Omega, Ex-Executive Talk Deal Over Bribe-Tainted Investment

May 19 2010 | 11:34am ET

Hedge fund Omega Advisors is in “advanced settlement discussions” with a former executive convicted in a bribery scandal in Azerbaijan.

Four years after first suing Clayton Lewis for allegedly involving the $6 billion hedge fund in the scheme to buy state-owned companies in the former Soviet republic, a federal judge has dismissed the suit, giving Omega two mores to bring the case back. Omega founder Leon Cooperman told Bloomberg News that his firm is nearing a deal with Lewis, who has also pleaded guilty to perjury.

According to Omega, Lewis pushed the hedge fund into a $125 million investment in Azerbaijan in 1998 without disclosing that it was part of a bribery scheme cooked up by himself and Czech businessman Viktor Kozeny. At his plea hearing six years ago on the bribery charges, Lewis admitted that he knew about the bribes before pushing the deal at Omega.

“Clayton Lewis brought me into a deal tainted by corruption,” Cooperman told Bloomberg. “He lied to me. He lied to co-workers.”

The deal wound up costing Omega a $500,000 fine when it cut a deal with federal prosecutors three years ago. While admitting no wrongdoing, Omega acknowledged “responsibility” for Lewis’s actions.

Omega has also accused Lewis of helping Kozeny steal its investment, a charge Lewis denies. Kozeny, who settled a lawsuit filed by Omega last year, has also been charged in the case and has been fighting extradition from the Bahamas.

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