Two Ex-Och-Ziff Executives Accused by SEC in Bribery Schemeby and
Cohen and Baros were behind sprawling Africa graft campaign
The duo paid tens of millions of dollars in bribes, SEC says
Two former Och-Ziff Capital Management Group executives, including the ex-head of the hedge fund’s European office, were sued by U.S. regulators over allegations that they spearheaded a sprawling bribery scheme that involved paying tens of millions of dollars across Africa to win business.
The Securities and Exchange Commission’s enforcement action against Michael Cohen, who headed the European office, and Vanja Baros, an executive on Africa-related deals, follows a settlement with the U.S. government last year in which an Och-Ziff unit pleaded guilty to violating bribery laws and the firm agreed to pay $415 million.
In a statement released Thursday, the SEC called Cohen and Baros the driving forces behind illegal payments that New York-based Och-Ziff made to government officials, spanning from Libya to Chad and the Democratic Republic of Congo.
“Cohen and Baros were the masterminds of Och-Ziff’s bribery scheme that improperly used investor funds to pay bribes through agents and partners to officials at the highest levels of foreign governments,” Kara Brockmeyer, head of the SEC’s bribery unit, said in a statement.
Attorneys for Cohen and Baros said the charges are unfounded.
“Michael Cohen has done nothing wrong and is confident that when all the evidence is presented it will be shown that the SEC’s civil charges are baseless,” said his attorney, Ron White, in a statement.
"The allegations in the SEC’s complaint about Mr. Baros are without basis," his attorney, Mark S. Cohen, said in a statement "When the facts come out, it will be clear that Mr. Baros did nothing wrong."
The allegations are the latest involving billionaire Dan Och’s firm, which in September became the first hedge fund to be criminally sanctioned by the U.S. Justice Department in an emerging-economy bribery scheme.
The Justice Department and SEC said the firm made more than $100 million in illegal payments. Though the SEC said Och didn’t know about the bribes, the firm acknowledged that it failed to accurately reflect how assets were used and didn’t have adequate internal controls to prevent misconduct.
The alleged graft campaign started in 2007 and extended into 2012 with Cohen and Baros ensuring that Och-Ziff use investors’ cash, rather than the firm’s own capital, the SEC said. In its complaint, the SEC demanded a jury trial against Cohen and Baros.
The American born Cohen joined Och-Ziff in 1997 and moved to London shortly after to set up its European business. He became one of the city’s best known and wealthiest traders. In 2013, Cohen appeared on the annual Sunday Times list of the richest U.K. hedge fund managers for the first time, with an estimated fortune of 300 million pounds ($378 million).
Regulators say he also pursued something that many traders have been accused of: an illicit edge to get ahead of the competition.
To secure an investment from Libya’s sovereign wealth fund, Cohen hired a London-based businessman who had long-standing relationships with high-ranking government officials in the North-African nation, the SEC said.
At a 2007 meeting in Vienna organized by the businessman, Cohen met two officials who had “significant control ” over the Libyan Investment Authority’s investment decisions, according to the SEC’s complaint.
Cohen e-mailed an Och-Ziff colleague afterward, writing: “They have 77 billion, half in cash and no idea who to give it to. I haven’t been this excited in a while.”
The Libyan Investment Authority ultimately invested $300 million in Och-Ziff. In return, Cohen arranged for Och-Ziff to allocate about $40 million to a Libyan real estate development, while the unnamed London businessman paid $3 million in bribes to government officials, the SEC said.