Michael Cohen, a Och-Ziff Capital Management Group LLC (NYSE:OZM) executive in charge of selecting European and African investments, helped his employer to invest in the Central African Mining and Exploration Company (Camec) traded in London’s AIM exchange, Cam Simpson and Jesse Westbrook report for Businessweek. Camec explored and traded rights to mines with precious metals. Cohen recommended the investment as he saw growth potential in the Democratic Republic of Congo (DRC) mining assets being developed by Camec. Camec was also targeting undeveloped platinum rights located in Zimbabwe’s Great Dyke. Mugabe’s dictatorship took control of such rights from Anglo American Platinum Ltd (JSE:AMS) and was eager to sell amid turmoil during the 2008 election cycle when his power was threatened.
Mugabe’s regime was in dire need of cash. The dictator could lose power as a significant portion of the population has turned against him. Currency was worthless outside the country, inflation has hit records and money depreciated daily. Mugabe has ruled since 1980 and for the first time he faced possible defeat in elections. The $100 million provided by the consortium came in at the right time. In April 2008, the U.S. was attempting to strengthen sanctions against Mugabe and Zimbabwe first imposed in 2003 while the consortium was negotiating financing terms with Mugabe’s state-owned mining company executives.
Cohen persuaded Och-Ziff to invest in Camec
On March 2008, Camec announced that it was raising funds to pursue multiple African investment opportunities. Cohen persuaded Och-Ziff Capital Management Group LLC (NYSE:OZM) to invest and the hedge fund provided $150 million to Camec and become the fourth largest shareholder of the firm. BlackRock, Inc. (NYSE:BLK), GLG Partners and Credit Suisse Group AG (ADR) (NYSE:CS) provided much smaller stakes. On April 11, 2008 Camec announced a joint venture with Zimbabwe Mining Development Corp. (ZMDC), Mugabe’s state owned mining company. ZMDC owned the platinum mines formerly controlled by Anglo American Platinum Ltd (JSE:AMS) and got $100 million for the platinum claims. This transaction is currently being investigated by the U.S. Department of Justice and the SEC.
Violence escalated after Och-Ziff investment
According to James McGee, U.S. ambassador to Zimbabwe in 2008, thousands of opposition supporters were being displaced from their homes by government forces. Violence worsened as the June 27, 2008 runoff election approached. Murders of opposition party leaders were reported and done by men in Toyota pickup trucks without license plates. The opposition candidate withdrew from the race and the runoff election did not happen. Mugabe remained in power.
McGee investigated possible sources of funding for Mugabe’s government and uncovered the sale of platinum rights. There were tips by a Camec shareholder that a fellow Camec shareholder, Muller Conrad “Billy” Rautenbach and Gideon Gono, Zimbabwe’s central banker, were ordering pickup trucks off the government books. Former Camec CEO Andrew Stuart Groves spokeswoman said that the $100 million transaction was properly researched and that proceeds went to Zimbabwe’s international creditors. Michael Cohen left Och-Ziff in March 18, 2013 without explanation. Och-Ziff Capital Management Group LLC (NYSE:OZM) posted losses in its Camec investment. Camec was acquired and no longer trades in the London stock exchange. Robert Mugabe won elections last year and the U.S. government considers the outcome rigged.