The Department of Justice (DOJ) has announced a landmark resolution concerning violations of the Foreign Corrupt Practices Act. The DOJ and the Securities and Exchange Commission (SEC) entered into a $413 million settlement with one of the world's largest hedge funds, Och-Ziff Capital Management Group LLC. Och-Ziff's African subsidiary also pleaded guilty to various felony and misdemeanour charges.
The settlement between US authorities and Och-Ziff relates to allegations that the hedge fund had bribed government officials in Libya, the Democratic Republic of the Congo (DRC) and several other African countries. Och-Ziff has also conceded that it made illegal payments to officials in the DRC, where Och-Ziff's case signals increased scrutiny by US officials into Foreign Corrupt Practices Act violations of hedge funds and private equity firms.
The settlement indicates that the DOJ intends to enforce the act strictly with little regard for the industry involved or the financial consequences. Appropriate anti-corruption policies and procedures will be key to mitigating risks, especially policies and procedures involving third-party dealings in emerging, high-risk markets, to ensure that they have robust programmes that can detect and escalate Foreign Corrupt Practices Act red flags or potential violations. In addition to comprehensive internal policies and controls designed to detect internal wrongdoing, it is imperative that companies conduct adequate pre-deal due diligence of any third party with whom the company intends to do business.
For further information on this topic please contact James McGovern, Robert Buehler or Garima Malhotra at Hogan Lovells US LLP's New York office by telephone (+1 212 918 3000) or email ([email protected], [email protected] or [email protected]). Alternatively, contact Stephanie Yonekura at Hogan Lovells' Los Angeles office by telephone (+1 310 785 4600) or email ([email protected]).The Hogan Lovells US LLP website can be accessed at www.hoganlovells.com.
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