Och-Ziff Probed Over Congo Deals

Apr 28 2014 | 2:28pm ET

Federal authorities are investigating two loans Och-Ziff Capital Management made to finance controversial natural resources deals in the Democratic Republic of Congo.

Och-Ziff said last month that it faced Securities and Exchange Commission and U.S. Justice Department probes over its investments “in a number of companies in Africa.” Those companies are controlled by Israeli billionaire Dan Gertler.

Och-Ziff’s fund made two loans, totaling $234 million, to two of Gertler’s ventures in the Congo, where Gertler is close to President Joseph Kabila. Gertler has been accused of buying up assets in the country at a steep discount, allegations that he denies.

Och-Ziff lent Gertler enterprises $123 million in 2008 and $110 million in 2010. The hedge fund was paid back, without invoking the deals’ anticorruption clauses, in 2012 and 2013, respectively. The loans were made through British Virgin Islands and Cayman Islands companies, and Och-Ziff made a $36 million profit on the first loan.

But Och-Ziff’s role did not end there. According to one document, Och-Ziff and its partners in the first deal actually “visited” a mine acquired by Gertler, in the southern Congo, in March 2008. The mine was the subject of an ownership dispute at the time, The Wall Street Journal reports.

In its statement last month, Och-Ziff said it faced an investigation into potential violations of the Foreign Corrupt Practices Act. The hedge fund also acknowledged an investigation into alleged bribery at the Libyan Investment Authority.

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