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U.S. v. OZ Africa Management GP, LLC

 
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OZ Africa Management GP, LLC
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DOJ Criminal
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September 29, 2016
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U.S. v. OZ Africa Management GP, LLC
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U.S. v. OZ Africa Management GP, LLC, No. 1:16-cr-00515 (E.D.N.Y. 2016)
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The DOJ’s case against Och-Ziff (along with the SEC’s parallel enforcement action) is the first time a hedge fund has been found liable for violations of the FCPA and is the most significant FCPA enforcement action against a financial institution to date.
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Financial Services/Financial Institutions
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2007; 2008; 2009; 2010; 2011; 2012; 2013
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Senior officials in the Democratic Republic of the Congo; Ambassador-at-Large and national parliamentarian of the Democratic Republic of the Congo.
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OZ Africa Management GP, LLC (“OZ Africa”), is a Delaware limited liability company and an indirectly owned subsidiary of the New York-based hedge fund, Och-Ziff Capital Management Group LLC (“Och-Ziff”). Och-Ziff maintained a class of securities that was registered with the SEC and traded on the New York Stock Exchange. OZ Africa maintained Och-Ziff’s business interests in Africa.

From approximately 2005 until 2015, an unnamed Israeli businessman (“DRC Partner”) with significant diamond and mining interests in the Democratic Republic of the Congo allegedly paid more than $100 million in bribes to DRC officials to obtain special access to and preferential prices for opportunities in the government-controlled mining sector. Beginning in 2007, Och-Ziff employees allegedly initiated discussions with the DRC Partner about forming a joint venture between Och-Ziff and the DRC Partner, through the DRC Partner’s companies, for purposes of acquiring and consolidated mining assets in the DRC into one large publicly traded mining company. The DOJ claims that as part of the arrangement, the DRC Partner would offer Och-Ziff special access to investment opportunities in the DRC while Och-Ziff would finance the DRC Partner’s operations.

As part of the arrangement, between 2007 and 2011, Och-Ziff allegedly provided funds to the DRC partner in the form of equity investments and loans worth several hundred million dollars. According to the DOJ, throughout this process Och-Ziff was aware of a high-risk that a portion of the funds provided to the DRC Partner would be used as bribes. In fact, at least two employees of Och-Ziff were aware of and participated in making corrupt payments to DRC officials to secure mining interests using funds provided by Och-Ziff. Throughout this period, OZ Africa was allegedly used by Och-Ziff to transfer funds to the DRC Partner.

On September 29, 2016, the DOJ announced that OZ Africa had entered into a plea agreement for violations of the FCPA’s anti-bribery provisions. Separately, on the same day, the DOJ and SEC announced that the enforcement agencies had settled charges against Och-Ziff (along with related entities and personnel) for violations of the FCPA. According to the DOJ’s Plea Agreement with OZ Africa, OZ Africa would not be required to pay a criminal penalty for its alleged involvement in the bribery scheme provided that Och-Ziff paid a total criminal penalty of $213,055,689 pursuant to the separate DPA Och-Ziff entered into with the DOJ.
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Conspiracy - Anti-Bribery
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Plea
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OZ Africa was not ordered to pay a criminal penalty for violations of the FCPA provided that Och-Ziff paid a total criminal penalty of $213,055,689 pursuant to the DPA Och-Ziff entered into with the DOJ.
:
Not stated.
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0
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Agent of Domestic Concern, Agent of Issuer
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U.S.
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United States
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Contract Procurement/Retention, Other Business Advantage
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Not stated.
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Wire/check
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Customs Broker or Agent/Consultant, Joint Venture, Sales Agent/Consultant, Subsidiary Company
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Not stated.
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No
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No
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Malta, Switzerland