Och-Ziff Payment Scrutinized In Libya Bribery Case

Dec 5 2014 | 1:57pm ET

The government’s three-year-long bribery probe into Och-Ziff Capital Management has boiled down to a large payment that authorities believe may have gone to a son of former Libyan dictator Muammar Gaddafi.

Prosecutors and the Securities and Exchange Commission are probing how Och-Ziff and other firms, including the Blackstone Group, Goldman Sachs and JPMorgan Chase, obtained mandates from Libya’s sovereign wealth fund before Gaddafi’s ouster in 2011. Och-Ziff got $300 million from the fund.

The New York-based hedge fund paid a London middleman to arrange the mandate, a payment it calls a legitimate placement fee. But prosecutors believe it may have been a bribe in violation of the U.S. Foreign Corrupt Practices Act, The Wall Street Journal reports.

At issue is Och-Ziff’s relationship to the middleman, Lebanese businessman Mohamad Ali Ajami, who prosecutors believe had ties with the Libyan regime. According to the Journal, Ajami gave some of his fee to a friend of Gadaffi’s son, Seif al-Islam, at to an executive of the Libyan Investment Authority.

At about the same time, a hotel-development company co-founded by Ajami got a $40 million loan from the hedge fund.

Prosecutors are looking into the activities of Och-Ziff’s former head of European investing, Michael Cohen, who resigned from the firm last year.

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