Och-Ziff will pay $413m and one of its subsidiaries is pleading guilty to violating anti-corruption laws, over charges the hedge fund paid bribes to Libya’s Gaddafi regime and other African nations.
Daniel Och, chief executive of the $39bn New York-listed hedge fund, agreed to pay $2.2m to settle the charges, said the Securities and Exchange Commission. The regulator said that in addition to the nearly $200m it will receive from Och-Ziff in disgorgement and interest, Och-Ziff has entered into a deferred-prosecution agreement with the Department of Justice in a parallel criminal proceeding and will pay a criminal penalty of $213m.
The settlement removes the uncertainty that has hung over the hedge fund since it disclosed it was under investigation by the SEC and DoJ two years ago.
The SEC said Och-Ziff executives “ignored red flags and corruption risks and permitted illicit transactions to proceed” in Libya, Chad, Niger, Guinea, and the Democratic Republic of Congo.
“Och-Ziff engaged in complicated, far-reaching schemes to get special access and secure significant deals and profits through corruption,” said Andrew Ceresney, director of the SEC’s enforcement division. “Senior executives cannot turn a blind eye to the acts of their employees or agents when they became aware of suspicious transactions with high-risk partners in foreign countries.”
“This has been a deeply disappointing episode,” Mr Och said. “This conduct is inconsistent with our core values and not representative of our hundreds of employees worldwide, who are dedicated to serving our clients with the utmost integrity. We have learned from this experience and taken significant steps to strengthen Och-Ziff. We are pleased to bring this matter to a conclusion and remain focused on generating returns in our funds.”
The settlement demonstrates a renewed effort by the DoJ to crack down on foreign bribery, after a light year on fines in 2015.
The US Foreign Corrupt Practices Act has banned overseas bribery since 1977, but the fine against Och-Ziff is only the second against a hedge fund for alleged bribery. Och-Ziff’s OZ Africa Management unit will plead guilty to one count of conspiracy to commit offences against the US.
“Firms will be held accountable for their misconduct no matter how they might structure complex transactions or attempt to insulate themselves from the conduct of their employees or agents,” said Kara Brockmeyer, chief of the SEC enforcement division’s unit dedicated to FCPA.
Och-Ziff this year set aside $414m to pay penalties it expected to incur as part of a deal to settle the bribery charges.
The SEC found that Mr Och caused violations in two transactions in the Democratic Republic of Congo, and the chief financial officer Joel Frank “caused violations” in transactions in that country and in Libya. A penalty will be assessed against Mr Frank at a future date. The executives did not admit or deny the findings.
Reputational risk could see some investors pull capital from Och-Ziff
An acute sensitivity to reputational risk among pensions, endowments and foundations makes Och-Ziff’s involvement in a bribery probe in Africa particularly perilous. Those investors account for almost half of the hedge fund’s $39bn of assets.
Some clients have pulled their money, shrinking the company’s assets from a peak of $48bn in July 2015. But the settlement will be a relief for the company as the uncertainty has deterred new investors, at a time when the hedge fund sector overall struggles with outflows and souring sentiment over high fees and underperformance.
As of July 1, pension funds accounted for 37 per cent of the assets Och-Ziff oversees, and foundations and endowments another 12 per cent. Those groups are “the most concerned” with reputational risk, according to Jefferies analysts led by Daniel Fannon.
$48bn
Och-Ziff’s assets at peak in July 2015, now said to stand at $39bn
Helping its prospects, performance in Och-Ziff’s Master Fund has improved. The fund, which accounts for just over half of assets, returned 2 per cent in August, its best month since November 2014. That pulled this year’s performance above its high watermark — meaning the fund can again earn incentive fees.
The company is under pressure to retain client money, as its fee-paying assets must not fall below $22bn for two successive quarters, or it will be judged to be in default against its five-year unsecured revolving credit facility.
Further, if a subsidiary pleads guilty, it must obtain a waiver from the US Department of Labor to continue managing money for retirement plans as a “qualified professional asset manager”.
“Losing QPAM would make life more difficult for Och-Ziff,” said Urska Velikonja, a law professor at Emory University.
But relatively little money is at stake — just 1 per cent of Och-Ziff’s assets would be affected, said a person with knowledge of the matter.
Och-Ziff went public in 2007 at $32 a share, and remains one of only a handful of hedge funds to have listed, alongside Man Group and Fortress.
Its shares had declined more than 70 per cent over the past year, hitting $3.21 in July. The stock has since recovered, rallying 5.6 per cent on Thursday to $4.49.
Cape Town - Africa’s biggest mobile network MTN has hit back at reports about allegations that it illegally repatriated R187bn ($13.92bn) out of Nigeria.
Reports on Tuesday emerged that Nigerian lawmakers have raised the fresh allegations and that the country’s Senate was set to investigate the matter.
Nigerian politician, Dino Melaye, has made a motion accusing MTN of repatriating the funds over 10 years starting in 2006, Bloomberg reported on Tuesday.
Four banks involved in the alleged illegal transfers are Citigroup, Standard Chartered, and Nigerian lenders Stanbic IBTC Holdings and Diamond Bank, the Bloomberg report said.
“The allegations made against MTN are completely unfounded and without any merit,” MTN Nigeria CEO Ferdi Moolman said in a statement on Wednesday morning.
This is just the latest controversy to hit MTN in Nigeria, its biggest market where it has around 50 million subscribers.
Regulators in Nigeria slapped MTN with a $3.9bn dollar fine last year for failing to meet a deadline to disconnect 5.1 million unregistered SIM cards.
MTN negotiated with regulators and the Nigerian government and then came to a deal earlier this year to pay 330 billion naira ($1bn) as part of a settlement.
MTN Nigeria also agreed to list the company on the West African nation’s bourse.
MTN operates in 22 countries across Africa, the Middle East and Asia and it has over 230 million subscribers.
British historian dies after savage beating in South Africa by armed robbers at his home
Robert Gerrard has died from his injuries after an attack in his South Africa home
ABritish historian who spent almost 20 years working as a tour guide in South Africa specialising in the Anglo-Zulu war has died after a savage beating by armed robbers at his home.
Robert Gerrard trained under David Rattray, the most celebrated historical storyteller in the region and a close friend of the Prince of Wales.
Mr Gerrard later became the resident tour guide at Isandlwana Lodge in KawZulu-Natal, with his home overlooking the hillside where one of the region's most famous battles took place.
The Royal Geographical Society Fellow and former British army officer died last week following complications from the multiple injuries he sustained, including brain damage, a shattered pelvis and severe burns, his family said on Tuesday.
“He was an incredibly fit and determined man until this,” his sister, Sally Gerrard Fox, said.
“He would be out striding the mountainside on tours every day. But he just wasn’t getting better, he was forcing himself to walk again but it was clear that the attack sounded the end of his career.”
Mr Gerrard, 74, a divorced father of two sons who live in the UK, laid claim to a lengthy family history both in South Africa and the military.
His great grandfather, Sir John Robinson, was the first prime minister of the British South African colony of Natal, he said in a recent blog post, and his father had been the commanding officer of The Gordon Highlanders, the British army infantry regiment that fought in the Anglo-Boer war along with both world wars.
Ampleforth College-educated Mr Gerrard served in Kenya, Malaysia, Singapore, Thailand and Borneo before moving to South Africa, where he first worked as a commodity broker before becoming a tour guide in KwaZulu Natal.
As the resident tour guide at Isandlwana Lodge, he became legendary among visitors who included former US president Jimmy Carter and his family.
He had, one visitor wrote, “one of those voices that you never got tired of hearing”.
Mr Gerrard had, one visitor wrote, “one of those voices that you never got tired of hearing”
“Rob was a huge drawcard,” said Joanne Hayes, a spokesman for the lodge. “But the damage and the injuries he suffered as a result of the break-in, he never really recovered.”
Mr Gerrard was attacked on the evening of February 25 after returning to his cottage after dinner with guests at the lodge.
“As he unlocked the door he saw one guy and punched him on the nose but didn’t realise that there was another one behind him with a gun,” Mrs Fox said.
“They beat the living hell out of him, smashed his head into the floor, tied him up, poured boiling water over him, fractured his pelvis in seven places.
“Afterwards, he was shattered not only that this had happened but the brutality behind what happened, the lack of clear reason for it.”
The thieves made off with two handguns and two rifles, one of which had been his father’s, along with credit cards and a signet ring they broke his finger to wrench off.
Mrs Fox said her brother had been left profoundly depressed by the attack.
“For the first time in my life, I could see that he was almost scared," she said. "I have never seen him scared of anything in my life but he was.”
A memorial service will be held overlooking the battlefield on October 29 and his ashes will be scattered there.
“A case of business robbery is being investigated by Nquthu SAPS,” said Captain Ngobile Gwala, a spokesman for the South African Police Service. “No arrests have been made, investigations are continuing.”
As Zimbabwe’s ruling Zanu PF political party struggles with fracturing internal power, two transitional plans — one from Western backers and another from China — are being refined in anticipation of the post-Mugabe era, The Zimbabwe Independent reported.
The Western package underwrites Vice President Emmerson Mnangagwa’s ascendancy, according to Zimbabwe Independent. The Chinese deal is largely designed to shore up First Lady Grace Mugabe and her Zanu PF faction’s political ambitions.
The Chinese government has come up with a $5 billion US financial rescue package for Zimbabwe to fund housing projects and agriculture ahead of the 2018 general elections. It’s part of a bid to counter the West’s proposed $2 billion US transitional Lima Plan, Zimbabwe Independent reported.
China’s plan is designed to offer President Robert Mugabe “a soft landing so that he does not leave Zimbabwe in ruins as it is now, but quits on a high, bequeathing a progressive, not disastrous, legacy to the nation,” Owen Gagare reported.
Zimbabwe and China sealed deals worth more than $4 billion when Mugabe visited China in 2014. Chinese President Xi Jinping paid a reciprocal visit to Zimbabwe in 2015 where and Mugabe signed more deals, according to Zimbabwe Herald.
Although it has been on the table for a while, the Chinese proposal was recently reworked from one focused on funding of infrastructure including railways to a package allocating $4 billion to agriculture and $1 billion to housing.
All the big geopolitical players are refining their transition strategies and post-Mugabe plans including the U.S., U.K. and South Africa, Zimbabwe Independent reported.
The Western-driven bailout was launched in October in Peru to help Zimbabwe clear $1.8 billion in debt to internationals financial institutions — including the International Monetary Fund, World Bank and African Development Bank — and secure $2 billion in new funding.
“The Lima Plan is being spearheaded by Mnangagwa’s key ally (Zimbabwean Finance Minister) Patrick Chinamasa, while the Chinese deal is being driven by Grace Mugabe’s close associate, local government Minister Saviour Kasukuwere,” an unnamed diplomat told the Zimbabwe Independent.
However the IMF said recently it will not finance Zimbabwe until reforms are put in place. IMF spokesman Gerry Rice said in a Sept. 1 briefing that the IMF would not be discussing a financing program with Zimbabwe.
Chinese’s $5 billion deal appears to still be on track so far. The funds will enable the Zanu PF government to build housing targeting low-income earners ahead of the 2018 general elections, Zimbabwe Indepenent reported.
China’s trade with Zimbabwe is now worth over $1 billion with many Chinese companies doing business in the country. Former colonizer the U.K. is also a big player in Zimbabwe and had more than 500 companies operating there at one time. South Africa is Zimbabwe’s largest trade partner. Zimbabwe gets more than 60 percent of its imports from South Africa and exports more than 50 percent of its goods to South Africa.
- See more at: http://afkinsider.com/132843/will-china-help-make-grace-mugabe-president-of-zimbabwe/?utm_source=AFKInsider+Newsletter&utm_campaign=00594d68c7-AFKInsider_Newsletter_9_20_169_20_2016&utm_medium=email&utm_term=0_0aff70cb26-00594d68c7-132949841#sthash.l9MOFPBB.O7bD0yr3.dpuf
