The United States’ first foreign-bribery case against a hedge fund is full of dramatic detail.
More than $100 million (paywall) in bribes, sometimes bags stuffed with cash, was paid from one of New York’s best known hedge funds, Och-Ziff Management Capital, to corrupt officials in Libya, Zimbabwe, the Democratic Republic of Congo, and other African countries.
A private Airbus was rented for a Guinean official while two officials from Niger received an S-Class Mercedes sedan each. Bribes are discussed in casual shorthand over text message: “Yip. Pay the 77m, and we pay 2m withim [sic] 24hr,” one employee wrote of funds to help facilitate a deal in Guinea in 2011.
In a settlement agreed this week, after a five-year investigation, Och-Ziff will pay a $413 million fine to settle criminal and civil charges over paying these bribes to African governments for mining and other natural resource deals and investments.
The company’s Africa unit has pleaded guilty to being part of a scheme to bribe DRC officials. Daniel Och, founder and chief executive of Och-Ziff, will pay $2.2 million for a record keeping violation. The company’s chief financial officer, Joel Frank, will also be settling charges that he ignored signs of corruption.
The settlement is one of the largest under the US Foreign Corrupt Practices Act, which prohibits US companies from paying foreign officials, directly or indirectly, in exchange for business deals. Yet one key player—Och-Ziff’s partner in the DRC—has so far remained unscathed.
In a court filing (pdf), the SEC describes him as an ”infamous Israeli businessman with close ties to government officials at the highest level within the DRC.” An Och-Ziff attorney described in an email in 2008 as “perhaps the impetus behind the movie Blood Diamonds [sic].”
On behalf of Och-Ziff, this partner paid an alleged $100 million in bribes to the DRC president Joseph Kabila as well as other top officials over the course of 10 years, in exchange for assets in the government-controlled mining sector, according to court documents.
Bloomberg, the Wall Street Journal, Reuters, and other publications have all identified this man as Dan Gertler, a businessman who in his twenties became close to the Kabila family and eventually made billions off of the country’s diamond exports. He also has extensive investments in the country’s mining and oil sectors. According to Bloomberg, US prosecutors are still investigating Gertler.
A spokesperson for Gertler’s company said:
[It] vigorously contests any and all accusations of wrongdoing in any of its dealings in the DRC including those with Och Ziff. The Fleurette Group and Dan Gertler strongly deny the allegations announced today, which are motivated by a hedge fund trying to put behind it problems sparked by people that have nothing to do with Fleurette.