A new report by RAID ‘Bribery in its purest form’: Och-Ziff, asset laundering and the London connection (released 5 January 2017) sets out the repeated failure of the UK regulatory authorities over a 10-year period to take action to prevent assets acquired through corrupt means being traded on the London markets.
In September 2016, the U.S. Department of Justice (DOJ) charged Och-Ziff Capital Management Group LLC (Och-Ziff), one of the largest hedge funds in the world, with conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA). The DOJ described the corrupt practices of Och-Ziff as ‘bribery in its purest form’. Och-Ziff is publicly listed, and the Securities and Exchange Commission (SEC), which regulates the New York stock exchange, also announced that Och-Ziff had agreed to settle civil charges of violating the FCPA. Overall, OchZiff agreed to pay combined civil and criminal penalties of $412 million, the largest ever settlement concerning a Wall Street firm.
RAID’s report examines the corrupt transactions in Democratic Republic of Congo (DRC) and suspicious payments in Zimbabwe, as detailed by the SEC and DOJ.
“All of the corrupt transactions outlined in the settlement and under a deferred prosecution agreement had a London connection: the deals were arranged through OchZiff’s London office and many of the entities involved were London-listed”, said Patricia Feeney, RAID’s Executive Director.
For many years, RAID has tracked how mining assets of dubious provenance have been laundered through UK-markets. One corruption scheme operated in the Democratic Republic of Congo, a country that has long been the focus of RAID’s campaign to expose the process by which rich mineral assets were used to fund a brutal war and to reward the government’s allies and vested interests in its aftermath. The US authorities also refer to a platinum deal in Zimbabwe, which RAID condemned for funding Mugabe’s violent 2008 election campaign, despite the existence of sanctions.
‘‘A key question is whether the UK authorities, far from preventing the platinum mine purchase or the later sale of shares controlled by sanctions targets, actually approved or licenced the transactions” said Patricia Feeney.
Over the past decade, at crucial moments, the UK authorities were in a position to take action over the ‘London connection’ – the key role played by Och-Ziff’s London office and the use of UK markets to list and launder African assets – that might have thwarted at least some of the corrupt deals and could have prevented ‘the flow of dirty money into the City’.
“Lessons must be learned from the Och-Ziff case and where necessary new legislation should be enacted and existing regulations more rigorously enforced to ensure that nothing on this scale happens again,” said Patricia Feeney.
'US hedge fund corruption settlement casts unfavourable light on City regulation', Press Release
‘Bribery in its purest form’: Och-Ziff, asset laundering and the London connection, Full Report
‘Bribery in its purest form’: Och-Ziff, asset laundering and the London connection, Executive Summary
U.S. Department of Justice press release and links to documents:
Securities and Exchange Commission press release and links to documents: