In one of the largest FCPA settlements in history, hedge fund Och-Ziff Capital Management Group LLC (“Och-Ziff”) recently resolved a long-running government inquiry by agreeing to $413 million in financial penalties and a subsidiary guilty plea. The enforcement action is notable for a number of reasons, not the least of which is that the SEC charged a sitting CEO and CFO of an issuer with violating the FCPA, the first time it has done so in the nearly 40-year history of the statute. For a number of years, U.S. enforcement authorities have threatened to hold financial services companies accountable for overseas corruption, and the Och-Ziff settlement is the first major move in that direction.

Conduct Related to the Democratic Republic of the Congo -

The conduct detailed in the DOJ and SEC settlement documents is remarkably broad. According to those documents, from 2005 to 2015 Och-Ziff and its subsidiaries engaged in widespread bribery schemes across Africa, touching on the Democratic Republic of the Congo (“DRC”), Libya, Guinea, Chad, and Niger. In the DRC, Och-Ziff engaged a business partner to acquire and consolidate mining assets. The DOJ and SEC portray the partner as character straight out of central casting, a man with “unsavory business associates” who was “perhaps the impetus behind the movie ‘Blood Diamond[].’” Despite knowing that the partner was “known to enjoy an extremely close relationship” with powerful DRC government officials, and despite warnings from in-house legal counsel, Och-Ziff hired him to “secure access to the attractive investment opportunities in the DRC mining sector.” Importantly, the CEO and the CFO knew of the individual’s reputation and the risks of partnering with him, but proceeded nonetheless.