Och-Ziff Capital Management Group LLC (NYSE:OZM) shares are down more than 10% today on further news regarding a federal investigation into the company for corrupt business practices. The hedge fund disclosed in a March filing that both the SEC and the Justice Department are investigating investments “in a number of companies in Africa” that might have violated the Foreign Corrupt Practices Act or other laws.
Och-Ziff is one of the world’s largest hedge funds. The firm is also unusual in that it is only one of a handful of publicly traded U.S. hedge funds.
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Och-Ziff: Financing Congo ventures
According to documents verified by the Wall Street Journal, Och-Ziff Capital Management Group LLC (NYSE:OZM) made two loans totaling $234 million back in 2008 and 2010 to companies controlled by mining kingpin Dan Gertler. Furthermore, both loans were routed through a complex series of offshore companies to obscure ownership.
Michael Cohen was the head of Och-Ziff Capital Management Group LLC (NYSE:OZM)’s London office at the time the loans were made and would likely have been the senior exec to give final approval for the loans. Mr. Cohen resigned last year after 15 years at the firm. The WSJ was unable to reach Cohen for comment.
Dan Gertler background
An Israeli, Gertler has made his fortune by investing in mines across Africa. More than a few deals that Gertler has been involved in have ended up with legal wrangling, and he has been frequently criticized for a notable lack of transparency in his business dealings.
According to the WSJ, Och-Ziff Capital Management Group LLC (NYSE:OZM)’s loans were major parts of the financing for two of Gertler’s mining projects in the Democratic Republic of Congo. Getler has openly acknowledged developing a working relationship with Congolese President Joseph Kabila, who is internationally shunned and has been accused of genocide.
A number of global anti-corruption organizations have been extremely critical of Gertler, claiming he gained control of his Congo assets under murky circumstances and apparently at steep discounts to true value.
Gertler’s Congo projects have also come under fire from the Africa Progress Panel, a group headed by former United Nations Secretary-General Kofi Annan, whose mission is advocating equitable and sustainable development in Africa.