U.S. authorities are investigating whether a multi-billion-dollar American firm knew that part of its $150 million investment in a small African miner would wind up in the hands of President Robert Mugabe\u2019s government.<\/p>\n
Global alternative asset management firm, Och-Ziff Capital Management Group LLC, invested $150 million in Central African Mining & Exploration Company, or Camec, in 2008.<\/p>\n
$100 million of the cash was then handed to the Mugabe regime through Billy Rautenbach, a Zimbabwean businessman with close ties to the Harare administration.<\/p>\n
The transaction was completed at the height of the country\u2019s economic crisis with the Harare regime desperately short of cash.<\/p>\n
The local currency was in free fall, losing value by the minute with inflation estimated at 79.6 billion percent by mid-November 2008.<\/p>\n
Rights groups say Mugabe, who was precipitously close to being forced out by a collapsed economy, used the money to fund a terror campaign that helped him retain power after a shock electoral set-back.<\/p>\n
Mugabe lost the first round of the 2008 presidential elections to long-time rival Morgan Tsvangirai who however, failed to win by a wide enough margin to avoid a run-off.<\/p>\n
The official results of the vote were not announced for more than a month as the Harare regime, according to observers, strategized on how to deal with the crisis.<\/p>\n
A run-off was eventually called, but Tsvangirai pulled out and fled to Botswana, accusing Mugabe of unleashing a terror campaign against his supporters.<\/p>\n
Tsvangirai\u2019s MDC-T party said Mugabe turned the country into a \u201cwar zone\u201d while Human Rights Watch said Zanu PF members set up \u201ctorture camps to systematically target, beat, and torture people suspected of having voted for the MDC\u201d.<\/p>\n
Och-Ziff last year disclosed that a broader Justice Department and Securities and Exchange Commission investigation is examining the $47 billion New York hedge fund\u2019s business in Zimbabwe and other African countries under the Foreign Corrupt Practices Act.<\/p>\n
The act bars firms doing business in the U.S. from giving money or items of value to foreign officials for business, either directly or through intermediaries.<\/p>\n
In Zimbabwe, U.S. authorities are examining Och-Ziff\u2019s connection to the $100 million payment to Mugabe\u2019s government in early 2008, officials said.<\/p>\n
The investigation into Och-Ziff\u2019s ties to the payment, which was made through the Camec hasn\u2019t been previously disclosed. Camec at the time described the payment as a loan.<\/p>\n
Och-Ziff has denied that it knew some of the money would end up with the Zimbabwe government.<\/p>\n
U.S. investigators are scrutinizing a March 2008 trip to Zimbabwe taken by Och-Ziff\u2019s Africa director at the time, Vanja Baros, according to people familiar with the investigation.<\/p>\n
The sources said Baros met several people involved in channeling the money to the Mugabe government, including Rautenbach.<\/p>\n
About three weeks after Baros\u2019s trip, in early April 2008, Och-Ziff made its investment in Camec, U.K. regulatory filings show.<\/p>\n
Days later, on April 11, Camec said in a statement about the deal that it purchased a company Rautenbach controlled, Lefever Finance Ltd., and its stake in Zimbabwe platinum mining operations for $5 million and 215 million Camec shares.<\/p>\n
As part of the deal, Camec said it would make a $100 million payment to Rautenbach\u2019s Lefever, which in turn lent the money to the Zimbabwe government to meet pre-existing obligations.<\/p>\n
Baros, who left Och-Ziff in 2013, declined to comment.<\/p>\n
Och-Ziff, which first disclosed the now four-year-old probe to investors last year after the Journal reported on it, said in a May 5, 2015, filing that it believed it \u201creasonably likely\u201d the inquiry would lead to an enforcement action.<\/p>\n
\u201cWe\u2019re hopeful that the investigation and the effect of legal expenses will be over by year-end,\u201d the firm\u2019s chairman, Daniel Och, said in an earnings call that day.<\/p>\n
Representatives for the Justice Department, Rautenbach and the Zimbabwe government didn\u2019t respond to requests for comment.<\/p>\n
Rautenbach also owns Zimbabwe\u2019s biggest ethanol producer, Green Fuel. The company, despite spirited challenge from opposition parties, managed to compel the government to make ethanol blending with petrol mandatory.<\/p>\n
The businessman\u2019s ties to Mugabe stretch back to the 1990s. Rautenbach built a small empire of businesses in Zimbabwe and other places in Africa ranging from trucking to manufacturing to mining and for years had extensive dealings with Camec in the Democractic Republic of Congo and elsewhere.<\/p>\n
Rautenbach at the time of Camec\u2019s Zimbabwe move faced an arrest warrant in South Africa for alleged fraud, corruption and theft. In 2009, he pleaded guilty on behalf of a company he controlled to fraud charges and paid a fine of about $5 million.<\/p>\n
A November 2001 report by a United Nations panel on natural-resources exploitation in the Congo called Rautenbach \u201ca man with no mining experience but with close ties to the ruling Zanu PF party in Zimbabwe.\u201d<\/p>\n
The panel said Rautenbach was appointed in 1998 by the DRC\u2019s Joseph Kabila as managing director of a Congolese state-controlled mining company at Mugabe\u2019s request.<\/p>\n
In late 2008, the U.S. Treasury Department put Rautenbach on a list of what it called Mugabe\u2019s \u201ccronies\u201d and said he \u201cprovided logistical support for large-scale mining projects in Zimbabwe that benefit a small number of corrupt senior officials.\u201d<\/p>\n
The Treasury removed Rautenbach from the list in 2014; the agency said that after a review, Rautenbach no longer warranted inclusion.<\/p>\n