The Leon Black clock strikes midnight
Leon Black is "retiring" as CEO of Apollo Global Management, the alternative investment giant he has led since co-founding it in 1990. But he is not making a full break, as Black will remain chair of Apollo's board of directors.
Why it matters: This is the culmination of 18 months of head-in-the-sand obfuscation of Black's dealings with Jeffrey Epstein.
What we already knew: Black and Epstein had both a business and personal relationship stretching back to before Epstein's 2008 guilty plea for soliciting prostitution with a minor.
- Black maintained those contacts until 2018, when they crumbled due to a "fee dispute," even though even new Epstein allegations came out during the 2016 presidential campaign because of his associations with both Bill Clinton and Donald Trump.
- Black was believed to have given Epstein at least $50 million, including a $10 million charitable donation.
What we just learned: Black paid Epstein a total of $158 million between 2012 and 2017, for tax advice and related work that Black believes saved him upwards of $2 billion, according to the results of an investigation conducted by law firm Dechert on behalf of Apollo.
- Dechert found no evidence that Epstein ever did work for Apollo or other Apollo executives, although Black did make introductions.
- Epstein received a $5 million allocation to Apollo's initial public offering in 2011, as part of a directed share offering program, although Black told Dechert he doesn't recall the circumstances. That stock today would be worth more than $12 million.
- Epstein also co-invested with Black and Black's family office on a personal investment.
- Black loaned Epstein $30.5 million in early 2017, of which only $10 million was repaid.
- Dechert found "no evidence that Epstein ever introduced Black, or offered to introduce Black, to any underage woman." It adds that "Black has no recollection of ever seeing Epstein with an underage woman at any time."
- "Underage woman" is a legal euphemism for "girl."
What Black is saying: "It is important for me to stress again how deeply I regret having had any involvement with Mr. Epstein."
- Read his full statement, which includes a $200 million pledge toward "initiatives that seek to achieve gender equality and protect and empower women."
What Apollo is saying: Black will formally step down as CEO by July 31, and will be succeeded by fellow co-founder Marc Rowan (who's largely credited for Apollo's massive debt business).
- The CEO shuffle features some serious palace intrigue. Rowan had stepped back from day-to-day Apollo activities last year, while the firm's third co-founder, Josh Harris, is said to have angled for the job.
- That's the same Josh Harris who co-owns the Philadelphia 76ers and New Jersey Devils with The Blackstone Group's David Blitzer.
The bottom line: Leon Black is giving up day-to-day control of his firm, just shy of his 70th birthday, because he broke the two cardinal rules of private equity: Conduct thorough due diligence and, when that fails, own up to it by cutting bait quick.