP LLC, reached an agreement with the Justice Department to pay a criminal penalty of more than $213 million in connection with a widespread scheme involving bribing officials in the Democratic Republic of Congo and Libya.
According to DOJ officials, it was the first time a hedge fund had been held accountable for violating the Foreign Corrupt Practices Act. In a related civil case brought by the Securities and Exchange Commission at the time, Och-Ziff agreed to pay $199 million in disgorgement and founder and CEO Daniel S. Och agreed to pay a $2.2 million fine.
The case also highlights the risk that other FCPA cases could lead to claims for restitution. On Aug. 29, U.S. District Court Nicholas G. Garaufis in New York ruled that the Africo investors were victims entitled to restitution under the Mandatory Victims Restitution Act, saying that it applies to conspiracies to violate the FCPA.
Mr. Garaufis has yet to rule on the amount of the restitution for the investors. DOJ lawyers argued in their latest filing that the court should either hold Och-Ziff to its own 2008 valuation of at least $150 million conducted at the time of the criminal activity, or use the government's valuation of $188.7 million. "The process of calculating restitution is not overly complex," said U.S. Attorney Richard P. Donoghue and DOJ attorneys in their filing.