Exclusive: Investor group says Apollo director overseeing Epstein review is not independent

In this news, we discuss the Exclusive: Investor group says Apollo director overseeing Epstein review is not independent.

NEW YORK (Reuters) – A group representing U.S. pension funds said the head of an Apollo Global Management Inc committee overseeing the investigation into CEO Leon Black’s links to the late financier and convicted sex offender Jeffrey Epstein is not independent.

The group told Reuters that the chairman of the committee, Michael Ducey, was not independent due to his previous relationship with the buyout company.

Ducey was a member of the board of directors of printing paper maker Verso Paper Corp, which was controlled by Apollo, from May 2006 to July 2016, according to company information.

The head of the Institutional Investors Council (CII), which represents pension funds, said he did not agree with Apollo de Ducey’s qualification as an independent director because he was on the board board of directors of a company owned by the private equity firm for less than five years. since.

“CII believes that a five-year retrospective helps avoid conflict or the appearance of a conflict of interest,” Executive Director Amy Borrus said in an email.

CII, whose members include investors in Apollo funds, does not track the number of companies that adhere to its guidelines. He declares on his site Web that its guidelines do not bind its members or societies.

The New York Stock Exchange, where Apollo is listed, asks companies to consider a business relationship dating back three years when assessing independence, rather than five as CII recommends.

A spokeswoman for Apollo said Ducey meets the requirements to become an independent director set by the New York Stock Exchange as well as the United States Securities and Exchange Commission (SEC).

“We are confident that our director independence practices are in line with best practices generally followed by publicly traded companies, including companies in our industry,” said the spokesperson. Ducey and a spokesperson for Black did not respond to requests for comment.

Black controls Apollo, which he co-founded in 1990 and transformed into one of the world’s largest private equity firms. Last week, he asked Ducey and two other Apollo directors to independently verify that he hadn’t done any wrongdoing. The three directors, who make up Apollo’s so-called “conflict committee”, have hired the law firm Dechert LLP to help them with their review.

Black said earlier this month he regretted payments to Epstein of between $ 50 million and $ 75 million over the past decade for what he called “professional services.” He was responding to a New York Times article, which revealed the payments.

The probe’s result could determine if Black continues to lead Apollo. During the company’s third-quarter earnings call on Thursday, executives said some investors had suspended commitments to Apollo funds pending the review’s findings.

“I would have concerns about these links between the director and Apollo. But the proof will be in how the directors behave themselves, ”said Nell Minow, vice president of corporate governance consultant ValueEdge Advisors.

Black said Thursday that in 2012, three years after Epstein was released from prison after his conviction in Florida for soliciting prostitution from a minor, he retained Epstein’s services for “personal estate planning, tax structuring and philanthropic advice ”. He called the decision a “terrible mistake” which he regretted.

Epstein was found hanged aged 66 in August 2019 in a Manhattan jail, awaiting trial on sex trafficking charges for allegedly abusing women and girls in Manhattan and Florida from 2002 to 2005. He had pleaded not guilty.

CII is an association representing the interests of pension funds, foundations and endowments with total assets under management of approximately $ 4 trillion.

Borrus said CII is working with companies to convey shareholder concerns, and that it has yet to contact Apollo regarding its concerns. No Apollo shareholders have spoken out against the company’s handling of Black’s relationship with Epstein, although some investors in the New York-based firm’s funds have expressed concerns.

The Pennsylvania Public School Employee Retirement System (PSERS) said last week that it would not consider any new investments in Apollo funds as a result of the investigation.

Reporting by Jessica DiNapoli in New York; Additional reporting by Chibuike Oguh in New York; Editing by Greg Roumeliotis and William Mallard

Original © Thomson Reuters

Originally posted 2020-10-30 20:46:12.

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