Giant New York Hedge Fund Och-Ziff Under Investigation For Bribery in $100 “Loan” to Zimbabwe Dictator Mugabe

One of the most interesting articles I published last year, but one that failed to receive the attention it deserved, was related to a $100 million “loan” to Zimbabwe’s brutal dictator Robert Mugabe, in which Wall Street firms played a key role. The post was titled, The Bailout of Robert Mugabe – How Wall Street Money Led to Intimidation, Torture and Death in Zimbabwe. Here are a few excerpts:

Four days later, Camec announced it was using the money it raised to purchase a joint venture with the Zimbabwe Mining Development Corp., or ZMDC, Mugabe’s state-owned mining company. The joint venture owned the platinum stakes on the Great Dyke that had been taken back just a few weeks earlier from Anglo American. The price included $5 million in cash; Camec issued shares to partners whose identities were shielded by a shell company based in the British Virgin Islands; and $100 million to Mugabe’s government. Camec said the $100 million was a cash loan “to comply with its contractual obligations to the government of Zimbabwe” for the platinum claims. It said the money would be repaid out of ZMDC’s share of future platinum earnings. Camec’s balance sheets for the period make clear that funding for the platinum rights came from the private transactions involving Och-Ziff.

The $100 million figure mentioned above that flowed directly to Zimbabwe’s brutal dictator Robert Mugabe was more than just a cash infusion to a corrupt dictator. Rather, it was a veritable political lifeline to a desperate and vulnerable despot. Facing defeat in the initial round of elections to the opposition, and with the nation’s currency hyper-inflating, the only thing he had at his disposal were valuable platinum assets that were at the time held by Anglo American Platinum. So Mugabe did what any desperate tyrant would do. He expropriated the assets from Anglo-American and immediately put them on the market to raise money to crush his opposition. Enter Wall Street.

This is where the Central African Mining & Exploration Co., or Camec, sniffed opportunity. Seemingly set up specifically to buy assets on the cheap from desperate African dictators, Camec immediately set out to raise funding to provide Mugabe with much need cash in exchange for the recently stolen platinum assets. Camec had no trouble raising this money from a variety of Wall Street firms, with the core participant being the massive hedge fund Och-Ziff, which contributed 75%, but also included BlackRock, GLG Partners and Credit Suisse.

Mugabe immediately used the money to intimidate, torture and murder opposition leaders until his primary opponent pulled out of the race. The ninety year-old Mugabe remains in power, while many of the Wall Street titans have retired lavishly to multi-million dollar retreats in the English countryside.

The excellent Bloomberg article from which that post was based, mentioned that Och-Ziff was under investigation by the Justice Department. I noted at the time:

Let the Justice Department and SEC investigate. Nothing meaningful will come out of it. Too many rich and powerful people got paid, and as Larry Summers so crudely admitted in 2009 “insiders don’t criticize insiders.” Just like how Jaime Dimon got a 74% raise in 2013 despite “settling” for $13 billion despite “doing nothing wrong” (in case you missed it, you must read: Jamie Dimon’s Big $13 Billion Secret – The Truth Behind the JP Morgan Settlement).

Fast forward one year, and the Wall Street Journal is reporting that Och-Ziff is close to “settling.” From the WSJ:

U.S. authorities are investigating whether Och-Ziff Capital Management Group LLC knew that part of a $150 million investment in a small African miner would wind up in the hands of Zimbabwe President Robert Mugabe’s government, according to people familiar with the probe.

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’s business in Africa under the Foreign Corrupt Practices Act. 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.

The publicly traded hedge-fund firm is in talks to settle the probe into its ties to a network of investors and deal makers that it worked with on business from Libya to South Africa, according to people familiar with the investigation. Och-Ziff and others have poured hundreds of millions of dollars into mining operations in the past decade as commodities prices soared.

Och-Ziff has denied that it knew some of the money would end up with the Zimbabwe government. Human-rights groups said the funds were used to carry out a violent crackdown on the opposition during a tough election Mr. Mugabe ultimately won in 2008.

U.S. investigators are scrutinizing a March 2008 trip to Zimbabwe taken by Och-Ziff’s Africa director at the time, Vanja Baros,according to people familiar with the investigation. The people said Mr. Baros met several people involved in channeling the money to the Mugabe government, including Billy Rautenbach, a Zimbabwean businessman with close ties to the dictator.

Mr. Rautenbach at the time of Camec’s 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.

“Fraud, corruption and theft. Eh, just pay a fine, no biggie!

In late 2008, the U.S. Treasury Department put Mr. Rautenbach on a list of what it called Mr. Mugabe’s “cronies” and said he “provided logistical support for large-scale mining projects in Zimbabwe that benefit a small number of corrupt senior officials.” The Treasury removed Mr. Rautenbach from the list in 2014; the agency said that after a review, Mr. Rautenbach no longer warranted inclusion.

Mr. Rautenbach met the Och-Ziff Africa director, Mr. Baros, in a mid-March 2008 gathering in Zimbabwe, along with a Camec executive and others, people familiar with the visit said. The trip was organized by Credit Suisse Group AG analysts who were optimistic about the company, these people said. The group visited a trucking operation used to service Camec’s Congolese mining projects and had dinner, the people said. They also visited the Congo and Mozambique, the people said.

Och-Ziff’s connection to the loan—disclosed in 2012 in the South African press—has raised concerns from at least one big investor.

In a September 2013 letter to the California Public Employees’ Retirement System, the biggest pension fund in the U.S. by assets known as Calpers and a onetime Och-Ziff investor that had questioned it about the Zimbabwe loan, the hedge-fund firm said it was a “passive shareholder of Camec” and that it “does not believe that any employee knew that Camec intended to provide funds raised from the offering to the regime of Robert Mugabe.”

A spokesman for Calpers, which last year shed its investments in hedge funds, including Och-Ziff, declined to comment.

In this case, it’s not just about theft and destroying the world economy. Giant financial firms can apparently just “settle” even when grotesque human rights abuses occur. This is how “justice” works in America. 

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Former Halliburton Subsidiary is Suing Sick Military Veterans they Poisoned

Halliburton, the transnational oil field services company formerly run by former Vice President andaccused war criminal Dick Cheney, is under public scrutiny again after it was revealed its former subsidiary is suing Iraq War veterans for $850,000.

Cheney self-approved major bids for his former company and its subsidiaries, which received massive government contracts in Iraq—funded by the American taxpayer—totaling over $39.5 billion. The U.S. war in Iraq has caused the loss of an estimated 1 million lives and Halliburton profited in the billionsfrom contracts that facilitated the bloodshed. One of the lesser known repercussions from the war was the toxic nature of oil work and waste disposal that resulted in the poisoning of untold numbers of American soldiers and Iraqis alike.

In 2012, a federal court in Portland, Oregon, awarded $85 Million in reimbursements to twelve Oregon National Guardsmen who had been exposed to and fell ill from the cancer-causing toxin sodium dichromate at the Qarmat Ali water treatment plant in Iraq. One veteran described his current health situation, saying that his children “saw me go from being such a big, strong soldier to just a crumpled down man dying of cancer.”

The Qarmat Ali water treatment plant was operated by KBR (a subsidiary of Halliburton at the time). The 9th Circuit Court threw out the2012  judgement on appeal, announcing the veterans must sue the company in Texas, the state where KBR’s headquarters is located.

The case against KBR is being filed again in Houston, but KBR is now attempting to sue the veterans for $850,000 in legal fees from the first case—a thinly veiled attempt to punish the veterans for seeking justice for their severe mistreatment.

Senator Ron Wyden of Oregon has expressed concern over the latest developments in this case. In aletter addressed to the Department of Defense, he said, “[W]e are concerned about the possibility of the DoD — and ultimately the American taxpayer — footing the bill for this seemingly endless and expensive litigation. In light of recent developments, and the potential for taxpayer dollars to enable the bankrupting of war veterans, we urge you to take control of this litigation and reach and equitable settlement.” 

According to Military.com, “[T]he company (KBR) has argued in court that it can’t be held liable for wartime decisions made by the U.S. military, and that it was essentially following orders given by the government when it created the burn pits.”

Hundreds of other veterans have launched similar lawsuits against Halliburton, KBR, and several other military contractors in 42 states for negligence in Iraq and Afghanistan.

One veteran, David Montoya, who is suing both Halliburton and KBR after he fell ill to cancer, summed up this situation best:

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With 28 Pages Still Hidden, Saudis May Be Released from 9/11 Suit

By Brian McGlinchey

Undermined by the U.S. government’s refusal to share everything it knows about the September 11 attacks, the pursuit of justice by 9/11 family members and survivors could be stopped in its tracks within the next 90 days.

In a courtroom just minutes from the World Trade Center, lawyers for the Kingdom of Saudi Arabia last Thursday asked Judge George Daniels to release the kingdom from a lawsuit seeking to hold it liable for aiding the 9/11 hijackers.

Representing Saudi Arabia, attorney Michael Kellogg said the victims have failed to provide “admissible, concrete, competent evidence” of Saudi Arabia’s complicity in the attacks.

Meanwhile, a 28-page chapter from a 2002 joint congressional intelligence inquiry that might tip the scales of justice in the plaintiffs’ favor remains out of reach, thanks to President Obama’s reluctance to declassify it.

Sean Carter, who represents the families and survivors, told New York’s PIX11 News, “The nature of Saudi support of al Qaeda remains classified at this point…it’s an issue that is featured in a whole range of intelligence documents…there is no real reason for them to be remain classified this many years out.”

Former Senator Bob Graham

The 28 pages detail specific sources of financial support for the hijackers and, according to former Senator Bob Graham, “point a very strong finger at Saudi Arabia as being the principal financier” of the attacks that killed 2,977 people. Graham and many others who’ve read the 28 pages insist there is no national security justification for the secrecy.

Saudi Arabia’s attorneys claim the 9/11 Commission Report exonerated the kingdom, a notion that’s refuted by, among others, commission member Bob Kerrey. In a sworn statement submitted for the suit last year, the former Nebraska senator wrote, “To the contrary, significant questions remain unanswered concerning the possible involvement of Saudi government institutions…and evidence relating to the plausible involvement of possible Saudi government agents in the September 11th attacks has never been fully pursued.”

The debate over the commission’s conclusion may be rendered moot with the release of the 28 pages: Congressman Walter Jones, who is leading the declassification drivein the House of Representatives, told the New Yorker “those 28 pages tell a story that has been completely removed from the 9/11 (Commission) Report.”

Will Judge Daniels “Connect the Dots”?

According to Michael D. Goldhaber, writing for The American Lawyer, Thursday’s courtroom exchanges emphasized a February 2000 meeting at the Saudi consulate in Los Angeles between alleged San Diego-based Saudi agent Omar al Bayoumi and embassy staffer Fahad al Thumairy. Plaintiffs attorneys and many observers point to that meeting as evidence of Saudi ties to the 9/11 plot.

Flight 77 Hijacker Nawaf al Hazmi

Immediately after the meeting, al Bayoumi went to a restaurant where he said he just happened to befriend 9/11 hijackers Nawaf al Hazmi and Khalid al Mihdhar, who had only days earlier arrived in the United States. (According to Graham’s book, “Intelligence Matters,” before leaving San Diego for Los Angeles that day, al Bayoumi told at least one person he was going to pick up visitors.)

Al Bayoumi proceeded to help the two move to San Diego, initially hosting them in his own home. He helped them find an apartment, paid their first two months rent and introduced them to a network of associates that included Anwar al Awlaki, who would become a prominent al Qaeda figure before dying in a U.S. drone strike in 2011.

Al Bayoumi’s wife served as a conduit for cashiers checks routed from a Saudi princess, and al Bayoumi himself received a dramatic, temporary raise at his no-show cover job coinciding with his generous sponsorship of the pair. On 9/11, al Hazmi and al Mihdhar hijacked American Airlines Flight 77, which hit the Pentagon.

Flight 77 Hijacker Khalid al Mihdhar

That mountain of circumstantial evidence, however, might not be enough to dissuade Judge Daniels from dropping Saudi Arabia from the suit. According to Goldhaber, Judge Daniels challenged the plaintiffs’ attorneys on exactly what was said at al Bayoumi’s meeting at the Saudi consulate, asking, “What’s the factual basis for you to allege that when al Thumairy met with al Bayoumi he said, ‘Give lodging to the hijackers, assist them and give financial support to the hijackers so that they can carry out the 9/11 attacks?’”

Summing the situation, Goldhaber writes, “The quest for historical truth threatens to founder on the judge’s futile desire for direct knowledge of espionage….This case ain’t going to trial against Saudi unless Judge Daniels is willing to connect the dots. The irony is that Daniels already entered a $6 billion default judgment against Iran on far weaker evidence.” (Indeed, even the word “evidence” seems too generous in the context of that case.)

Judge Daniels said he would render his decision within 90 days.

Heightened Urgency for Declassification Effort

Last summer, President Obama tasked the Office of the Director of National Intelligence (ODNI) to review the 28 pages for potential declassification. With a year passing since that order, and with the clock ticking on Judge Daniels’ self-imposed deadline, citizens, journalists and legislators should all be asking the White House one simple question: What’s taking so long?

Brian McGlinchey is the founder and director of 28Pages.org 

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Federal court rules that bumper stickers, air fresheners are reasonable suspicion of criminal activity

(Photo: Pal Berge)

KINGSVILLE, TX — A panel of judges unanimously held that the presence of bumper stickers, air fresheners, and religious symbols in a vehicle can be considered “reasonable suspicion of criminal activity” during a traffic stop.

The case stems from a March 9, 2011, traffic stop that took place along U.S. Highway 77 in Kingsville, Texas.  Officer Mike Tamez of the Kingsville Police Department observed a Chevy Tahoe with a woman behind the wheel, going 2 MPH above the posted speed limit. The family vehicle had a man in the passenger seat and a young girl in the back. The vehicle’s bumper was decorated with a Drug Abuse Resistance Education (D.A.R.E.) sticker and other “pro-police” decals.  There were also a few rosaries hanging from the rear view mirror, and some air fresheners visible.

From these visual clues alone, Officer Tamez “concluded that they were probably drug runners.” He pulled them over for speeding, with the premeditated intention of searching the vehicle for drugs.

As Officer Tamez fished for probable cause, he had the driver, Mrs. Nohemi Peña, step out of the vehicle for questioning, while her husband, Ruben Peña-Gonzalez, waited inside with their daughter. The officer noticed things like the “smell of air freshener” and religious medallions on the driver’s key chain. He noted that Mrs. Peña “paused” before responding to his irrelevant line of questioning.

According to court documents, “Tamez testified that a number of things he observed and smelled during the course of the stop made him suspicious: the large number of bumper stickers supporting law enforcement, which he contends shows a desire to be viewed as a ‘good guy’ who ‘can’t do no wrong’; numerous air fresheners placed throughout the vehicle, which experience taught him is an attempt to mask the odor of drugs or drug money; Pancho Villa and St. Jude medallions on the key chain, both of which he characterized as icons commonly used by drug smugglers along Highway 77 as symbols for righteousness and protection; and three rosaries hanging from the rear view mirror, which his experience led him to believe are also used by drug traffickers for protection.”

The Fifth Circuit U.S. Court of Appeals was asked to consider if this was a reasonable standard for extending a traffic stop for an investigation. The panel, consisting of Judge Edith H. Jones, Judge Jerry E. Smith, and Judge Gregg J. Costa, unanimously agreed that these were reasonable circumstances for conducting an investigation, even after the relevant steps had been taken to deal with the speeding infraction.

“Officer Tamez had reasonable suspicion of criminal activity apart from the traffic violation,” the Court of Appeals wrote, in its July 20th, 2015, decision, upholding a lower court’s conviction of the couple and seizure of their cash.

“We do have concerns that classifying pro-law enforcement and anti-drug stickers or certain religious imagery as indicators of criminal activity risks putting drivers in a classic ‘heads I win, tails you lose’ position,” the judges conceded.  “But we need not decide whether these items alone, or in combination with one another, amount to reasonable suspicion because we find the more suspicious evidence to be the array of air fresheners and inconsistencies in the driver’s responses to the officer’s basic questions. We have long recognized that the presence of air fresheners, let alone four of them placed throughout an SUV, suggests a desire to mask the odor of contraband.”

The ruling gives legal cover for police to perform intrusive and irrelevant investigations on motorists, who have otherwise not been observed doing anything illegal.  And police departments have a great incentive to perform these lucrative fishing expeditions.  In 2014 alone, the Kingsville Police Department seized 21 vehicles and $1,099,558 in cash using civil asset forfeiture, TheNewspaper.com reported.

SOURCE: U.S. v. Pena-Gonzalez (U.S. Court of Appeals, Fifth Circuit, 7/20/2015)

 { SUPPORT POLICE STATE USA }

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Hatchet-Wielding Man with Mental Issues Attacks Moviegoers in Tennessee; Media Calls it “Theater Shooting Horror” to Fit Gun Control Agenda

Breaking news tonight of another attack at a movie theater, this time in Antioch, Tennessee. Thankfully, no one wound up seriously injured.

The story at this time is that a 29-year-old named Vincente David Montano who had been reported missing to Texas police by his mother wound up in a showing of Mad Max: Fury Road and attacked his fellow patrons. Motive is still unknown at this time according to reports.

Details are still coming in and have been just a bit sketchy. By sketchy, we’re talking about things like this:

Is he a 51-year-old local man, or a 29-year-old missing Texas man with a pellet gun, hatchet, mace and serious mental issues? Montano had apparently be committed four times previously, twice in 2004 and twice in 2007.

Calls did go out that it was active shooter on the scene, but it turns out the guy had an airsoft pellet gun which cops were quick to point out looks like a real gun. It has been reported that when a cop ran into the theater, Montano fired his pellet gun once toward the officer, and the officer retreated.

However, the suspect didn’t shoot anyone or attempt to shoot anyone in the theater (if so, that has not been reported at this time). Clad in a surgical mask, he instead attacked another man with a hatchet, hitting and superficially wounding him, and he pepper sprayed that man as well as two other female moviegoers. There were eight total people in the theater including Montano. No one was taken to the hospital.

He also apparently had two backpacks, one containing a hoax (fake) bomb device. Sounds like a movie itself, doesn’t it?

SWAT took Montano out as he ran out of the back door of the theater; he died in the parking lot.

The mainstream media, however, is still running full speed ahead with the theater shooter story anyway.

Here’s how CNN is currently portraying this event:

THEATER SHOOTING HORROR!!!

“Theater shooter” must sound sexier than hatchet-wielding psycho.

USA Today: “Police Shoot Gunman at Tennessee Movie Theater”

ABC News: “Gunman Killed at Tennessee Movie Theater Had Hatchet and Fake Bomb, Police Say”

The list goes on. But was this guy really a “gunman” the likes of, say, John Russell Houser or James Holmes?

People who watch TV without paying attention will think so.

How long until this, also, is used to scare people more and further push Obama’s gun control initiatives?

And how long until we find out just how many SSRI antidepressant drugs this man was on (or just recently off)? 

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Cash-Strapped Saudi Arabia Hopes To Continue War Against Shale With Fed's Blessing

As we said at the time, "those who contend that the downturn simply cannot last much longer are perhaps ignoring the underlying narrative that helps to explain why the situation looks like it does."

"At heart," we continued, "this is a struggle between the Fed’s ZIRP and the Saudis, who appear set to outlast the easy money that’s kept US producers alive." This is an allusion to the fact that the weakest players in the US shale industry - which the Saudis figure they can effectively wipe out - have been able to hold on thus far thanks largely to accommodative capital markets.

But persistently low crude prices - which, if you believe Morgan Stanley, are at this point driven pretty much entirely by OPEC supply - are taking their toll on producers the world over. That is, the damage isn’t confined to US producers.

In fact, the protracted downturn in prices is slowly killing the petrodollar and exporters sucked liquidity from global markets for the first time in 18 years in 2014. To let Goldman tell it, a "new (lower) oil price equilibrium will reduce the supply of petrodollars by up to US$24 bn per month in the coming years, corresponding to around US$860 bn" by 2018.

As Bloomberg noted a few months back, the turmoil in commodities has produced a "concomitant drop in FX reserves ... in nations from oil producer Oman to copper-rich Chile and cotton-growing Burkina Faso."

And don’t forget Saudi Arabia which, as you can see from the chart below, isn’t immune to the ill-effects of its own policies.

The financial strain comes at an inopportune time for the Saudis and indeed, as we noted when the country moved to open its stock market to foreign investment in June, "the move to allow direct foreign ownership of domestic equities [may reflect the fact that] falling crude prices and military action in Yemen have weighed on Saudi Arabia’s fiscal position."

"Our forecast is for Brent to average US$54 per barrel in 2015 [and] at this price, we expect total Saudi government revenues to fall by some 41% in 2015.[resulting] in [sharp] cuts to expenditures," Citi said at the time.

Now that Saudi boots are officially on the ground in Yemen (if only to provide "training") and now that it appears the Kingdom is prepared to step up its military efforts in Syria, the financial strain from lower crude prices looks set to drive the Saudis into the bond market. Here’s FT with more:

 

 

Saudi Arabia is returning to the bond market with a plan to raise $27bn by the end of the year, in the starkest sign yet of the strain lower oil prices are putting on the finances of the world’s largest oil exporter.

Bankers say the kingdom’s central bank has been sounding out demand for an issuance of about SR20bn ($5.3bn) a month in bonds — in tranches of five, seven and 10 years — for the rest of the year.

The latest plans represent a major expansion of that programme, which bankers believe could even extend into 2016, given the outlook for the oil price.

Saudi Arabia’s resort to further domestic borrowing highlights the challenges facing the region’s largest economy amid one of the steepest falls in the oil price in recent decades. Brent, the international benchmark, has dropped from $115 a barrel in June last year to about $50 this week.

Oil’s decline accelerated in November when Opec, the producers’ cartel, decided not to cut output, a major departure from its traditional policy of trimming production to prop up prices. Saudi Arabia said it was an attempt to defend market share against rivals such as the US shale industry.

But the decision to ride out a sustained period of lower prices has put a huge strain on the finances of major oil exporters, including Saudi Arabia which requires an oil price of $105 a barrel to balance its budget.

The kingdom has drained $65bn of its fiscal reserves to maintain government spending since the oil price plunge began. Sama currently has $672bn in foreign reserves, down from their peak of $737bn in August 2014.

The plan to resort to capital markets, if confirmed, demonstrates the priority Riyadh is placing on maintaining government spending, despite the pressure cheap oil is putting on its budget.

The monthly bond issuance plan would only cover part of the deficit, which economists estimate will reach SR400bn this year amid falling revenues and continuing high expenditure on big infrastructure projects, public sector wages and the continuing war in Yemen.

In case the irony here isn't clear, allow us to explain.

Saudi Arabia has effectively kept oil prices suppressed in an effort to wipe out the US shale industry which has only managed to stay afloat this long because Fed policies have kept monetary conditions loose and driven investors into HY credit and other risk assets. Now, Saudi Arabia is set to take advantage of the very same forgiving capital markets that have served to keep its US competition in business as persistently low oil prices and two armed conflicts look set to strain the Kingdom's finances. 

Of course one option for keeping the cash drain to a minimum would be to avoid getting involved in multiple regional proxy wars - but where's the fun in that? 

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