Goldman Sachs move aside. Och-Ziff Capital Management Group LLC (NYSE:OZM) and other big Wall Street firms have been under scrutiny for years in connection with a broad investigation into bribery allegations overseas. Today there’s a new development involving a certain payment Och-Ziff made to a company in exchange for assistance in winning an investment from the Libyan government.
Och-Ziff pays questionable fee
Citing sources familiar with the investigation, The Wall Street Journal reports that investors believe the payment in question went to one of Col. Moammar Gadhafi’s son’s friends. The U.S. Dept. of Justice and the Securities and Exchange Commission have been investigating Wall Street firms’ overseas dealings for the past three years.
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Investigators are looking at how firms secured investments from former dictator Gadhafi, who was killed in Libya’s 2011 revolution. In Och-Ziff’s case, they’re looking into a fee the firm paid to a company run by a London middleman who assisted the firm in securing a $300 million investment from the Gadhafi regime.
Och-Ziff defends the payment
Och-Ziff Capital Management Group LLC (NYSE:OZM) reportedly said its lawyers believe the fee was legal, but investigators are considering whether it was essentially a bribe. Under the U.S. Foreign Corrupt Practices Act, firms that do business in the U.S. cannot give money or valuable items to foreign officials in exchange for their business.
According to The Wall Street Journal, it’s unclear if investigators have any evidence that any of the money Och-Ziff paid actually went to any officials within the Libyan government. The investigation in Libya involves determining whether any firms used placement agents to pay bribes to the government. The placement agents are known informally by the term “fixers” and have connections with the regime.
Among other firms, investigators are also looking into Goldman Sachs Group Inc (NYSE:GS)’s and The Blackstone Group L.P. (NYSE:BX)’s dealings in Libya.
Other parts of the investigation
The Wall Street Journal’s sources also said U.S. investigators are looking into Och-Ziff’s dealings with a company that was developing hotel projections. The same London middleman reportedly spearheaded those projects. An investor presentation given by developers indicates that Och-Ziff loaned $40 million in 2007.
One of the individuals are investigating in the case is Michael L. Cohen, who was Och-Ziff Capital Management Group LLC (NYSE:OZM)’s European Investing chief and was based in London. He was in charge of the firm’s business in Libya and throughout Africa. Cohen resigned from the firm in 2013.