Exhibit 10.4

EXECUTION COPY

WMP/JPL/LRT:JPM/JPL/DP

F. #2012R01716

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

 

         ---------------------------------------------------------------X

  

        UNITED STATES OF AMERICA

 

                         - against —

 

        OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC,

 

Defendant.                         

  

DEFERRED PROSECUTION AGREEMENT

 

Cr. No. 16-516 (NGG)

         ---------------------------------------------------------------X

  

Defendant Och-Ziff Capital Management Group LLC (“Och-Ziff” or the “Company”),
pursuant to authority granted by the Company’s Board of Directors, and the
United States Department of Justice, Criminal Division, Fraud Section, and the
United States Attorney’s Office for the Eastern District of New York
(collectively, the “Offices”), enter into this deferred prosecution agreement
(the “Agreement”).

CRIMINAL INFORMATION AND ACCEPTANCE OF RESPONSIBILITY

1. The Company acknowledges and agrees that the Offices will file the attached
four-count criminal Information in the United States District Court for the
Eastern District of New York charging the Company with two counts of conspiracy
to commit offenses against the United States in violation of Title 18, United
States Code, Section 371, that is, to violate the anti-bribery provisions of the
Foreign Corrupt Practices Act of 1977 (“FCPA”), as amended, Title 15, United
States Code, Section 78dd-1, one count of violating the books and records
provisions of the FCPA, in violation of Title 15, United States Code, Sections
78m(b)(2)(A), (b)(4), (b)(5), and 78ff(a), and one count of violating the
internal controls provision of the FCPA, in violation of Title 15, United States
Code, Sections 78m(b)(2)(B), (b)(4), (b)(5) and 78ff(a). In so doing, the
Company: (a) knowingly waives its right to indictment on these charges, as well
as all rights to a speedy trial pursuant to the Sixth Amendment to the United
States Constitution, Title 18, United States Code, Section 3161, and Federal
Rule of Criminal Procedure 48(b); and (b) knowingly waives any objection with
respect to venue to any charges by the United States arising out of the conduct
described in the Statement of Facts, which is attached to this Agreement as
Attachment A (“Statement of Facts”), and consents to the filing of the
Information, as provided under the terms of this Agreement, in the United States
District Court for the Eastern District of New York. The Offices agree to defer
prosecution of the Company pursuant to the terms and conditions described below.

2. The Company admits, accepts, and acknowledges that it is responsible under
United States law for the acts of its officers, directors, employees, and agents
as charged in the Information, and as set forth in the Statement of Facts, and
that the allegations described in the Information and the facts described in the
Statement of Facts are true and accurate. Should the Offices pursue the
prosecution that is deferred by this Agreement, the Company stipulates to the
admissibility of the Statement of Facts in any proceeding, including any trial,
guilty plea, or sentencing proceeding, and will not contradict anything in the
Statement of Facts at any such proceeding.

TERM OF THE AGREEMENT

3. This Agreement is effective for a period beginning on the date on which the
Information is filed and ending three (3) years from the later of the date on
which the Information is filed or the date on which the independent compliance
monitor (the “Monitor”) is retained by the Company, as described in Paragraphs
11 through 13 below (the “Term”). The Company agrees, however, that, in the
event the Offices determine in their sole discretion, that the Company has
knowingly violated any provision of this Agreement, an extension or extensions
of the term of the Agreement may be imposed by the Offices, in their sole
discretion, for up to a total additional time period of one year, without
prejudice to the Offices’ right to proceed as provided in Paragraphs 16 through
19 below. Any extension of the Agreement extends all terms of this Agreement,
including the terms of the independent compliance monitorship set forth in
Attachment D for an equivalent period, Conversely, in the event the Offices
find, in their sole discretion, that there exists a change in circumstances
sufficient to eliminate the need for the monitorship in Attachment D, and that
the other provisions of this Agreement have been satisfied, the Term of the
Agreement may be terminated early. If the Court rejects the Agreement, all the
provisions of the Agreement shall be deemed null and void, and the Term shall be
deemed to have not begun.

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RELEVANT CONSIDERATIONS

4. The Offices enter into this Agreement based on the individual facts and
circumstances presented by this case, including:

a. The Company did not voluntarily self-disclose the offense conduct to the
Offices, and as a result the Company was not eligible for a more significant
discount on the fine amount or the form of resolution;

b. The Company received credit, in addition to the two-point downward adjustment
to the Sentencing Guidelines, of 20 percent off of the bottom of the Sentencing
Guidelines range for its cooperation with the Offices’ investigation, including
its Audit Committee’s very thorough and comprehensive internal investigation
through counsel which included regular reports to the Offices, Company counsel’s
collection and production of voluminous evidence located in foreign countries,
and efforts to make current and former employees available for interviews. The
Company did not receive additional credit because of issues that resulted in a
delay to the early stages of the investigation, including failures to produce
important, responsive documents on a timely basis; and in some instances
producing documents only after the Offices flagged for the Company that the
documents existed and should be produced, and providing documents to other
defense counsel prior to their production to the government;

c. By the conclusion of the investigation, the Company had provided to the
Offices all relevant facts known to it, including information about individuals
involved in the offense conduct;

d. The Company engaged in significant remediation to improve is compliance
program and internal controls, and the Company has committed to continue to
enhance its compliance program and internal controls, including ensuring that
they satisfy the minimum elements of the corporate compliance program set forth
in Attachment C to this Agreement;

e. In addition to the Company’s remedial efforts, the Company has agreed to the
imposition of an independent compliance monitor to prevent the reoccurrence of
the misconduct;

f. The seriousness of the offense conduct including the high-dollar amount of
bribes paid to foreign officials, conduct in multiple, high-risk jurisdictions,
and the fact that the bribery occurred at a high level within the Company;

g. The Company has no prior criminal history; and

h. The Company has committed to continuing to cooperate with the Offices as
described in Paragraph 5 below.

FUTURE COOPERATION AND DISCLOSURE REQUIREMENTS

5. The Company shall cooperate fully with the Offices in any and all matters
relating to the conduct described in this Agreement and the Statement of Facts,
and any individual or entity referred to therein, as well as other conduct
related to corrupt payments, false books, records, and accounts, the failure to
implement adequate internal accounting controls, investment. adviser fraud, wire
fraud, obstruction of justice, and money laundering, subject to applicable law
and regulations, until the later of the date upon which all investigations and
prosecutions arising out of such conduct are concluded, or the end of the Term.
At the request of the Offices, the Company shall also cooperate fully with other
domestic or foreign law enforcement and regulatory authorities and agencies, as
well as the Multilateral Development Banks(“MDBs”), in any investigation of the
Company, its parent company or its affiliates, or any of its present or former
officers, directors, employees, agents, and consultants, or any other party, in
any and all matters relating to corrupt payments, false books, records, and
accounts, and the failure to implement adequate internal accounting controls.
The Company agrees that its cooperation pursuant to this paragraph shall
include, but not be limited to, the following:

a. The Company shall truthfully disclose all factual information not protected
by a valid claim of attorney-client privilege or work product doctrine with
respect to its activities, those of its parent company and affiliates, and those
of its present and former directors, officers, employees, agents, and
consultants, including any evidence or allegations and internal or external
investigations, about which the Company has any knowledge or about which the
Offices may inquire. This obligation of truthful disclosure includes, but is not
limited to, the obligation of the Company to provide to the Offices, upon
request, any document, record or other tangible evidence about which the Offices
may inquire of the Company;

b. Upon request of the Offices, the Company shall designate knowledgeable
employees, agents or attorneys to provide to the Offices the information and
materials described in Paragraph 5(a) above on behalf of the Company. It is
further understood that the Company must at all times provide complete,
truthful, and accurate information;

 

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c. The Company shall use its best efforts to make available for interviews or
testimony, as requested by the Offices, present or former officers, directors,
employees, agents and consultants of the Company. This obligation includes, but
is not limited to, sworn testimony before a federal grand jury or in federal
trials, as well as interviews with domestic or foreign law enforcement and
regulatory authorities. Cooperation under this Paragraph shall include
identification of witnesses who, to the knowledge of the Company, may have
material information regarding the matters under investigation; and

d. With respect to any information, testimony, documents, records or other
tangible evidence provided to the Offices pursuant to this Agreement, the
Company consents to any and all disclosures, subject to applicable law and
regulations, to other governmental authorities, including United States
authorities and those of a foreign government, as well as the MDBs, of such
materials as the Offices, in their sole discretion, shall deem appropriate.

6. In addition to the obligations in Paragraph 5 above, during the Term of the
Agreement, should the Company learn of credible evidence or allegations of
corrupt payments, false books, records, and accounts, and the failure to
implement adequate internal accounting controls, the Company shall promptly
report such evidence or allegations to the Offices.

PAYMENT OF MONETARY PENALTY

7. The Offices and the Company agree that application of the United States
Sentencing Guidelines (“USSG” or “Sentencing Guidelines”) to determine the
applicable fine range yields the following analysis:

a. The 2015 USSG are applicable to this matter.

b. Offense Level—Bribery Conduct (Highest Offense Level). Based upon USSG §
2C1.1 and the absence of any increase in the offense level under § 3D1.4, the
total offense level is 44, calculated as follows:

 

(a)(2)    Base Offense Level

     12   

(b)(1)    Multiple Bribes

     +2   

(b)(2)    Value of benefit received more than $150,000,000

     +26   

(b)(3)    High Level Official Involved

     +4      

 

 

 

Total Offense Level

     44   

c. Base Fine. Based upon USSG § 8C2.4(a)(2), the base fine is $221,933,010 (the
amount of pecuniary gain).

d. Culpability Score. Based upon USSG § 8C2.5, the culpability score is 6,
calculated as follows:

 

(a)

  

Base Culpability Score

     5   

(b)(3)

   the organization had 200 or more employees and an individual within
high-level personnel of the organization participated in, condoned, or was
willfully ignorant of the offense      +3   

(g)(2)

   The organization fully cooperated in the investigation and clearly
demonstrated recognition and affirmative acceptance of responsibility for its
criminal conduct      –2         

 

 

 

TOTAL

     6   

 

Calculation of Fine Range:     

Base Fine

     $221,933,010     

Multipliers

     1.2 (min)/2.4 (max)     

Fine Range

    
  $266,319,612 to
$532,639,224   
    

 

 

 

 

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The Company, directly or through an affiliate, agrees to transfer the monetary
penalty of $213,055,689 into an escrow account within ten (10) days of the
execution of this agreement for the benefit of the United States Treasury. The
monetary penalty in the amount of $213,055,689 shall be released from the escrow
account to the United States Treasury within ten (10) days of the entry of the
judgment against OZ Africa Management GP, LLC, in connection with its guilty
plea, pursuant to a plea agreement, in the United States District Court for the
Eastern District of New York filed simultaneously herewith. The parties agree
that any criminal fine that might be imposed by the Court against OZ Africa
Management GP, LLC, in connection with its guilty plea and plea agreement, will
be paid from the $213,055,689 monetary penalty held in the escrow account and
that any remaining balance will be transferred from the escrow account within
ten (10) days of entry of the judgment to the United States Treasury. The
Company and the Offices agree that the monetary penalty is appropriate given the
facts and circumstances of this case, including the factors described in
Paragraph 4 above. The $213,055,689 monetary penalty is final and shall not be
refunded. Furthermore, nothing in this Agreement shall be deemed an agreement by
the Offices that the $213,055,689 monetary penalty is the maximum penalty that
may be imposed in any future prosecution, and the Offices are not precluded from
arguing in any future prosecution that the Court should impose a higher fine,
although the Offices agree that under those circumstances, they will recommend
to the Court that any amount paid under this Agreement should be offset against
any fine the Court imposes as part of a future judgment. The Company
acknowledges that no tax deduction may be sought in connection with the payment
of any part of this $213,055,689 million monetary penalty. The Company shall not
seek or accept, directly or indirectly, reimbursement or indemnification from
any source with regard to the penalty or disgorgement amounts that the Company
pays pursuant to this Agreement or any other agreement concerning the conduct
set forth in the Statement of Facts entered into with an enforcement authority
or regulator.

CONDITIONAL RELEASE FROM LIABILITY

8. Subject to Paragraphs 16 through 19 below, the Offices agree, except as
provided in this Agreement, that they will not bring any criminal or civil case
against the Company or any of its current or former wholly-owned subsidiaries
relating to any of the conduct described in either the Statement of Facts or the
criminal Information filed pursuant to this Agreement. This Agreement does not
provide any protection against prosecution for any future conduct by the
Company. In addition, this Agreement does not provide any protection against
prosecution of any individuals, regardless of their affiliation with the
Company. The Offices, however, may use any information related to the conduct
described in the Statement of Facts against the Company:

a. in a prosecution for perjury or obstruction of justice;

b. in a prosecution for making a false statement;

c. in a prosecution or other proceeding relating to any crime of violence; or

d. in a prosecution or other proceeding relating to a violation of any provision
of Title 26 of the United States Code.

CORPORATE COMPLIANCE PROGRAM

9. The Company represents that it has implemented and will continue to implement
a compliance and ethics program throughout their operations, including those of
its affiliates, agents, and joint ventures, and those of its contractors and
subcontractors whose responsibilities include interacting with foreign officials
or other activities carrying a high risk of corruption, designed to prevent and
detect violations of the FCPA and other applicable anti-corruption laws.

10. In order to address any deficiencies in its internal accounting controls,
policies, and procedures, the Company represents that it has undertaken, and
will continue to undertake in the future, in a manner consistent with all of its
obligations under this Agreement, a review of its existing internal accounting
controls, policies, and procedures regarding compliance with the FCPA and other
applicable anti-corruption laws. If necessary and appropriate, the Company will
adopt new or modify existing internal controls, policies, and procedures in
order to ensure that the Company maintains: (a) a system of internal accounting
controls designed to ensure the making and keeping of fair and accurate books,
records, and accounts; and (b) rigorous anti-corruption compliance code,
standards, and procedures designed to detect and deter violations of the FCPA
and other applicable anti-corruption laws. The internal accounting controls
system and compliance code, standards, and procedures will include, but not be
limited to, the minimum elements set forth in Attachment C.

 

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INDEPENDENT COMPLIANCE MONITOR

11. Promptly after the Offices’ selection pursuant to Paragraph 12 below, the
Company agrees to retain a Monitor for the term specified in Paragraph 13 below.
The Monitor’s duties and authority, and the obligations of the Company with
respect to the Monitor and the Offices, are set forth in Attachment D, which is
incorporated by reference into this Agreement. Upon the execution of this
Agreement, and after consultation with the Offices, the Company will propose to
the Offices a pool of three (3) qualified candidates to serve as the Monitor. If
the Offices determine, in their sole discretion, that any of the candidates are
not, in fact, qualified to serve as the Monitor, or if the Offices, in their
sole discretion, are not satisfied with the candidates proposed, the Offices
reserve the right to seek additional nominations from the Company. The Monitor
candidates or their team members shall have, at a minimum, the following
qualifications:

a. demonstrated expertise with respect to the FCPA and other applicable
anti-corruption laws, including experience counseling on FCPA issues;

b. experience designing and/or reviewing corporate compliance policies,
procedures and internal controls, including FCPA and anti-corruption policies,
procedures and internal controls;

c. the ability to access and deploy resources as necessary to discharge the
Monitor’s duties as described in the Agreement; and

d. sufficient independence from the Company to ensure effective and impartial
performance of the Monitor’s duties as described in the Agreement.

12. The Offices retain the right, in their sole discretion, to choose the
Monitor from among the candidates proposed by the Company, though the Company
may express its preference(s) among the candidates. In the event the Offices
reject all proposed Monitors, the Company shall propose an additional three
candidates within thirty (30) calendar days after receiving notice of the
rejection. This process shall continue until a Monitor acceptable to both
parties is chosen. The Offices and the Company will use their best efforts to
complete the selection process within sixty (60) calendar days of the filing of
the Agreement and the accompanying Information. If the Monitor resigns or is
otherwise unable to fulfill his or her obligations as set out herein and in
Attachment D, the Company shall within thirty (30) calendar days recommend a
pool of three qualified Monitor candidates from which the Offices will choose a
replacement.

13. The Monitor’s term shall be three (3) years from the date on which the
Monitor is retained by the Company, subject to extension or early termination as
described in Paragraph 3 above. The Monitor’s powers, duties, and
responsibilities, as well as additional circumstances that may support an
extension of the Monitor’s term, are set forth in Attachment D. The Company
agrees that it will not employ or be affiliated with the Monitor or the
Monitor’s firm for a period of at least two (2) years from the date on which the
Monitor’s term expires. Nor will the Company discuss with the Monitor or the
Monitor’s firm the possibility of further employment or affiliation during the
Monitor’s term.

DEFERRED PROSECUTION

14. In consideration of the undertakings agreed to by the Company herein, the
Offices agree that any prosecution of the Company for the conduct set forth in
the Statement of Facts, and for the conduct that the Company disclosed to the
Offices prior to the signing of this Agreement, be and hereby is deferred for
the Term. To the extent there is conduct disclosed by the Company that the
parties have specifically discussed and agreed is not covered by this Agreement,
such conduct will not be exempt from further prosecution and is not within the
scope of or relevant to this Agreement.

15. The Offices further agree that if the Company fully complies with all of its
obligations under this Agreement, the Offices will not continue the criminal
prosecution against the Company described in Paragraph 1 above and, at the
conclusion of the Term, this Agreement shall expire. Within six (6) months of
the Agreement’s expiration, the Offices shall seek dismissal with prejudice of
the criminal Information filed against the Company described in Paragraph 1
above, and agrees not to file charges in the future against the Company based on
the conduct described in this Agreement and the Statement of Facts.

 

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BREACH OF THE AGREEMENT

16. If, during the Term, the Company: (a) commits any felony under U.S. federal
law; (b) provides in connection with this Agreement deliberately false,
incomplete, or misleading information, including in connection with its
disclosure of information about individual culpability; (c) fails to cooperate
as set forth in Paragraphs 5 and 6 of this Agreement; (d) fails to implement a
compliance program as set forth in Paragraphs 9 and 10 of this Agreement and
Attachment C; (e) commits any acts that, had they occurred within the
jurisdictional reach of the FCPA, would be a violation of the FCPA; or
(f) otherwise fails specifically to perform or to fulfill completely each of the
Company’s obligations under the Agreement, regardless of whether the Offices
become aware of such a breach after the Term is complete, the Company shall
thereafter be subject to prosecution for any federal criminal violation of which
the Offices have knowledge, including, but not limited to, the charges in the
Information described in Paragraph 1 above and charges that arise from the
conduct set forth in the Statement of Facts, which may be pursued by the Offices
in the United States District Court for the Eastern District of New York or any
other appropriate venue. Determination of whether the Company has breached the
Agreement and whether to pursue prosecution of the Company shall be in the
Offices’ sole discretion. Any such prosecution may be premised on information
provided by the Company or its personnel. Any such prosecution relating to the
conduct described in the Statement of Facts or relating to conduct known to the
Offices prior to the date on which this Agreement was signed that is not
time-barred by the applicable statute of limitations on the date of the signing
of this Agreement may be commenced against the Company, notwithstanding the
expiration of the statute of limitations, between the signing of this Agreement
and the expiration of the Term plus one year. Thus, by signing this Agreement,
the Company agrees that the statute of limitations with respect to any such
prosecution that is not time-barred on the date of the signing of this Agreement
shall be tolled for the Term plus one year. In addition, the Company agrees that
the statute of limitations as to any violation of federal law that occurs during
the Term will be tolled from the date upon which the violation occurs until the
earlier of the date upon which the Offices are made aware of the violation or
the duration of the Term plus five years, and that this period shall be excluded
from any calculation of time for purposes of the application of the statute of
limitations.

17. In the event the Offices determine that the Company has breached this
Agreement, the Offices agree to provide the Company with written notice prior to
instituting any prosecution resulting from such breach. Within thirty (30) days
of receipt of such notice, the Company shall have the opportunity to respond to
the Offices in writing to explain the nature and circumstances of the breach, as
well as the actions the Company has taken to address and remediate the
situation, which the Offices shall consider in determining whether to pursue
prosecution of the Company.

18. In the event that the Offices determine that the Company has breached this
Agreement: (a) all statements made by or on behalf of the Company to the Offices
or to the Court, including the Statement of Facts, and any testimony given by
the Company before a grand jury, a court, or any tribunal, or at any legislative
hearings, whether prior or subsequent to this Agreement, and any leads derived
from such statements or testimony, shall be admissible in evidence in any and
all criminal proceedings brought by the Offices against the Company; and (b) the
Company shall not assert any claim under the United States Constitution, Rule
11(f) of the Federal Rules of Criminal Procedure, Rule 410 of the Federal Rules
of Evidence, or any other federal rule that any such statements or testimony
made by or on behalf of the Company prior or subsequent to this Agreement, or
any leads derived therefrom, should be suppressed or are otherwise inadmissible.
The decision whether conduct or statements of any current director, officer or
employee, or any person acting on behalf of, or at the direction of, the
Company, will be imputed to the Company for the purpose of determining whether
the Company has violated any provision of this Agreement shall be in the sole
discretion of the Offices.

19. The Company acknowledges that the Offices have made no representations,
assurances, or promises concerning what sentence may be imposed by the Court if
the Company breaches this Agreement and this matter proceeds to judgment. The
Company further acknowledges that any such sentence is solely within the
discretion of the Court and that nothing in this Agreement binds or restricts
the Court in the exercise of such discretion.

20. Thirty (30) days after the expiration of the period of deferred prosecution
specified in this Agreement, the Company, by the Chief Executive Officer of the
Company and the Chief Financial Officer of the Company, will certify to the
Department that the Company has met its disclosure obligations pursuant to
Paragraph 6 of this Agreement. Each certification will be deemed a material
statement and representation by the Company to the executive branch of the
United States for purposes of 18 U.S.C. § 1001, and it will be deemed to have
been made in the judicial district in which this Agreement is filed.

 

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SALE, MERGER, OR OTHER CHANGE IN CORPORATE FORM OF COMPANY

21. Except as may otherwise be agreed by the parties in connection with a
particular transaction, the Company agrees that in the event that, during the
Term, it undertakes any change in corporate form, including if it sells, merges,
or transfers business operations that are material to the Company’s consolidated
operations, or to the operations of any subsidiaries or affiliates involved in
the conduct described in the Statement of Facts, as they exist as of the date of
this Agreement, whether such sale is structured as a sale, asset sale, merger,
transfer, or other change in corporate form, it shall include in any contract
for sale, merger, transfer, or other change in corporate form a provision
binding the purchaser, or any successor in interest thereto, to the obligations
described in this Agreement. The Company shall obtain approval from the Offices
at least thirty (30) days prior to undertaking any such sale, merger, transfer,
or other change in corporate form, including dissolution, in order to give the
Offices an opportunity to determine if such change in corporate form would
impact the terms or obligations of the Agreement.

PUBLIC STATEMENTS BY COMPANY

22. The Company expressly agrees that it shall not, through present or future
attorneys, officers, directors, employees, agents or any other person authorized
to speak for the Company, make any public statement, in litigation or otherwise,
contradicting the acceptance of responsibility by the Company set forth above or
the conduct described in the Statement of Facts. Any such contradictory
statement shall, subject to cure rights of the Company described below,
constitute a breach of this Agreement, and the Company thereafter shall be
subject to prosecution as set forth in Paragraphs 16 through 19 of this
Agreement. The decision whether any public statement by any such person
contradicting a fact contained in the Statement of Facts will be imputed to the
Company for the purpose of determining whether it has breached this Agreement
shall be at the sole discretion of the Offices. If the Offices determine that a
public statement by any such person contradicts in whole or in part the conduct
described in the Statement of Facts, the Offices shall so notify the Company,
and the Company may avoid a breach of this Agreement by publicly repudiating
such statement(s) within five (5) business days after notification. The Company
shall be permitted to raise defenses and to assert affirmative claims in other
proceedings relating to the matters set forth in the Statement of Facts provided
that such defenses and claims do not contradict, in whole or in part, a
statement contained in the Statement of Facts. This paragraph does not apply to
any statement made by any present or former officer, director, employee, or
agent of the Company in the course of any criminal, regulatory, or civil case
initiated against such individual, unless such individual is speaking on behalf
of the Company.

23. The Company agrees that if it, or any of its direct or indirect subsidiaries
or affiliates, issues a press release or holds any press conference in
connection with this Agreement, the Company shall first consult with the Offices
to determine: (a) whether the text of the release or proposed statements at the
press conference are true and accurate with respect to matters between the
Offices and the Company; and (b) whether the Offices have any objection to the
release.

24. The Offices agree, if requested to do so, to bring to the attention of law
enforcement and regulatory authorities the facts and circumstances relating to
the nature of the conduct underlying this Agreement, including the nature and
quality of the Company’s cooperation and remediation. By agreeing to provide
this information to such authorities, the Offices are not agreeing to advocate
on behalf of the Company, but rather are agreeing to provide facts to be
evaluated independently by such authorities.

LIMITATIONS ON BINDING EFFECT OF AGREEMENT

25. This Agreement is binding on the Company and the Offices but specifically
does not bind any other component of the Department of Justice, other federal
agencies, or any state, local or foreign law enforcement or regulatory agencies,
or any other authorities, although the Offices will bring the cooperation of the
Company and its compliance with its other obligations under this Agreement to
the attention of such agencies and authorities if requested to do so by the
Company.

NOTICE

26. Any notice to the Offices under this Agreement shall be given by personal
delivery, overnight delivery by a recognized delivery service, or registered or
certified mail, addressed to Chief, FCPA Unit, Fraud Section, Criminal Division,
United States Department of Justice, 1400 New York Avenue, Washington, D.C.
20530; Chief, Business and Securities Fraud Section, United States Attorney’s
Office, Eastern District of New York, 271-A Cadman Plaza East, Brooklyn, New
York 11201. Any notice to the Company under this Agreement shall be given by
personal delivery, overnight delivery by a recognized delivery service, or
registered or certified mail, addressed to David M. Becker, Esq., Chief Legal
Officer, Och-Ziff Capital Management Group LLC, 9 West 57th Street, New York,
New York 10019, with a copy to Mark K. Schonfeld, Esq., Gibson, Dunn & Crutcher
LLP, 200 Park Ave, New York, New York 10166. Notice shall be effective upon
actual receipt by the Offices or the Company.

 

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COMPLETE AGREEMENT

27. This Agreement, including its attachments, sets forth all the terms of the
agreement between the Company and the Offices. No amendments, modifications or
additions to this Agreement shall be valid unless they are in writing and signed
by the Offices, the attorneys for the Company and a duly authorized
representative of the Company.

 

AGREED:     FOR OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC:     /S/ David M. Becker  
  /S/ Mark K. Schonfeld David M. Becker, Esq.     Mark K. Schonfeld, Esq. Chief
Legal Officer     Joel M. Cohen, Esq. Och-Ziff Capital Management Group LLC    
Lee G. Dunst, Esq.     F. Joseph Warin, Esq.     Gibson Dunn & Crutcher LLP    
Counsel to the Company Date: September 29, 2016     FOR THE U.S. DEPARTMENT OF
JUSTICE:     ROBERT CAPERS     SANDRA MOSER United States Attorney     Principal
Deputy Chief Eastern District of New York     Criminal Division, Fraud Section  
  U.S. Department of Justice /S/ James P. Loonam     /S/ James P. McDonald

James P. Loonam

Jonathan P. Lax

David Pitluck

Assistant U.S. Attorneys

   

Leo R. Tsao, Assistant Chief

James P. McDonald, Trial Attorney

Date: 9/29/2016

 

 

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COMPANY OFFICER’S CERTIFICATE

I have read this Agreement and carefully reviewed every part of it with outside
counsel for Och-Ziff Capital Management Group LLC (the “Company”). I understand
the terms of this Agreement and voluntarily agree, on behalf of the Company, to
each of its terms. Before signing this Agreement, I consulted outside counsel
for the Company. Counsel fully advised me of the rights of the Company, of
possible defenses, of the Sentencing Guidelines’ provisions, and of the
consequences of entering into this Agreement.

I have carefully reviewed the terms of this Agreement with the Board of
Directors of the Company. I have advised and caused outside counsel for the
Company to advise the Board of Directors fully of the rights of the Company, of
possible defenses, of the Sentencing Guidelines’ provisions, and of the
consequences of entering into the Agreement.

No promises or inducements have been made other than those contained in this
Agreement. Furthermore, no one has threatened or forced me, or to my knowledge
any person authorizing this Agreement on behalf of the Company, in any way to
enter into this Agreement. I am also satisfied with outside counsel’s
representation in this matter. I certify that I am the Chief Legal Officer of
the Company and that I have been duly authorized by the Company to execute this
Agreement on behalf of the Company.

Date: September 29, 2016

 

OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC By:   /S/ David M. Becker  

David M. Becker, Esq.

Chief Legal Officer

 

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CERTIFICATE OF COUNSEL

I am counsel for Och-Ziff Capital Management Group LLC (the “Company”) in the
matter covered by this Agreement. In connection with such representation, I have
examined relevant Company documents and have discussed the terms of this
Agreement with the Company Board of Directors. Based on our review of the
foregoing materials and discussions, I am of the opinion that the representative
of the Company has been duly authorized to enter into this Agreement on behalf
of the Company and that this Agreement has been duly and validly authorized,
executed, and delivered on behalf of the Company and is a valid and binding
obligation of the Company. Further, I have carefully reviewed the terms of this
Agreement with the Board of Directors and the Chief Legal Officer of the
Company. I have fully advised them of the rights of the Company, of possible
defenses, of the Sentencing Guidelines’ provisions and of the consequences of
entering into this Agreement. To my knowledge, the decision of the Company to
enter into this Agreement, based on the authorization of the Board of Directors,
is an informed and voluntary one.

Date: 9/29/2016

 

By:   /S/ Mark K. Schonfeld  

Mark K. Schonfeld Esq.

Joel M. Cohen, Esq.

Lee G. Dunst, Esq.

F. Joseph Warin, Esq.

Gibson Dunn & Crutcher LLP

Counsel for Och-Ziff Capital Management Group LLC

 

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ATTACHMENT A

STATEMENT OF FACTS

The following Statement of Facts is incorporated by reference as part of the
Deferred Prosecution Agreement (the “Agreement”) between the United States
Department of Justice, Criminal Division, Fraud Section, the United States
Attorney’s Office for the Eastern District of New York (collectively, the
“Offices” or the “United States”) and the defendant Och-Ziff Capital Management
Group LLC (“Och-Ziff” or the “Company”). Och-Ziff hereby agrees and stipulates
that the following information is true and accurate. Certain of the facts herein
are based on information obtained from third parties by the Offices through
their investigation and described to Och-Ziff. Och-Ziff admits, accepts, and
acknowledges that it is responsible for the acts of its officers, directors,
employees, and agents as set forth below. Should the Offices pursue the
prosecution that is deferred by the Agreement, Och-Ziff agrees that it will
neither contest the admissibility of, nor contradict, this Statement of Facts in
any such proceeding. The Offices’ evidence establishes the following facts
during the relevant time frame and proves beyond a reasonable doubt the charges
set forth in the Criminal Information filed in the United States District Court
for the Eastern District of New York pursuant to the Agreement:

OCH-ZIFF AND RELEVANT ENTITIES AND INDIVIDUALS

1. Och-Ziff was a Delaware limited liability company and one of the largest
alternative asset and hedge fund managers in the world. Och-Ziff had its
headquarters in New York, New York and was listed on the New York Stock Exchange
on November 14, 2007. Since that time, Och-Ziff has had a class of securities
registered pursuant to Section 12 of the Securities Exchange Act of 1934 (the
“Exchange Act”) and has been required to file annual reports with the United
States Securities and Exchange Commission (“SEC”) under Section 15(d) of the
Exchange Act, Title 15, United States Code, Section 78o(d). Accordingly, since
November 14, 2007, Och-Ziff has been an “issuer” as that term is used in the
Foreign Corrupt Practices Act (“FCPA”), Title 15, United States Code, Sections
78dd-1(a) and 78m(b). Prior to its initial public offering on November 14, 2007,
Och-Ziff was a “domestic concern” within the meaning of the FCPA, Title 15,
United States Code, Section 78dd-2(h)(1).

2. Och-Ziff controlled numerous consolidated subsidiaries through which Och-Ziff
operated and provided investment advisory and management services for individual
hedge funds and alternative investment vehicles (the “Och-Ziff Hedge Funds”) in
return for management fees and incentive income. During the relevant time
period, Och-Ziff had approximately $30 billion in assets under management and
had offices located in New York, London and Hong Kong.

3. OZ Management LP was a Delaware limited partnership and a subsidiary of
Och-Ziff through which Och-Ziff registered as an investment adviser. Thus, OZ
Management LP was a “domestic concern” within the meaning of the FCPA, Title 15,
United States Code, Section 78dd-2(h)(1), and was an “agent” of an issuer,
Och-Ziff, within the meaning of the FCPA, Title 15, United States Code,
Section 78dd-1(a).

4. OZ Africa Management GP, LLC (“OZ Africa”) was a Delaware limited liability
company and a wholly-owned subsidiary of OZ Management LP. OZ Africa held
Och-Ziff’s interests for its joint-venture in Africa. OZ Africa was a “domestic
concern” within the meaning of the FCPA, Title 15, United States Code,
Section 78dd-2(h)(1), and was an “agent” of an issuer, Och-Ziff, within the
meaning of the FCPA, Title 15, United States Code, Section 78dd-1(a).

5. Africa Management Limited (“AML”) was a joint-venture company started by
Och-Ziff, OZ Africa and affiliated and subsidiary entities with various South
African business partners in 2007. AML established multiple investment funds
under the “African Global Capital” (“AGC”) name which invested in companies with
African mining and mineral assets and rights. The joint-venture partner and
Och-Ziff owned 60 percent and 40 percent of the interest in AML, respectively.
Och-Ziff s approval was required for all investments by AGC funds, and AML and
AGC relied upon Och-Ziff s legal and compliance functions to perform due
diligence, provide legal advice and document transactions.

6. “Och-Ziff Employee 1,” a U.S. citizen whose identity is known to the United
States and the Company, was a high-ranking officer of Och-Ziff. Och-Ziff
Employee 1 was based in Och-Ziff s New York office. Och-Ziff Employee 1 was an
officer of OZ Africa. Och-Ziff Employee 1 was a “domestic concern” within the
meaning of the FCPA, Title 15, United States Code, Section 78dd-2(h)(1), and was
an “officer” and “agent” of an issuer, Och-Ziff, within the meaning of the FCPA,
Title 15, United States Code, Section 78dd-1(a).

7. “Och-Ziff Employee 2,” a U.S. citizen whose identity is known to the United
States and the Company, was a high-ranking officer of Och-Ziff. Och-Ziff
Employee 2 was based in Och-Ziff s New York office. Och-Ziff Employee 2 was an
officer of OZ Africa and executed various documents on its behalf. Och-Ziff
Employee 2 was a “domestic concern” within the meaning of the FCPA, Title 15,
United States Code, Section 78dd-2(h)(1), and was an “officer” and “agent” of an
issuer, Och-Ziff, within the meaning of the FCPA, Title 15, United States Code,
Section 78dd-1(a).

 

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8. “Och-Ziff Employee 3,” a U.S. citizen whose identity is known to the United
States and the Company, was a senior executive of Och-Ziff and a member of
Och-Ziff’s partner management committee who headed Och-Ziff’s London office.
Och-Ziff Employee 3 was a “domestic concern” within the meaning of the FCPA,
Title 15, United States Code, Section 78dd-2(h)(1), and was an “employee” and
“agent” of an issuer, Och-Ziff, within the meaning of the FCPA, Title 15, United
States Code, Section 78dd-1(a).

9. “Och-Ziff Employee 4,” a U.S. citizen whose identity is known to the United
States and the Company, was a senior member of Och-Ziff s investor relations
department. Och-Ziff Employee 4 was a “domestic concern” within the meaning of
the FCPA, Title 15, United States Code, Section 78dd-2(h)(1), and was an
“employee” and “agent” of an issuer, Och-Ziff, within the meaning of the FCPA,
Title 15, United States Code, Section 78dd-1(a).

10. “Och-Ziff Employee 5,” an Australian citizen whose identity is known to the
United States and the *Company, was an employee of Och-Ziff Management Europe
Limited, the London based subsidiary of OZ Management LP, and a member of
Och-Ziff s European private investment team, which also had responsibility for
investments in Africa. Och-Ziff Employee 5 was responsible for overseeing
certain Och-Ziff investments involving mineral extraction, oil and other natural
resources in Africa, and thus was an “employee” and “agent” of an issuer,
Och-Ziff, within the meaning of the FCPA, Title 15, United States Code,
Section 78dd-1(a).

11. “Och-Ziff Employee 6,” a U.S. citizen whose identity is known to the United
States and the Company, was a member of Och-Ziff’s legal department and worked
in multiple Och-Ziff offices. Och-Ziff Employee 6 was a “domestic concern”
within the meaning of the FCPA, Title 15, United States Code,
Section 78dd-2(h)(1), and was an “employee” and “agent” of an issuer, Och-Ziff,
within the meaning of the FCPA, Title 15, United States Code, Section 78dd-1(a).

12. “DRC Partner,” an Israeli businessman whose identity is known to the United
States and the Company, had significant interests in the diamond and mineral
mining industries in the Democratic Republic of the Congo (the “DRC”). Och-Ziff,
through OZ Africa, AGC and various subsidiary companies, and DRC Partner were
investment partners for mining and mineral opportunities in the DRC. For these
purposes, DRC Partner was an “agent” of an issuer, Och-Ziff, within the meaning
of the FCPA, Title 15, United States Code, Section 78dd-1(a).

13. “Libya Intermediary,” an individual whose identity is known to the United
States and the Company, was a London-based middleman with connections to foreign
officials in Libya. Libya Intermediary was retained by Och-Ziff to act as an
agent on behalf of Och-Ziff to obtain a $300 million investment from the Libyan
Investment Authority (“LIA”), and thus was an “agent” of an issuer, Och-Ziff,
within the meaning of the FCPA, Title 15, United States Code, Section 78dd-1(a).

FOREIGN GOVERNMENT ENTITIES AND OFFICIALS

A. Democratic Republic of the Congo

14. “DRC Official 1,” an individual whose identity is known to the United States
and the Company, was a senior official in the DRC who had the ability to take
official action and exert official influence over mining matters in the DRC. DRC
Official 1 was a “foreign official” within the meaning of the FCPA, Title 15,
United States Code, Sections 78dd-1(f)(1) and 78dd-2(h)(2).

15. “DRC Official 2,” an individual whose identity is known to the United States
and the Company, was a senior official in the DRC and close advisor to DRC
Official 1. Since at least 2004, DRC Official 2 was an Ambassador-at-Large for
the DRC government and also a national parliamentarian. DRC Official 2 had the
ability to take official action and exert official influence over mining matters
in the DRC, and was a “foreign official” within the meaning of the FCPA, Title
15, United States Code, Sections 78dd-1(f)(1) and 78dd-2(h)(2).

B. Libya

16. The LIA was formed in 2006 to serve as Libya’s sovereign wealth fund to
invest and manage the country’s oil revenues on behalf of the Libyan government.
The LIA was formed as part of the Libyan government’s rapprochement with Western
governments. The LIA was overseen by senior Libyan officials, was controlled by
the Libyan government, and performed a government function on behalf of Libya.
The LIA was an “agency” and “instrumentality” of a foreign government, as those
terms are used in the FCPA, Title 15, United States Code, Sections 78dd-1(f)(1)
and 78dd-2(h)(2).

17. “Libyan Official 1,” an individual whose identity is known to the United
States and the Company, was a close relative of a high-ranking official in the
Libyan government. Libyan Official 1 did not hold a formal position within the
Libyan government, but possessed and used a Libyan diplomatic passport and
conducted high profile foreign and domestic affairs on behalf of the Libyan
government. Libyan Official 1 made administrative and investment decisions for
the LIA, including through proxies like “Libyan Official 3,” as described more
fully below. Libyan Official 1 was a “foreign official” within the meaning of
the FCPA, Title 15, United States Code, Sections 78dd-1(f)(1) and 78dd-2(h)(2).

 

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18. “Libyan Official 2,” an individual whose identity is known to the United
States and the Company, was a high-ranking official in the Libyan government who
could influence commercial matters in Libya. Libyan Official 2 could also
influence the granting of visas and landing permits for foreign visitors to
Libya. Libyan Official 2 was a “foreign official” within the meaning of the
FCPA, Title 15, United States Code, Sections 78dd-1(f)(1) and 78dd-2(h)(2).

19. “Libyan Official 3,” an individual whose identity is known to the United
States and the Company, was a high-ranking official at the LIA who could
influence investment decisions. Libyan Official 3 was a “foreign official”
within the meaning of the FCPA, Title 15, United States Code, Sections
78dd-1(f)(1) and 78dd-2(h)(2).

OVERVIEW OF THE CORRUPTION SCHEMES

20. In or about and between 2005 and 2015, DRC Partner, together with others,
paid more than one-hundred million U.S. dollars in bribes to DRC officials to
obtain special access to and preferential prices for opportunities in the
government-controlled mining sector in the DRC. Beginning in December 2007,
Och-Ziff, through Och-Ziff Employee 3 and Och-Ziff Employee 5, had discussions
with DRC Partner about forming a joint venture between Och-Ziff and DRC Partner,
through DRC Partner’s companies, for the purpose of acquiring and consolidating
valuable mining assets in the DRC into one large publicly traded mining company.
The underlying premise of the proposed joint venture was that DRC Partner had
special access to attractive investment opportunities in the DRC through his
relationships with officials at the highest levels of the DRC government. In
return for access to these attractive investment opportunities, Och-Ziff would
finance DRC Partner’s operations in the DRC. Och-Ziff Employee 3 and Och-Ziff
Employee 5 understood that Och-Ziff’s funds would be used, in part, to pay
substantial sums of money to DRC officials to secure access to these
opportunities in the DRC mining sector. Although the parties did not enter into
a written partnership agreement, as a result of agreeing to the corrupt
arrangement, Och-Ziff Employee 3 and Och-Ziff Employee 5 secured long-term deal
flow for Och-Ziff and AGC in the DRC mining sector.

21. In or about and between 2007 and 2010, Och-Ziff engaged Libya Intermediary
as a third-party agent to assist in securing investments from the LIA into the
Och-Ziff Hedge Funds. Libya Intermediary paid bribes to Libyan officials to
corruptly influence those officials and thereby obtain investments from the LIA.
Och-Ziff entered into a consulting agreement to pay Libya Intermediary a
“finder’s fee” of $3.75 million, while Och-Ziff Employee 3 knew that all or a
portion of the fee would be paid to foreign officials in return for influencing
the LIA to make a $300 million investment into the Och-Ziff Hedge Funds. As a
result of the corrupt payments, Och-Ziff, through Och-Ziff Employee 3, secured
the investment of LIA funds and approximately $100 million in pecuniary gain.

22. In addition, Och-Ziff and AGC made investments in companies doing business
in the mining and mineral sectors of various developing countries, including
countries with a documented high risk for corruption such as the DRC, Libya,
Chad, and Niger. These investments by Och-Ziff, AGC and their business partners
were facilitated, through the use of illegal bribery. Och-Ziff knowingly failed
to implement and maintain an adequate system of internal accounting controls
designed to detect and prevent the misappropriation of assets by its employees,
agents, and business partners. It further did not appropriately respond to due
diligence that was performed on proposed business transactions, agents,
counterparties, and business partners or controls for payments to third parties.

THE DRC CORRUPTION SCHEME

A. Och-Ziff’s Agreements with DRC Partner

23. In or about and between December 2007 and March 2008, Och-Ziff, through
Och-Ziff Employee 3 and Och-Ziff Employee 5, began discussions with DRC Partner
and others about forming a joint venture for the purpose of acquiring and
consolidating valuable mining assets in the DRC into one large mining company.
At that time, DRC Partner communicated to Och-Ziff Employee 3 and Och-Ziff
Employee 5 that DRC Partner would have to pay substantial sums of money to DRC
officials, including DRC Official 1, and “local partners” to secure access to
the attractive investment opportunities in the DRC mining sector. DRC Partner
communicated to Och-Ziff Employee 3 and Och-Ziff Employee 5 that, as part of the
joint venture, DRC Partner expected Och-Ziff to help fund these corrupt
payments, which would be above and beyond the acquisition and operational costs
of the specific assets and transactions. Neither Och-Ziff Employee 3 nor
Och-Ziff Employee 5 shared this information with anyone within Och-Ziff s legal
or compliance departments.

24. Och-Ziff Employee 3 started the internal process within Och-Ziff to enter
into business with DRC Partner. Consistent with Och-Ziff’s anti-corruption
policy as it related to prospective business partners, on or about February 14,
2008, Och-Ziff Employee 6 sent an e-mail to a due diligence firm requesting a
background report on DRC Partner. In that e-mail, Och-Ziff Employee 6 noted that
information about DRC Partner “will be very easy to find… perhaps the impetus
behind the movie ‘Blood Diamonds.’”

 

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25. On or about February 21, 2008, Och-Ziff Employee 6 received an e-mail that
attached the initial findings of the due diligence firm, which stated, among
other things:

[DRC Partner] has been willing to use his significant political influence with
[DRC Official 1]. . . and his clique to facilitate acquisitions, settle disputes
and frustrate competitors.... [DRC Partner] was rumoured to have used his
influence with [DRC Official 2], [DRC Official l’s] closest aide, and former
Katanga governor in order to settle [a commercial] dispute in his favor.. , .
Several compliance Watch Lists identify [DRC Partner] as a political [sic]
exposed individual as a result of his close ties to the DRC government. He is
known to enjoy an extremely close relationship with [DRC Official 1]. . . . He
is happy to use his political influence against those with whom he is in
dispute. . . . Whether through good PR and legal advice or indeed innocence, no
allegations against him have yet been proved. That said, he has been named in a
UN report [and] keeps what can only be described as unsavory business
associates.

26. Based upon the report, and other publicly available information, various
Och-Ziff senior employees had concerns about proceeding with any transaction
with DRC Partner. For example, Och-Ziff Employee 6 did not believe Och-Ziff
should do business with DRC Partner and expressed to Och-Ziff Employee 3 strong
concerns about doing business with DRC Partner. Separately, Och-Ziff Employee 2
had come to believe that it was likely that DRC Partner was able to operate and
acquire assets in the DRC because he paid bribes to officials. In or about late
February 2008, several members of Och-Ziff senior management advised Och-Ziff
Employee 1 that although there was no strict legal or regulatory prohibition on
doing business with DRC Partner, such as DRC Partner having being designated by
the Office of Foreign Assets Control on a prohibited persons list, they
recommended not undertaking transactions with him. Thereafter, Och-Ziff
proceeded to conduct several business transactions with DRC Partner in the DRC.

27. Och-Ziff Employee 6 also forwarded the due diligence report on DRC Partner
to an outside attorney representing Och-Ziff on anti-corruption issues. The
outside attorney advised that providing a convertible loan to DRC Partner would
be high-risk, but that there would be “no [anti-money laundering] or
anti-corruption issue” as long as DRC Partner “has no discretion with regard to
how to spend the proceeds of the loan.” As described below, the subsequent
agreements provided DRC Partner with a significant amount of discretion over the
use of the loan proceeds.

28. In or about and between March 2008 and February 2011, Och-Ziff entered into
several DRC-related transactions with DRC Partner: (1) an April 2008 purchase of
approximately $150 million of shares in a publicly traded DRC-focused mining
company controlled by DRC Partner (“Company A”); (2) a $124 million convertible
loan through a subsidiary company and AGC to Company B, a DRC Partner-controlled
shell entity, funded in or about and between April and October 2008 (the
“Convertible Loan Agreement”); and (3) a $130 million margin loan to Company C,
a DRC Partner-controlled shell entity, in November 2010 and February 2011 (the
“Margin Loan Agreement”). Leading up to and through these transactions, Och-Ziff
Employee 3 and Och-Ziff Employee 5 were made aware of and participated in the
corrupt payments, using funds provided by Och-Ziff to Company B and Company C,
that DRC Partner made to various DRC officials to secure mining interests in the
DRC.

B. The Bribery Scheme to Consolidate DRC Copper Mines

29. The first aspect of Och-Ziff’s partnership with DRC Partner involved
Och-Ziff, OZ Africa or AGC structuring and funding simultaneous investments into
two companies controlled by DRC Partner: Company A and Company B. On or about
March 7, 2008, Och-Ziff Employee 3 e-mailed a description of the first part of
this plan to Och-Ziff Employee 1. In the e-mail, Och-Ziff Employee 3 stated that
there would be three upcoming transactions requiring Och-Ziff funds. First,
Och-Ziff would buy $150 million of new shares to be issued by Company A,
controlled by DRC Partner, which Och-Ziff Employee 3 described as “the second
biggest copper company in DRC.” Second, DRC Partner would offer AGC 50 percent
of a nearby copper and cobalt mine “at a very attractive price,” and AGC would
likely invest up to $200 million in it. Third, AGC and DRC Partner would buy 55
percent of a company called Africo Resources Limited (“Africo”), which owned a
copper asset “next door” to DRC Partner’s copper and cobalt mine Och-Ziff
Employee 3 wrote that the “[g]ame plan is to eventually merge [the copper and
cobalt mine] and Africo into [Company A] for stock and control the company
jointly with [DRC Partner].”

30. Africo was a Canadian mining company engaged in a dispute concerning its
ownership interest in a DRC copper mine (the “DRC Mine”). The dispute involved a
Congolese company called Akam Mining SPRL (“Akam”), which had obtained an ex
parte default judgment against Africo following an employment dispute. In fact,
DRC Official 2 had orchestrated the taking of Africo’s interest in the DRC Mine
and made it available to DRC . Partner. Africo had engaged in legal proceedings
in the DRC courts to try to nullify the seizure of its interest in the DRC Mine,
which remained pending in March 2008.

 

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31. On or about March 16, 2008, Och-Ziff Employee 3 received an e-mail from DRC
Partner, which stated in part:

As you can see, our only real point is this flexibility. The DRC landscape is in
the making and I am shaping it - like no one else. I would love to have you
beside me as a long-term partner. As 40% [Company A] shareholder, I facilitated
your entry at an attractive time / price knowing that you see there is a bigger
picture in all of this. What this bigger picture exactly looks like, is yet to
be determined, but it is your partner who is holding the pen - I just need
flexibility on the drawing board to create full value for our partnership.

32. Following DRC Partner’s negotiations on behalf of Och-Ziff, on or about
March 27, 2008, Och-Ziff entered into a supplemental subscription agreement with
Company A, as contemplated in Och-Ziff Employee 3’s e-mails above, to purchase a
total of 150 million shares for a total of approximately $150 million. The
stated purpose of the offering by Company A, to which Och-Ziff subscribed, was
to raise capital to fund the company’s ongoing mining efforts in the DRC. That
same day, on or about March 27, 2008, DRC Partner caused $11 million to be
delivered to DRC Official 2.

33. Och-Ziff and DRC Partner agreed on a multi-step plan to obtain the disputed
mining interest by acquiring Akam using Och-Ziff funds, and then settling the
legal dispute over the DRC Mine. As part of its agreement, Och-Ziff, through
AGC, provided Company B with significant financing to carry out the resolution
of the DRC legal dispute and to gain control of Africo. This financing was
provided through the Convertible Loan Agreement, which was originally intended
to be approximately $115 million, funded in two tranches of $15 million and $100
million.

34. On or about April 3, 2008, Och-Ziff Employee 5 sent an e-mail to Och-Ziff
Employee 3 and others seeking approval to fund the first tranche under the
Convertible Loan . Agreement, in the amount of $15 million, to acquire Akam.

35. On or about April 7, 2008, DRC Partner caused $2.2 million to be delivered
to DRC Official 2, and on or about April 10, 2008, DRC Partner caused $2.8
million to be delivered to DRC Official 2.

36. On or about April 17, 2008, Och-Ziff, through AGC, funded the first tranche
of the Convertible Loan Agreement through wire transfers from New York. This
first tranche of $15.750 million was funded purportedly to acquire Akam, make a
shareholder loan to Africo, and pay legal expenses. A few days later, on or
about April 21, 2008, Africo announced that it reached an agreement with Company
B for a private placement of CAD $100 million that would result in Company B (L
e. , DRC Partner’s company) owning approximately 60 percent of Africo. This
agreement required the approval of Africo’s shareholders.

C. Bribes Resolve Africo and Akam Dispute in DRC

37. DRC Partner caused bribes to be paid to DRC officials, including judges, to
ensure that Africo did not obtain a favorable court ruling in its case against
Akam that could have affected the outcome of the Africo shareholder vote.

38. On or about June 4, 2008, DRC Partner and one of his associates arranged to
pay $500,000 to DRC officials, including judges, who were involved in the Africo
court case to corruptly influence the outcome of those proceedings to the
benefit of Och-Ziff and DRC Partner. The associate sent a text message to DRC
Partner, which read:

Hi [DRC Partner], im with the main lawyer. . . in the africo story, he has to
arrange with supreme court, attorney genral [sic] and magistrates, he wants 500
to give to all the officials and 600 for 3 lawyers cabinets that worked on the
file in defense[lawyer] and batonnier [lawyer]. the converstaion is vey tough.
(while talking i said to ask money to [one of the Akam shareholders], [the Akam
shareholder] said he cant because most of the money has to go to [DRC Official
2] . . . i dont know if he wants to provoke me or it was something [the Akam
shareholder] invented. . .) but they are now at 1,1 in total.

39. On or about June 4, 2008, the associate sent another text message to DRC
Partner, which stated: “he wants 500 for officials, 300 for them (3 lawyers
office), 800 and in even in one month an extra 100 to make 900, he is very
categoric[.]” Approximately thirty minutes later, the associate sent a text
message to DRC Partner, which stated: “with 800 they guarantee the results and
they want me to promise that i will add 100 after.” Less than one minute later,
DRC Partner responded to the associate’s text message, writing: “We can’t accept
a mid result . . . Africo must be screwd and finished totally!!!!”

40. On or about June 5, 2008, an associate of DRC Partner sent a text message to
DRC Partner, which stated: “[lawyer] has met attorney general and the
magistrat[e] that has to write the opinion, he also had contact with the 3
judges of supreme court. they got clear instructions to rewrite the opinion and
to make sure that akam wins. they also agreed to do the lecture of the opinion
on JUNE 13!”

 

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41. On or about June 12, 2008, Africo announced that its shareholders had voted
to approve the private placement by DRC Partner through Company B.

42. On or about June 18, 2008, DRC Partner caused $2.5 million to be delivered
to DRC Official 2.

 

  D. Och-Ziff Learns of Allegations of Serious Misconduct Involving Company A
and then Provides DRC Partner an Additional $109 Million

43. On or about June 13, 2008, Och-Ziff Employee 3 and Och-Ziff Employee 5
learned of allegations that a significant portion of the money that had been
invested in Company A through the April 2008 private placement may have been
diverted from a mining investment to a political party in Zimbabwe. Och-Ziff
Employee 3 received a message which stated: “[Company A] paid 4 arms into zim,
and rented boat from china. Journo has bank transfers apparently.” Neither
Och-Ziff Employee 3 nor Och-Ziff Employee 5 reported this matter to Och-Ziff’s
legal and compliance employees nor undertook efforts to determine whether the
funds had been used as described in the message.

44. On or about June 24, 2008, Och-Ziff, through AGC, funded the second tranche
of the Convertible Loan Agreement totaling $98.275 million. The purpose of this
tranche was to allow Company B to acquire the Africo shares and gain control
over Africo.

45. On or about July 10, 2008, Och-Ziff Employee 3 sent an e-mail to another
Och-Ziff employee that read: “U have [Och-Ziff Employee 5’s] mobile. [DRC
Partner] just got a big asset for us.”

46. Later that month, on or about July 24, 2008, Och-Ziff, AGC, and DRC Partner
amended the Convertible Loan Agreement to provide for a $9 million third tranche
for “financing the working capital requirements. . . to the extent such
requirements are in accordance with the Business Plan.” Och-Ziff Employee 3 and
Och-Ziff Employee 5 knew that the operating expenses for Company B’s business
plan included paying bribes to high-level DRC officials.

47. On or about October 9, 2008, Och-Ziff funded its share of the third tranche
of the Convertible Loan Agreement totaling $4.5 million, while the joint-venture
partner in AGC contributed the remaining $4.5 million.

E. Och-Ziff’s Audit Uncovers Bribery in DRC Partner’s Operations

48. In or about November 2008, AGC employees who were based in South Africa and
reported to Och-Ziff Employee 5 conducted an audit of Company B’s expenses to
ensure that the third tranche of the Convertible Loan Agreement was properly
spent. These AGC employees were given limited access to DRC Partner’s business
records. Their draft audit report, which was sent to Och-Ziff Employee 5 and
another Och-Ziff employee, included the following paragraph:

Satisfactory answers could not be extracted during my discussions (with [DRC
Partner’s employees]) for some of these expenses and it leads one to believe
that these are actually the costs of maintaining “political alignment” and for
“protocol” with the authorities in the DRC — in other words with senior
Government officials. This issue needs to be investigated at the highest level
directly with [DRC Partner’s company]. This issue should be flagged as a concern
considering AGC’s compliance requirements.

(emphasis in original)

49. After reviewing the draft audit report, Och-Ziff Employee 5 spoke with one
of the employees who drafted it and instructed that the above-described
paragraph referencing payments for “political alignment” with senior government
officials be removed from the report. The employee did as instructed by Och-Ziff
Employee 5, and on or about December 9, 2008, the employee sent an e-mail to
Och-Ziff Employee 5, which stated, in part: “[Och-Ziff Employee 5,] As discussed
please find attached the revised report[.]” The attached revised report did not
contain the paragraph that referenced payments to senior government officials.

F. Och-Ziff and DRC Partner Find a Buyer for DRC Assets

50. Och-Ziff and AGC did not exercise the option to convert into equity in
Company B, did not require payment on the loan when it was due to be repaid in
full on or about April 24, 2009, and did not seek to exercise its rights on the
collateral of the loan. Instead, the repayment dates for the Convertible Loan
Agreement were continually extended until a publicly traded mining company
(“Mining Company 1”) purchased Company B.

 

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51. To attract a buyer for Company B, Och-Ziff Employee 5 worked with DRC
Partner to obtain additional assets to inject into or sell alongside Company B,
including assets known as Kolwezi Tailings and SMKK. Och-Ziff knew that Kolwezi
Tailings had been stripped by the DRC government from a mining company
immediately before being obtained by a group of companies controlled by DRC
Partner and the DRC government. Och-Ziff also knew that the SMKK asset was the
subject of a back-to-back sale that allowed DRC Partner to purchase the asset
for $15 million from the DRC-owned and controlled mining company, La Générale
des Carrières et des Mines (“Gécamines”), and immediately resell it to Mining
Company 1 for $75 million even though Mining Company 1 had the right of first
refusal to buy that same interest directly from Gécamines.

52. Throughout the period of DRC Partner’s acquisition of Kolwezi Tailings and
SMKK, DRC Partner continued to make corrupt payments to DRC Official 2. For
example, on or about December 23, 2009, DRC Partner delivered $1 million to DRC
Official 2; on or about January 5, 2010, DRC Partner delivered $2 million to DRC
Official 2.

53. On or about August 20, 2010, Mining Company 1 acquired 50.5 percent of
Company B. Mining Company 1 agreed to pay up to $575 million over two years,
including $50 million in cash. Och-Ziff Employee 3 and Och-Ziff Employee 5 were
informed by a co-conspirator that the $50 million was for DRC Partner to “use on
the ground” to corruptly acquire Kolwezi Tailings. As part of the deal, Mining
Company 1 guaranteed repayment of the Convertible Loan Agreement through a
novation of the loan.

54. Following the novation of the Convertible Loan Agreement, Och-Ziff continued
to provide DRC Partner with financing in exchange for deal flow of investment
opportunities in the DRC, per their original agreement.

G. Och-Ziff Provides DRC Partner an Additional $130 Million

55. On or about November 11, 2010, Och-Ziff Employee 3 sent an e-mail to another
Och-Ziff employee, which stated: “[DRC Partner] has asked for a margin loan on
katanga shares which want u to handle.”

56. On or about November 16, 2010, an Och-Ziff employee sent a draft term sheet
for the loan to Och-Ziff Employee 3, who then forwarded it on to DRC Partner.
The parties then negotiated the terms of the loan. DRC Partner’s representatives
stressed that they would need to make intercompany loans with the proceeds of
the loan and that any “use of proceeds” provision in the loan document would
have to be generic.

57. On or about November 18, 2010, Och-Ziff incorporated a new Cayman Islands
based partnership called CML Investments Ltd. (“CML”). CML was controlled by
Och-Ziff.

58. On or about November 24, 2010, Och-Ziff, in two separate transfers through
CML, extended a $110 million margin loan to Lora Enterprises Limited (“Lora”), a
DRC-Partner-controlled company. The use of proceeds provision allowed for “(ii)
funding existing activities of Affiliates of the Borrower and acquisitions of
other business interests by its Affiliates; and (iii) other general purposes of
the Borrower’s Affiliates.”

59. On or about February 17, 2011, CML and Lora agreed to an amended and
restated margin loan agreement which increased the amount of funding available
to Lora by an additional $20 million.

60. In or about and between November 2010 and February 2011, DRC Partner caused
approximately $20 million in corrupt payments to be made to various DRC
officials, including the following payments made on or about the following
dates:

 

Date

  

Amount in USD

  

Bribe Recipient

December 1, 2010    $1 million    DRC Official 1 December 3, 2010    $2 million
   DRC Official 1 December 7, 2010    $2 million    DRC Official 1 December 9,
2010    $2 million    DRC Official 1 December 15, 2010    $350,000    DRC
Official 2 December 17, 2010    $250,000    DRC Official 2 January 13, 2011   
$500,000    DRC Official 2 February 9, 2011    $3 million    DRC Official 1
February 9, 2011    $1 million    DRC Official 2 February 23, 2011    $750,000
   DRC Official 1

 

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61. On or about February 12, 2012, DRC Official 2 died. On or about February 13,
2012, Och-Ziff Employee 5 sent an e-mail message to Och-Ziff Employee 3, which
stated: “FYI, [DRC Official 2 is] dead, [DRC Partner’s] key guy in DRC.”
Och-Ziff Employee 5’s e-mail included the text of a Financial Times article on
the official’s death, which stated, among other things: “[DRC Official 2],
member of parliament and a former governor of Congo’s copper heartlands
province, Katanga, cut a shadowy figure. Diplomats associate him with Congo’s
entrenched corruption and a series of secret investments. Congo is one of the
world’s poorest countries despite its mineral wealth, and ranks among the worst
places to do business.” .

62. On or about February 15, 2012, DRC Partner sent a text message to Och-Ziff
Employee 5, which stated, “I’m fine. . . sad but fine. . . I will have to help
[DRC Official 1] much more now. . . tomorrow the burial will take place.”

63. In or about and between August 2012 and January 2013, Och-Ziff received wire
transfers of $342,091,110 from DRC Partner-controlled companies as satisfaction
of the outstanding agreements, representing a profit of approximately
$91,181,182.

THE LIBYA CORRUPTION SCHEME

A. Och-Ziff Engages Libya Intermediary to Obtain Investments in Libya

64. Beginning in or around 2007, Och-Ziff sought to secure investments from the
LIA into the Och-Ziff Hedge Funds. In connection with these efforts, in or about
2007, Och-Ziff Employee 3 arranged to have Libya Intermediary act on Och-Ziff’s
behalf to obtain an investment from the LIA. At the time Och-Ziff engaged Libya
Intermediary, Och-Ziff Employee 3 knew that Libya Intermediary would need to
make corrupt payments to Libyan officials to secure that investment. Libya
Intermediary did in fact make corrupt payments to and for the benefit of Libyan
Official 1, Libyan Official 2, and Libyan Official 3.

65. In addition, during the time Libya Intermediary was working as Och-Ziff’s
agent to secure an investment from the LIA, Och-Ziff Employee 3 caused Och-Ziff
funds to invest $40 million in a Libyan real estate development project (the
“Libya Real Estate Development Project”), which was founded and overseen by
Libya Intermediary. Och-Ziff Employee 3 described his motivation to make this
$40 million investment as, in part, “a bet on Libya here and relationship need
to get done quickly,” a reference to the relationship with Libya Intermediary.
In connection with this investment, Och-Ziff paid a $400,000 “deal fee” to an
entity controlled by Libya Intermediary, which Och-Ziff Employee 3 understood
was to compensate Libya Intermediary for bribes that Libya Intermediary had to
pay to Libyan officials in connection with the Libya Real Estate Development
Project.

66. In or about February 2007 onward, Libya Intermediary worked as Och-Ziff’s
agent to obtain an asset placement from the LIA. Prior to engaging Libya
Intermediary to work on Och-Ziff’s behalf, Och-Ziff did not conduct any due
diligence on Libya Intermediary, and there was no formal approval of Libya
Intermediary to work on behalf of Och-Ziff.

67. In or about and between February 2007 and March 2007, Libya Intermediary
explained to Och-Ziff Employee 3 that the LIA was largely controlled by Libyan
Official 1 through Libyan Official 3. Libya Intermediary arranged for Och-Ziff
Employee 3 to meet with Libyan Official 1 and Libyan Official 3 in Vienna,
Austria.

68. On or about March 7, 2007, Och-Ziff Employee 3 traveled from London, England
to Vienna, Austria to attend the meeting, which took place in a hotel suite,
with Libya Intermediary, Libyan Official 1, Libyan Official 3 and an associate
of Libya Intermediary. At the meeting, Och-Ziff Employee 3 and Libyan Official 1
discussed Och-Ziff’s business and the LIA generally and the possibility of the
LIA making an investment in the Och-Ziff Hedge Funds.

69. Although Och-Ziff Employee 3 did not inform the legal or compliance
functions at Och-Ziff about the meeting with Libyan officials, he informed
Och-Ziff Employee 1 of the meeting. Shortly after the meeting, Och-Ziff Employee
3 sent an e-mail to Och-Ziff Employee 1, stating, “Meetings are amazing. They
have 77 billion, half in cash and no idea who to give it to.” Later that same
day, Och-Ziff Employee 3 sent an e-mail to Och-Ziff Employee 1, stating, “I
haven’t been this excited in a while.”

70. On or about March 8, 2007, Och-Ziff Employee 3 sent an e-mail to Libyan
Official 3, which stated, in part: “It was very nice meeting you yesterday. I
think there are many ways we can work together on the investment side. I have
attached an overview of our main fund. I would love to get you in as an investor
in one of our funds so we can start a dialogue and look at investments
together.”

71. On or about May 29, 2007, Och-Ziff Employee 1 sent an e-mail to Och-Ziff
Employee 3 inquiring about the status of the potential investment from the LIA.
Och-Ziff Employee 3 sent a response, stating, “I thought you were against it so
I havent [sic] pursued it. The agent wants to come in and see me this week. You
OK with that?” Och-Ziff Employee 1 responded, “I will be ok. Will call you.”

72. On or about August 9, 2007, Och-Ziff Employee 1 sent an e-mail to Och-Ziff
Employee 3, asking: “Is Libya in for Sept 1?” Och-Ziff Employee 3 responded, “I
think so. Will check.”

 

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73. On or about September 11, 2007, an employee of a due diligence firm
transmitted a report on Libya Intermediary and his business partner to Och-Ziff
employees via an e-mail, which stated in part: “These guys [Libya Intermediary
and his business partner] were hard to pin down because they have always acted
as advisors and kept their money and interests offshore.” The background report
added that: “[Libya Intermediary’s company] uses special purpose vehicles based
offshore that have no subsidiaries, no employees and no operations other than
relating to the transaction for which they were established. This, and their
activities as ‘fixers’, means that there is little documented evidence of the
company’s activities either in the UK or internationally.”

74. On or about and between September 19, 2007 and September 20, 2007, Och-Ziff
Employee 3, Och-Ziff Employee 4, and another Och-Ziff employee traveled to
Tripoli, Libya, where they were met by Libya Intermediary. Libya Intermediary
arranged for the landing permits and visas for this trip through Libyan Official
2.

75. On or about September 20, 2007, Och-Ziff Employee 3 and Och-Ziff Employee 4
met with the LIA at the LIA’s office. Indeed, Libya Intermediary did not
accompany them to this meeting despite purportedly serving as Och-Ziff’s
introductory agent. To the contrary, Libya Intermediary communicated to Och-Ziff
Employee 3 that Libya Intermediary’s role as Och-Ziff’s agent could not be
publicly disclosed to the LIA. Prior to the meeting, Och-Ziff Employee 3 did not
disclose to Och-Ziff Employee 4 that Libya Intermediary was acting as Och-Ziff’s
agent for the potential LIA investment. Och-Ziff Employee 3 also did not inform
Och-Ziff Employee 4 that he (Och-Ziff Employee 3) previously had met with Libyan
Official 1 and Libyan Official 3 in Vienna, Austria to solicit an investment
from the LIA. There was no mention of Libya Intermediary during the meeting.

B. Libya Intermediary’s “Consultancy Agreement” and the LIA’s Investment of $300
Million into the Och-Ziff Hedge Funds

76. Throughout in or about 2007, over the course of multiple conversations,
Och-Ziff Employee 3 and Libya Intermediary negotiated the amount of the fee
Och-Ziff would pay to Libya Intermediary in the event Och-Ziff received an
investment from the LIA. During these discussions, Libya Intermediary repeatedly
told Och-Ziff Employee 3 that Libya Intermediary would have to confer with an
undisclosed third-party to confirm whether or not the proposed size of the fee
was acceptable. Och-Ziff Employee 3 told Libya Intermediary that Och-Ziff was
limited in how much it could pay because it was a regulated entity in the United
States. Och-Ziff Employee 3, Libya Intermediary, and the undisclosed third-party
ultimately agreed on a fee of $3,750,000 to be paid in two installments for the
LIA’s $300 million investment into the Och-Ziff Hedge Funds.

77. On or about November 26, 2007, which was four days before the LIA funded its
$300 million investment, Och-Ziff Employee 3 spoke with Och-Ziff Employee 1
about paying Libya Intermediary a fee in connection with the LIA investment.

78. The next day, on or about November 27, 2007, Och-Ziff Employee 1 forwarded
an e-mail from an Och-Ziff officer to Och-Ziff Employee 3. The e-mail contained
conditions that had to be met for the fee to be paid:

. . . There has to be a written agreement between OZ and the person who receives
payment that. . . requires the solicitor, at the time of any solicitation, to
provide the client with a copy of the [investment adviser registration] and a
separate written disclosure document containing information relating to the
solicitation arrangemen [sic] (including the comp to be paid); and the adviser
receives from the client an executed acknowledgment showing that the client
received the separate written disclosure document[.]

79. After receiving the legal advice forwarded by Och-Ziff Employee 1 on or
about November 27, 2007, Och-Ziff Employee 3 contacted Libya Intermediary and
informed Libya Intermediary that, contrary to their previous discussions,
Och-Ziff, might be required to disclose Libya Intermediary’s role as an Och-Ziff
agent to the LIA. Libya Intermediary and Och-Ziff Employee 3 discussed ways to
satisfy Och-Ziff’s requirements without actually providing such disclosure to
the LIA. To this end, Och-Ziff Employee 3 and Libya Intermediary discussed the
possibility of Och-Ziff delivering the disclosure to the LIA through Libya
Intermediary, which Libya Intermediary would fail to deliver. Och-Ziff Employee
3 and Libya Intermediary also discussed the possibility of Libya Intermediary
providing a false representation to Och-Ziff that Libya Intermediary had
provided the LIA with disclosure of Libya Intermediary’s role.

80. On or about November 30, 2007, Och-Ziff received the signed subscription
documents and wire transfers from the LIA for a total investment of $300 million
into two of the Och-Ziff Hedge Funds.

 

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81. A few days later, on or about December 4, 2007, an officer of Och-Ziff sent
an e-mail to Och-Ziff Employee 3, which attached a consultancy agreement (the
“Consultancy Agreement”) and an anti-corruption side letter (the “Side Letter”)
between OZ Management LP and a special purpose vehicle based in the British
Virgin Islands (“BVI SPV-1”), which Libya Intermediary established for the sole
of purpose of receiving the LIA-related fee from Och-Ziff. Och-Ziff Employee 3
replied to the e-mail stating: “looks good.” The Consultancy Agreement described
BVI SPV-1 as follows: “[BVI SPV-1] has technical and commercial expertise in
Libya as a consultant to companies (in particular in information gathering,
strategic analysis, high-level introduction, negotiations and promotion of
projects and implementation).” This description was false insofar as BVI SPV-1
had no employees, had no expertise and had never acted as a consultant in Libya
or elsewhere to any company.

82. The Consultancy Agreement stated that: “[BVI SPV-1] has offered to provide
assistance to [OZ Management LP] with respect to introducing the Company to the
[LIA], developing and coordinating strategy and tactics to promote and encourage
LIA to invest in [OZ Management LP] by cash injection into the account of [OZ
Management LP] or any of its funds[.]” Under the terms of the Consultancy
Agreement, BVI SPV-1 undertook to “assist OZ Management LP in connection with
the introduction of the [OZ Management LP] to and promoting its interests and
reputation with LIA.” The forward-looking agreement did not reflect that Libya
Intermediary had been working for Och-Ziff, at the direction of Och-Ziff
Employee 3, since February 2007. The fee for the purported services was $3.75
million, payable in two installments.

83. The Side Letter, which included anti-corruption representations from the BVI
SPV-1, stated: “[t]he Investor has been informed in writing of the [Consultancy]
Agreement and the consideration payable to ourselves thereunder.” This
representation was false; the LIA was not notified in writing or otherwise that
Och-Ziff agreed to pay fees to BVI SPV-1 in connection with the LIA’s investment
into the Och-Ziff Hedge Funds. Och-Ziff did not obtain a copy of any written
notification, nor did Och-Ziff attempt to notify the LIA directly of its
relationship with Libya Intermediary or BVI SPV-1, nor did Och-Ziff obtain an
acknowledgement from the LIA that it had been notified of Libya Intermediary’s
agreement or payments.

84. The Consultancy Agreement and the Side Letter were executed between OZ
Management LP and BVI SPV-1 on or about. January 15, 2008, but backdated to
appear as if they were executed on or about December 5, 2007. Contrary to
Och-Ziff internal policies requiring Och-Ziff to conduct sufficient due
diligence on proposed business transactions and partners to be confident in the
legitimacy of proposed transactions, Och-Ziff did not conduct any due diligence
on BVI SPV-1 before entering into the Consultancy Agreement.

C. Bribe Payments to Various Libyan Officials

85. On or about January 16, 2008, Och-Ziff paid BVI SPV-1 $2.25 million in
connection with Libya Intermediary’s work on behalf of Och-Ziff to obtain the
$300 million investment from the LIA. That same day, on or about January 16,
2008, Och-Ziff Employee 3 described Libya Intermediary in an e-mail to a
business associate as follows: “[Libya Intermediary] is very close to [Libyan
Official 1], LIA and other government officials. . . . Alot [sic] of people in
Libya say they can get things done, but [Libya Intermediary] actually does so I
dont [sic] think it will be a waste of your time.”

86. On or about January 29, 2008, Libya Intermediary, through BVI SPV-1,
transferred two-thirds of the interest in BVI-SPV-1 to an associate of Libya
Official 1. On or about January 31, 2008, BVI SPV-1 sent a wire transfer
totaling $1,507,659.61 through an intermediary account which was subsequently
paid onward to an account in Switzerland held by a proxy for the benefit of
Libyan Official 1.

87. On March 5, 2008, BVI SPV-1 transferred $331,478.00 from its account at
Investec Bank in Guernsey to an account for a British Virgin Islands company
that was controlled by Libya Intermediary (“BVI SPV-2”).

88. The next day, on or about March 6, 2008, Libya Intermediary transferred
€500,045 from an account at Standard Chartered in Jersey to a Bank of Valetta
account in Malta in the name of Libya Official 2’s son, over which Libya
Official 2 had signatory authority.

89. Also on or about March 6, 2008, Libya Intermediary transferred $400,000 from
BVI SPV-2’s US Dollar account at Blom Banque France, London Branch to a Bank of
Valetta account in Malta in the name of Libya Official 2’s son, over which Libya
Official 2 had signatory authority.

90. In addition, Libya Intermediary regularly provided Libyan Official 3 with
in-kind payments to gain and maintain influence with Libyan Official 3. These
in-kind payments included, but were not limited to, payments for luxury travel,
hotel accommodations and jewelry. Libya Intermediary also paid the living
expenses of Libyan Official 3’s brother while he resided in London.

 

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91. The second tranche of the “consultancy fee” owed by OZ Management LP to BVI
SPV-1 in connection with the original $300 million LIA investment was due to be
paid on or about December 1, 2008. On or about October 30, 2008, Libya
Intermediary spoke with Och-Ziff Employee 3 and asked to be paid early, and
Och-Ziff Employee 3 agreed to do so. Och-Ziff Employee 3 directed Och-Ziff
personnel to pay Libya Intermediary’s invoice. On or about November 5, 2008, at
the direction of Libya Intermediary, BVI SPV-1 transferred $1,005,000.00 from
its account to an intermediary account, which was subsequently paid onward to an
account in Switzerland held by a proxy for the benefit of Libyan Official 1.

92. Och-Ziff accrued fees and incentive income from the LIA fund investment
totaling approximately $100,181,881.

OCH-ZIFF’S POLICIES, PROCEDURES AND CONTROLS

93. At all times relevant, Och-Ziff sought business opportunities in countries
with high corruption risks, including, among other places, the DRC, Libya, Chad,
and Niger. Despite understanding the nature of the corruption risks presented by
doing business in those countries, Och-Ziff knowingly failed to implement an
adequate system of internal accounting controls and failed to enforce the
internal accounting controls it did have in place, which failed to prevent bribe
payments from being made in DRC, Libya, Chad, and Niger. Further, in instances
where the potential improper use of proceeds was identified, Och-Ziff did not
take corrective measures, obtain verification of payments or seek to exercise
contractually available audit or cancellation rights.

94. Och-Ziff also knowingly failed to implement and maintain adequate controls
for the approval of business transactions and consultancy agreements. With
respect to Libya Intermediary, although Och-Ziff had prior dealings with Libya
Intermediary relating to obtaining a Kazakhstan oil field investment, it did not
conduct due diligence on, and only obtained anti-corruption representations
from, BVI SPV-1, a shell company that did not actually provide or support any of
the services rendered. Och-Ziff further permitted Och-Ziff Employee 3 to enter
into arrangements for deal fees and payments without requiring contracts, proof
of services or legal pre-approval, including for an earlier $400,000 deal fee to
Libya Intermediary in connection with the Libya Real Estate Development Project
where no agreement was in place and Och-Ziff Employee 3 knew that the fee would
be used for bribe payments. Och-Ziff approved the payment of the deal fee
without conducting adequate due diligence on the offshore entity which received
the funds and without restricting the funds’ use.

95. Och-Ziff did not implement controls to ensure the effective enforcement of
policies governing interactions by third-parties with prospective clients,
including requirements (a) that such arrangements were to be pre-cleared by
legal or compliance and (b) that Och-Ziff provide prospective clients with a
written disclosure of any agreements for a third-party to secure money from the
prospective client on behalf of Och-Ziff.

96. Och-Ziff also knowingly failed to implement and maintain controls to address
known risks for corruption or misuse of company funds in connection with
contractual agreements-or investments. Och-Ziff proceeded to conduct multiple
business transactions with DRC Partner and entities associated with him despite
objections from senior compliance and control personnel. When Och-Ziff Employee
3 and Och-Ziff Employee 5 learned of possible misuse of funds in connection with
the Company A investment, Och-Ziff conducted no review or audit to confirm or
rebut the allegations, and thereafter advanced more than $200 million to DRC
Partner for additional transactions. Further, Och-Ziff continued to engage with
business partners after those partners had presented deals where corrupt
payments were expressly required. For example, a deal presented by Och-Ziff’s
partner in AGC to Och-Ziff Employee 3 included “$5 million for the ongoing
Presidential campaign” in a West African country. Although Och-Ziff Employee 3
shared this proposal with two analysts, it was not shared with legal or
compliance.

97. In connection with funding AGC’s first fund, Och-Ziff did not establish
adequate controls over the use of proceeds provided by Och-Ziff to its future
joint-venture partner. Prior to the formation of the first AGC-branded
investment fund, African Global Capital, LP (“AGC I”), Och-Ziff funded requests
for loans that were convertible into equity in AGC Ito its business partners on
short notice and without completing adequate due diligence on the use of the
proceeds. On or about June 1, 2007, an Och-Ziff analyst responsible for
assessing the projects e-mailed Och-Ziff Employee 3: “I’ve asked for budgets etc
for all these projects but nothing yet,” and followed up by writing, “[w]e’ve
seen the basic structure for these and did ‘just’ enough to put the loan
together last time . . . as they needed it asap.” On or about October 2, 2007,
the same analyst e-mailed Och-Ziff Employee 3: “Been trying to get exact detail
etc on where money is going but detail isn’t great. Don’t think we can get huge
amounts more detail now (been trying for a while) but we need to find a
systematic way of approving expenditure in the future.” Despite repeatedly
failing to conduct sufficient due diligence, Och-Ziff continued to fully fund
the requests of its joint-venture partners and never developed a systematic way
to track the funds provided to the joint venture through 2012.

 

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98. In or about and between May 2007 and February 2009, an AGC portfolio company
used funds provided by Och-Ziff to pay various consultants employed by the
joint-venture portfolio company, including a Gabonese national (“Gabonese
Consultant”). Beginning in October 2007, Och-Ziff became aware that the salary
payments to Gabonese Consultant in connection with operations in Chad and Niger,
were a “deal introduction related consulting fee,” and that Gabonese
Consultant’s “consulting fee” was nearly two and one-half times the salary of
the remaining 19 portfolio-company employees combined. Och-Ziff further
identified other unknown consultant payments and that the funds provided by
Och-Ziff to the joint-venture partners were being used for, among other
purposes, personal expenditures and personal travel of the joint-venture
partners. In or about and between January 2008 and July 2008, despite
identifying that the joint-venture payments were not being adequately justified,
including the payments to Gabonese Consultant, Och-Ziff funded approximately
$20,141,734 in capital calls for the joint venture. Ultimately, portions of
these capital calls funded by Och-Ziff were used to reimburse bribe payments
that Gabonese Consultant had made in Chad and Niger.

99. On or about October 3, 2008, Och-Ziff Employee 3 received an e-mail
containing the results of an audit of the joint-venture portfolio company which
indicated, among other things: “Results of audit are very weak with poor
controls and management . . . . [Subsidiary companies and management] needs
[sic] significantly more supervision.” Och-Ziff did not thereafter sufficiently
address the deficiencies identified in the audit. Further, senior employees of
Och-Ziff, including Och-Ziff Employee 3, did not adequately enforce various
applicable internal policies, including the AGC Anti-Corruption and Anti-Money
Laundering Policy and Suggested Procedures which Och-Ziff had specifically
designed to be implemented at the joint venture. When Gabonese Consultant later
refused to sign anti-corruption warranties, Och-Ziff continued to do business
with him as an intermediary in 2011.

100. In or about and between mid-2007 and February 2009, Gabonese Consultant
provided at least $2 million in bribe payments to officials in Niger and the
Republic of Chad in connection with obtaining uranium concessions for the joint
venture. Och-Ziff and the joint venture continued to hold and renew licenses for
the uranium concessions through 2012. During the relevant period, Och-Ziff
accrued approximately $30 million in fees in connection with investments for
which it failed to implement or enforce effective controls.

 

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UNANIMOUS WRITTEN CONSENT OF

THE BOARD OF DIRECTORS

OF OCH-ZIFF HOLDING CORPORATION

September 28, 2016

The undersigned, being the sole director of the Corporation (as defined below),
hereby ratifies, approves, adopts and consents to the following resolutions as
the action of the Board (as defined below), pursuant to Section 141(f) of the
Delaware General Corporation Law (the “DGCL”); without the formality of a
meeting. It is the intent of the undersigned that this consent be executed in
lieu of a meeting of the Board, and that it shall be filed with the minutes of
proceedings of the Board.

PLEA AGREEMENT BY OZ AFRICA

WHEREAS, Och-Ziff Capital Management Group LLC, a Delaware limited liability
company (the “Company”), has been engaged in discussions with the U.S.
Department of Justice, Criminal Division, Fraud Section (the “DOJ”) and the
United States Attorney’s Office for the Eastern District of New York (together
with the DOJ, the “Offices”) regarding issues arising in relation to certain
improper payments to foreign officials to facilitate and assist in obtaining
business for the Company;

WHEREAS, in order to resolve such discussions, the Company has agreed to enter
into a deferred prosecution agreement with the Offices (the “Deferred
Prosecution Agreement”) and it is also proposed that OZ Africa Management GP,
LLC, a Delaware limited liability company (“OZ Africa”), plead guilty pursuant
to a plea agreement substantially in the form attached as Annex A hereto in the
United States District Court for the Eastern District of New York (the “Plea
Agreement”), to be filed simultaneously with the Deferred Prosecution Agreement;

WHEREAS, Och-Ziff Holding Corporation, a Delaware corporation (the
“Corporation”), is the general partner of OZ Management LP, the managing member
of OZ Africa (“OZM”);

WHEREAS, David M. Becker, Esq., Chief Legal Officer of the Company, together
with outside counsel for the Company and outside counsel for the Audit
Committee, have advised the Board of Directors of the Corporation (the “Board”)
of OZ Africa’s rights, possible defenses, the Sentencing Guidelines’ provisions,
and the consequences of OZ Africa entering into the Plea Agreement with the
Officers;

WHEREAS, the Board desires to approve the terms set forth in the Plea Agreement
and authorize any director or officer of the Company, the Company’s Chief Legal
Officer or his designee, and Gibson, Dunn & Crutcher LLP, outside counsel to the
Company and OZ Africa, to execute the Plea Agreement on behalf of OZ Africa
(each such person, an “Authorized Person”); and

WHEREAS, the Board desires to authorize each Authorized Person to waive
indictment on behalf of OZ Africa, to appear on behalf of OZ Africa in any
proceedings relating to the Plea Agreement and the matters to which the Plea
Agreement relates and to take all ancillary or related acts on behalf of OZ
Africa.

Vice President for the Defendant and that I have been duly authorized by the
Defendant to execute the Agreement on behalf of the Defendant.

Date: 9/29/2016

 

      OZ AFRICA MANAGEMENT GP, LLC By:   /S/ Joel M. Frank  

Joel M. Frank

Vice President

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ATTACHMENT C

CORPORATE COMPLIANCE PROGRAM

In order to address any deficiencies in its internal controls, compliance code,
policies, and procedures regarding compliance with the Foreign Corrupt Practices
Act (“FCPA”), 15 U.S.C. §§ 78dd-1, et seq., and other applicable anti-corruption
laws, Och-Ziff Capital Management Group LLC (the “Company”) agrees to continue
to conduct, in a manner consistent with all of its obligations under this
Agreement, appropriate reviews of its existing internal controls, policies, and
procedures.

Where necessary and appropriate, the Company agrees to adopt new or to modify
existing internal controls, compliance code, policies, and procedures in order
to ensure that it maintains: (a) a system of internal accounting controls
designed to ensure that the Company makes and keeps fair and accurate books,
records, and accounts; and (b) a rigorous anti-corruption compliance program
that includes policies and procedures designed to detect and deter violations of
the FCPA, foreign law counterparts, and other applicable anti-corruption laws
(collectively, the “anti-corruption laws”). At a minimum, this should include,
but not be limited to, the following elements to the extent they are not already
part of the Company’s existing internal controls, compliance code, policies, and
procedures:

High-Level Commitment

1. The Company will ensure that its directors and senior management provide
strong, explicit, and visible support and commitment to its corporate policy
against violations of the anti-corruption laws and its compliance code.

Policies and Procedures

2. The Company will develop and promulgate a clearly articulated and visible
corporate policy against violations of the anti-corruption laws, which policy
shall be memorialized in a written compliance code.

3. The Company will develop and promulgate compliance policies and procedures
designed to reduce the prospect of violations of the anti-corruption laws and
the Company’s compliance code, and the Company will take appropriate measures to
encourage and support the observance of ethics and compliance policies and
procedures against violation of the anti-corruption laws by personnel at all
levels of the Company. These anti-corruption policies and procedures shall apply
to all directors, officers, and employees and, where necessary and appropriate,
outside parties acting on behalf of the Company in a foreign jurisdiction,
including but not limited to, agents and intermediaries, consultants,
representatives, distributors, teaming partners, contractors and suppliers,
consortia, and joint venture partners (collectively, “agents and business
partners”). The Company shall notify all employees that compliance with the
policies and procedures is the duty of individuals at all levels of the company.
Such policies and procedures shall address:

a. gifts;

b. hospitality, entertainment, and expenses;

c. customer travel;

d. political contributions;

e. charitable donations and sponsorships;

f. facilitation payments; and

g. solicitation and extortion.

4. The Company will ensure that it has a system of financial and accounting
procedures, including a system of internal controls, reasonably designed to
ensure the maintenance of fair and accurate books, records, and accounts. This
system should be designed to provide reasonable assurances that:

a. transactions are executed in accordance with management’s general or specific
authorization;

b. transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles or any
other criteria applicable to such statements, and to maintain accountability for
assets;

c. access to assets is permitted only in accordance with management’s general or
specific authorization; and

d. the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.

 

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Periodic Risk-Based Review

5. The Company will develop these compliance policies and procedures on the
basis of a periodic risk assessment addressing the individual circumstances of
the Company, in particular the foreign bribery risks facing the Company,
including, but not limited to, its geographical organization, interactions with
various types and levels of government officials, industrial sectors of
operation, involvement in joint venture arrangements, importance of licenses and
permits in the Company’s operations, degree of governmental oversight and
inspection, and volume and importance of goods and personnel clearing through
customs and immigration.

6. The Company shall review its anti-corruption compliance policies and
procedures no less than annually and update them as appropriate to ensure their
continued effectiveness, taking into account relevant developments in the field
and evolving international and industry standards.

Proper Oversight and Independence

7. The Company will assign responsibility to one or more senior corporate
executives of the Company for the implementation and oversight of the Company’s
anti-corruption compliance code, policies, and procedures. Such corporate
official(s) shall have the authority to report directly to independent
monitoring bodies, including internal audit, the Company’s Board of Directors,
or any appropriate committee of the Board of Directors, and shall have an
adequate level of autonomy from management as well as sufficient resources and
authority to maintain such autonomy.

Training and Guidance

8. The Company will implement mechanisms designed to ensure that its
anti-corruption compliance code, policies, and procedures are effectively
communicated to all directors, officers, employees, and, where necessary and
appropriate, agents and business partners. These mechanisms shall include:
(a) periodic training for all directors and officers, all employees in positions
of leadership or trust, positions that require such training (e.g., internal
audit, sales, legal, compliance, finance), or positions that otherwise pose a
corruption risk to the Company, and, where necessary and appropriate, agents and
business partners; and (b) corresponding certifications by all such directors,
officers, employees, agents, and business partners, certifying compliance with
the training requirements.

9. The Company will maintain, or where necessary establish, an effective system
for providing guidance and advice to directors, officers, employees, and, where
necessary and appropriate, agents and business partners, on complying with the
Company’s anti-corruption compliance code, policies, and procedures, including
when they need advice on an urgent basis or in any foreign jurisdiction in which
the Company operates.

Internal Reporting and Investigation

10. The Company will maintain, or where necessary establish, an effective system
for internal and, where possible, confidential reporting by, and protection of,
directors, officers, employees, and, where appropriate, agents and business
partners concerning violations of the anti-corruption laws or the Company’s
anti-corruption compliance code, policies, and procedures.

11. The Company will maintain, or where necessary establish, an effective and
reliable process with sufficient resources for responding to, investigating, and
documenting allegations of violations of the anti-corruption laws or the
Company’s anti-corruption compliance code, policies, and procedures.

Enforcement and Discipline

12. The Company will implement mechanisms designed to effectively enforce its
compliance code, policies, and procedures, including appropriately incentivizing
compliance and disciplining violations.

13. The Company will institute appropriate disciplinary procedures to address,
among other things, violations of the anti-corruption laws and the Company’s
anti-corruption compliance code, policies, and procedures by the Company’s
directors, officers, and employees. Such procedures should be applied
consistently and fairly, regardless of the position held by, or perceived
importance of, the director, officer, or employee. The Company shall implement
procedures to ensure that where misconduct is discovered, reasonable steps are
taken to remedy the harm resulting from such misconduct, and to ensure that
appropriate steps are taken to prevent further similar misconduct, including
assessing the internal controls, compliance code, policies, and procedures and
making modifications necessary to ensure the overall anti-corruption compliance
program is effective.

 

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Third-Party Relationships

14. The Company will institute appropriate risk-based due diligence and
compliance requirements pertaining to the retention and oversight of all agents
and business partners, including:

a. properly documented due diligence pertaining to the hiring and appropriate
and regular oversight of agents and business partners;

b. informing agents and business partners of the Company’s commitment to abiding
by anti-corruption laws, and of the Company’s anti-corruption compliance code,
policies, and procedures; and

c. seeking a reciprocal commitment from agents and business partners.

15. Where necessary and appropriate, the Company will include standard
provisions in agreements, contracts, and renewals thereof with all agents and
business partners that are reasonably calculated to prevent violations of the
anti-corruption laws, which may, depending upon the circumstances, include:
(a) anti-corruption representations and undertakings relating to compliance with
the anti-corruption laws; (b) rights to conduct audits of the books and records
of the agent or business partner to ensure compliance with the foregoing; and
(c) rights to terminate an agent or business partner as a result of any breach
of the anti-corruption laws, the Company’s compliance code, policies, or
procedures, or the representations and undertakings related to such matters.

Mergers and Acquisitions

16. The Company will develop and implement policies and procedures for mergers
and acquisitions requiring that the Company conduct appropriate risk-based due
diligence on potential new business entities, including appropriate FCPA and
anti-corruption due diligence by legal, accounting, and compliance personnel.

17. The Company will ensure that the Company’s compliance code, policies, and
procedures regarding the anti-corruption laws apply as quickly as is practicable
to newly acquired businesses or entities merged with the Company and will
promptly:

a. train the directors, officers, employees, agents, and business partners
consistent with Paragraph 8 above on the anti-corruption laws and the Company’s
compliance code, policies, and procedures regarding anti-corruption laws; and

b. where warranted, conduct an FCPA-specific audit of all newly acquired or
merged businesses as quickly as practicable.

Monitoring and Testing

18. The Company will conduct periodic reviews and testing of its anti-corruption
compliance code, policies, and procedures designed to evaluate and improve their
effectiveness in preventing and detecting violations of anti-corruption laws and
the Company’s anti-corruption code, policies, and procedures, taking into
account relevant developments in the field and evolving international and
industry standards.

 

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ATTACHMENT D

INDEPENDENT COMPLIANCE MONITOR

The duties and authority of the Independent Compliance Monitor (the “Monitor”),
and the obligations of Och-Ziff Capital Management Group LLC (the “Company”), on
behalf of itself and its subsidiaries and affiliates, with respect to the
Monitor and the United States Department of Justice, Criminal Division Fraud
Section and United States Attorney’s Office for the Eastern District of New York
(the “Offices”), are as described below:

1. The Company will retain the Monitor for a period of three (3) years (the
“Term of the Monitorship”), unless the early termination provision of Paragraph
3 of the Deferred Prosecution Agreement (the “Agreement”) is triggered.

Monitor’s Mandate

2. The Monitor’s primary responsibility is to assess and monitor the Company’s
compliance with the terms of the Agreement, including the Corporate Compliance
Program in Attachment C, so as to specifically address and reduce the risk of
any recurrence of the Company’s misconduct. During the Term of the Monitorship,
the Monitor will evaluate, in the manner set forth below, the effectiveness of
the internal accounting controls, record-keeping, and financial reporting
policies and procedures of the Company as they relate to the Company’s current
and ongoing compliance with the Foreign Corrupt Practices Act (“FCPA”), 15
U.S.C. §§ 78dd-1, et seq., and other applicable anti-corruption laws
(collectively, the “anti-corruption laws”) and take such reasonable steps as, in
his or her view, may be necessary to fulfill the foregoing mandate (the
“Mandate”). This Mandate shall include an assessment of the Board of Directors’
and senior management’s commitment to, and effective implementation of, the
corporate compliance program described in Attachment C of the Agreement.

Company’s Obligations

3. The Company shall cooperate fully with the Monitor, and the Monitor shall
have the authority to take such reasonable steps as, in his or her view, may be
necessary to be fully informed about the Company’s compliance program in
accordance with the principles set forth herein and applicable law, including
applicable data protection and labor laws and regulations. To that end, the
Company shall: facilitate the Monitor’s access to the Company’s documents and
resources; not limit such access, except as provided in Paragraphs 5 and 6; and
provide guidance on applicable local law (such as relevant data protection and
labor laws). The Company shall provide the Monitor with access to all
information, documents, records, facilities, and employees, as reasonably
requested by the Monitor, that fall within the scope of the Mandate of the
Monitor under the Agreement. The Company shall use its best efforts to provide
the Monitor with access to the Company’s former employees and its third-party
vendors, agents, and consultants.

4. Any disclosure by the Company to the Monitor concerning corrupt payments,
false books and records, and internal accounting control failures shall not
relieve the Company of any otherwise applicable obligation to truthfully
disclose such matters to the Offices, pursuant to the Agreement.

Withholding Access

5. The parties agree that no attorney-client relationship shall be formed
between the Company and the Monitor. In the event that the Company seeks to
withhold from the Monitor access to information, documents, records, facilities,
or current or former employees of the Company that may be subject to a claim of
attorney-client privilege or to the attorney work-product doctrine, or where the
Company reasonably believes production would otherwise be inconsistent with
applicable law, the Company shall work cooperatively with the Monitor to resolve
the matter to the satisfaction of the Monitor.

6. If the matter cannot be resolved, at the request of the Monitor, the Company
shall promptly provide written notice to the Monitor and the Offices. Such
notice shall include a general description of the nature of the information,
documents, records, facilities or current or former employees that are being
withheld, as well as the legal basis for withholding access. The Offices may
then consider whether to make a further request for access to such information,
documents, records, facilities, or employees.

Monitor’s Coordination with the Company and Review Methodology

7. In carrying out the Mandate, to the extent appropriate under the
circumstances, the Monitor should coordinate with Company personnel, including
in-house counsel, compliance personnel, and internal auditors, on an ongoing
basis. The Monitor may rely on the product of the Company’s processes, such as
the results of studies, reviews, sampling and testing methodologies, audits, and
analyses conducted by or on behalf of the Company, as well as the Company’s
internal resources (e.g., legal, compliance, and internal audit), which can
assist the Monitor in carrying out the Mandate through increased efficiency and
Company-specific expertise, provided that the Monitor has confidence in the
quality of those resources.

 

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8. The Monitor’s reviews should use a risk-based approach, and thus, the Monitor
is not expected to conduct a comprehensive review of all business lines, all
business activities, or all markets. In carrying out the Mandate, the Monitor
should consider, for instance, risks presented by: (a) the countries and
industries in which the Company operates; (b) current and future business
opportunities and transactions; (c) current and potential business partners,
including third parties and joint ventures, and the business rationale for such
relationships; (d) the Company’s gifts, travel, and entertainment interactions
with foreign officials; and (e) the Company’s involvement with foreign
officials, including the amount of foreign government regulation and oversight
of the Company, such as licensing and permitting, and the Company’s exposure to
customs and immigration issues in conducting its business affairs.

9. In undertaking the reviews to carry out the Mandate, the Monitor shall
formulate conclusions based on, among other things: (a) inspection of relevant
documents, including the Company’s current anti-corruption policies and
procedures; (b) on-site observation of selected systems and procedures of the
Company at sample sites, including internal accounting controls, record-keeping,
and internal audit procedures; (c) meetings with, and interviews of, relevant
current and, where appropriate, former directors, officers, employees, business
partners, agents, and other persons at mutually convenient times and places; and
(d) analyses, studies, and testing of the Company’s compliance program.

Monitor’s Written Work Plans

10. To carry out the Mandate, during the Term of the Monitorship, the Monitor
shall conduct an initial review and prepare an initial report, followed by at
least two follow-up reviews and reports as described in Paragraphs 16 through 19
below. With respect to the initial report, after consultation with the Company
and the Offices, the Monitor shall prepare the first written work plan within
thirty (30) calendar days of being retained, and the Company and the Offices
shall provide comments within thirty (30) calendar days after receipt of the
written work plan. With respect to each follow-up report, after consultation
with the Company and the Offices, the Monitor shall prepare a written work plan
at least thirty (30) calendar days prior to commencing a review, and the Company
and the Offices shall provide comments within twenty (20) calendar days after
receipt of the written work plan. Any disputes between the Company and the
Monitor with respect to any written work plan shall be decided by the Offices in
their sole discretion.

11. All written work plans shall identify with reasonable specificity the
activities the Monitor plans to undertake in execution of the Mandate, including
a written request for documents. The Monitor’s work plan for the initial review
shall include such steps as are reasonably necessary to conduct an effective
initial review in accordance with the Mandate, including by developing an
understanding, to the extent the Monitor deems appropriate, of the facts and
circumstances surrounding any violations that may have occurred before the date
of the Agreement. In developing such understanding the Monitor is to rely to the
extent possible on available information and documents provided by the Company.
It is not intended that the Monitor will conduct his or her own inquiry into the
historical events that gave rise to the Agreement.

Initial Review

12. The initial review shall commence no later than one hundred twenty
(120) calendar days from the date of the engagement of the Monitor (unless
otherwise agreed by the Company, the Monitor, and the Offices). The Monitor
shall issue a written report within one hundred twenty (120) calendar days of
commencing the initial review, setting forth the Monitor’s assessment and, if
necessary, making recommendations reasonably designed to improve the
effectiveness of the Company’s program for ensuring compliance with the
anti-corruption laws. The Monitor should consult with the Company concerning his
or her findings and recommendations on an ongoing basis and should consider the
Company’s comments and input to the extent the Monitor deems appropriate. The
Monitor may also choose to share a draft of his or her reports with the Company
prior to finalizing them. The Monitor’s reports need not recite or describe
comprehensively the Company’s history or compliance policies, procedures and
practices, but rather may focus on those areas with respect to which the Monitor
wishes to make recommendations, if any, for improvement or which the Monitor
otherwise concludes merit particular attention. The Monitor shall provide the
report to the Board of Directors of the Company and contemporaneously transmit
copies to the Chief — FCPA Unit, Fraud Section, Criminal Division, United States
Department of Justice, at 1400 New York Avenue N.W., Bond Building, Eleventh
Floor, Washington, D.C. 20005 and Chief, Business and Securities Fraud Section,
United States Attorney’s Office, Eastern District of New York, 271-A Cadman
Plaza East, Brooklyn, New York 11201. After consultation with the Company, the
Monitor may extend the time period for issuance of the initial report for a
brief period of time with prior written approval of the Offices.

13. Within one hundred and twenty (120) calendar days after receiving the
Monitor’s initial report, the Company shall adopt and implement all
recommendations in the report, unless, within sixty (60) calendar days of
receiving the report, the Company notifies in writing the Monitor and the
Offices of any recommendations that the Company considers unduly burdensome,
inconsistent with applicable law or regulation, impractical, excessively
expensive, or otherwise inadvisable. With respect to any such recommendation,
the Company need not adopt that recommendation within the one hundred and twenty
(120) days of receiving the report but shall propose in writing to the Monitor
and the Offices an alternative policy, procedure or system designed to achieve
the same objective or purpose. As to any recommendation on which the Company and
the Monitor do not agree, such parties shall attempt in good faith to reach an
agreement within forty-five (45) calendar days after the Company serves the
written notice.

 

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14. In the event the Company and the Monitor are unable to agree on an
acceptable alternative proposal, the Company shall promptly consult with the
Offices. The Offices may consider the Monitor’s recommendation and the Company’s
reasons for not adopting the recommendation in determining whether the Company
has fully complied with its obligations under the Agreement. Pending such
determination, the Company shall not be required to implement any contested
recommendation(s).

15. With respect to any recommendation that the Monitor determines cannot
reasonably be implemented within one hundred and twenty (120) calendar days
after receiving the report, the Monitor may extend the time period for
implementation with prior written approval of the Offices.

Follow-Up Reviews

16. A follow-up review shall commence no later than one hundred-twenty
(120) calendar days after the issuance of the initial report (unless otherwise
agreed by the Company, the Monitor and the Offices). The Monitor shall issue a
written follow-up report within ninety (90) calendar days of commencing the
follow-up review, setting forth the Monitor’s assessment and, if necessary,
making recommendations in the same fashion as set forth in Paragraph 12 with
respect to the initial review. After consultation with the Company, the Monitor
may extend the time period for issuance of the follow-up report for a brief
period of time with prior written approval of the Offices.

17. Within ninety (90) calendar days after receiving the Monitor’s follow-up
report, the Company shall adopt and implement all recommendations in the report,
unless, within thirty (30) calendar days after receiving the report, the Company
notifies in writing the Monitor and the Offices concerning any recommendations
that the Company considers unduly burdensome, inconsistent with applicable law
or regulation, impractical, excessively expensive, or otherwise inadvisable.
With respect to any such recommendation, the Company need not adopt that
recommendation within the ninety (90) calendar days of receiving the report but
shall propose in writing to the Monitor and the Offices an alternative policy,
procedure, or system designed to achieve the same objective or purpose. As to
any recommendation on which the Company and the Monitor do not agree, such
parties shall attempt in good faith to reach an agreement within thirty
(30) calendar days after the Company serves the written notice.

18. In the event the Company and the Monitor are unable to agree on an
acceptable alternative proposal, the Company shall promptly consult with the
Offices. The Offices may consider the Monitor’s recommendation and the Company’s
reasons for not adopting the recommendation in determining whether the Company
has fully complied with its obligations under the Agreement. Pending such
determination, the Company shall not be required to implement any contested
recommendation(s). With respect to any recommendation that the Monitor
determines cannot reasonably be implemented within ninety (90) calendar days
after receiving the report, the Monitor may extend the time period for
implementation with prior written approval of the Offices.

19. The Monitor shall undertake a second follow-up review pursuant to the same
procedures described in Paragraphs 16 through 18. Following the second follow-up
review, the Monitor shall certify whether the Company’s compliance program,
including its policies and procedures, is reasonably designed and implemented to
prevent and detect violations of the anti-corruption laws. The final follow-up
review and report shall be completed and delivered to the Offices no later than
thirty (30) days before the end of the Term.

Monitor’s Discovery of Misconduct

20. Should the Monitor, during the course of his or her engagement, discover
that: (a) improper payments or anything of value may have been offered,
promised, made, or authorized by any entity or person within the Company or any
entity or person working, directly or indirectly, for or on behalf of the
Company; (b) the Company may have maintained false books, records or accounts;
or (c) the Company may have failed to implement a system of internal accounting
controls that is sufficient to accurately record the Company’s transactions
(collectively “Misconduct”); then except as set forth below, the Monitor must
immediately report Misconduct to the Company’s General Counsel, Chief Compliance
Officer, and Audit Committee for further action; unless the Misconduct was
already so disclosed. If the Monitor believes that any Misconduct did actually
occur or may constitute a violation of law, the Monitor must immediately report
the Offices. When the Monitor in his or her discretion believes that disclosure
to the Company would be inappropriate under the circumstances, the Monitor
should disclose the Misconduct solely to the Offices, and, in such cases,
disclosure of the Misconduct to the General Counsel, Chief Compliance Officer,
and/or the Audit Committee of the Company should occur as promptly and
completely as the Offices and the Monitor deem appropriate under the
circumstances. The Monitor shall address in his or her reports the
appropriateness of the Company’s response to disclosed Misconduct, whether
previously disclosed to the Offices or not. Further, in the event that the
Company, or any entity or person working directly or indirectly for or on behalf
of the Company, withholds information necessary for the performance of the
Monitor’s responsibilities, if the Monitor believes that such withholding is
without just cause, the Monitor shall disclose that fact to the Offices. The
Company shall not take any action to retaliate against the Monitor for any such
disclosures or for any other reason. The Monitor shall report criminal or
regulatory violations by the Company or any other entity discovered in the
course of performing his or her duties, in the same manner as described above.

 

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Meetings During Pendency of Monitorship

21. The Monitor shall meet with the Offices within thirty (30) calendar days
after providing each report to the Offices to discuss the report, to be followed
by a meeting between the Offices, the Monitor, and the Company.

22. At least annually, and more frequently if appropriate, representatives from
the Company and the Offices will meet together to discuss the monitorship and
any suggestions, comments, or improvements the Company may wish to discuss with
or propose to the Offices, including with respect to the scope or costs of the
monitorship.

Contemplated Confidentiality of Monitor’s Reports

23. The reports will likely include proprietary, financial, confidential, and
competitive business information. Moreover, public disclosure of the reports
could discourage cooperation, or impede pending or potential government
investigations and thus undermine the objectives of the monitorship. For these
reasons, among others, the reports and the contents thereof are intended to
remain and shall remain non-public, except as otherwise agreed to by the parties
in writing, or except to the extent that the Offices determine in their sole
discretion that disclosure would be in furtherance of the Offices’ discharge of
their duties and responsibilities or is otherwise required by law.

 

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