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UN pension fund remains suspicious of Apollo after Epstein report

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A report by Apollo Global Management lawyers on the links between Leon Black and the late pedophile Jeffrey Epstein are “not enough” to remove the company from a watchlist for investments that require further scrutiny, a senior UN pension fund official said.

Law firm Dechert said last week that Mr. Black, co-founder of Apollo, had transferred $ 158 million to Epstein for tax advice and other professional services, much more than previously known. The firm found that Apollo was not doing business with Epstein and that there was “no evidence that Black. . . has been involved in any way in Epstein’s criminal activities at all times ”.

Apollo was placed on the United Nations Joint Staff Pension Fund watchlist in July 2019 after Mr Blackties to Epstein, a UN official said. The $ 80.3 billion pension fund has been investing with Apollo since at least 2013.

Speaking after the publication of the Dechert report, Pedro Guazo, representative of the UN Secretary General for the investment of pension fund assets, told the Financial Times: “At the moment we are not exploring any further investments. with them.”

“The current outlook for [UN office of investment management] is that the findings of Dechert’s investigation were not enough to remove Apollo from the watch list, ”he added.

“Reputational risk is something we take very seriously,” Guazo said, stressing that any new investment should meet strict United Nations criteria for social impact and corporate governance.

The UN decision is a blow to Apollo, whose co-founder Joshua Harris said in October that “third-party fundraising will slow in the near term as some investors await the findings of the review” by the company’s lawyers.

Apollo last week unveiled reforms designed to address investor concerns, saying it would add four new independent directors and revamp its two-class share structure to give outside investors more say in the management of the company. . Mr Black has said he will step down as chief executive by July 31.

“Dechert had unrestricted access to all relevant people and documents. . . and the report has been made public in its entirety, ”Apollo said in a statement to the FT.

He added, “The proposed improvements in corporate governance are radical and, subject to company and regulatory approvals, will be industry-leading.”

The moves appeared to appease some Apollo investors, including the UK’s South Yorkshire Pensions Authority, which committed nearly £ 29million to three Apollo funds between 2013 and 2019.

Authority director George Graham told the FT that Apollo’s actions “demonstrate a commitment to learn and improve from things that go wrong.”

Several other pension funds approached by the FT declined to say whether they would continue to invest with Apollo.

But the decision by the United Nations Joint Staff Pension Fund signaled a more cautious approach and could influence public pension funds and other institutions that contribute to Apollo’s $ 433 billion asset stack.

The Pennsylvania Public School Employee Retirement System, which said in October it was not considering any new investments with Apollo, showed no signs of reconsidering its position following the Dechert review.

“I refer you to our previous comment. . . and decline any further comment, ”said Steve Esack, a spokesperson for the fund.

Connecticut’s $ 40 billion pension and trust fund plans said they “reviewed Apollo this spring and determined, based on various due diligence criteria, that they did not meet our standards to make a new commitment. of capital ”.

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