Leon Black, who founded the alternative investment firm Apollo Global Management, is stepping down as chief executive following an independent review of his relations with convicted sex offender Jeffrey Epstein.
Mr Black will retire as chief executive "effective on or before July 31, 2021 consistent with best-in-class governance practices of the company", Apollo said in a statement on Monday. He will, however, remain chairman of the firm he founded three decades ago.
Marc Rowan will take over as the new chief executive of the alternative asset management company, which had $433 billion in assets under management at the end of September last year.
The move comes after the Conflict Committee of Apollo board in October 2020 launched an independent review of Mr Black’s ties to the late financer Epstein. It released the findings of the investigation by law firm Dechert on Monday and said Apollo never retained Epstein for any services and he never invested in any of the funds managed by the company.
Epstein, however, regularly advised Mr Black on trust and estate planning, tax issues, philanthropic endeavours and the operation of his family office.
"All fees paid to Epstein by Mr Black or his family office were for bona fide tax, estate planning and other related services, and the amounts were intended to be proportional to the value provided by Epstein," Apollo's board said in a separate statement.
It said Epstein’s advice was vetted by professional advisers and Dechert found "no evidence that Mr Black was involved in any way with Epstein’s criminal activities at any time".
The findings of the report by Dechert – which had unrestricted access and examined more than 60,000 pieces of communication – were consistent with statements made by Mr Black and Apollo regarding the prior relationship.
"We are releasing the report and findings in its entirety in the interest of being fully transparent to all of our stakeholders," Michael Ducey, chair of the board’s conflicts committee, said.
Mr Black, 69, one of the most influential figures in global private equity circles, has faced criticism for his connections to convicted sex offender Epstein, whose arrest and subsequent suicide in August 2019 gripped the financial world. Mr Black's payments to Epstein totalled $158 million for the work done from 2012 to 2017, according to Dechert.
Mr Black has a net worth of almost $10bn, according to the Bloomberg Billionaires Index, with his fortune stemming from his stake in Apollo and its funds. He founded Apollo in 1990 with five partners from Drexel Burnham Lambert. By the early 2000s, only one of them remained. They started buying up distressed assets at a deep discount, including Midtown Manhattan office buildings, the luggage maker Samsonite, the owner of Vail resorts, according to Bloomberg.
Apollo’s executive committee and its board unanimously voted for Mr Rowan to succeed Mr Black. In a bid to strengthen the company’s corporate governance structure, the company has expanded its board and will include four new independent directors.
Pamela Joyner, founder of Avid Partners, and Siddhartha Mukherjee, a physician and scientist, have been appointed to the board. The company expects to appoint two additional independent directors "as soon as practical", it said.
Apollo is also adopting a "one share, one vote" structure to ensure that the voting rights of its shareholders "align with their economic interests".
"I am extraordinarily proud of the firm I have helped build over the past 30 years and the value we bring to our clients, investors and communities," Mr Black said. "Since our IPO in early 2011, we have focused on transforming Apollo and developing the next generation of leadership to position the firm for continued growth for decades to come."
As the chairman of the company, "I look forward to focusing on strategic planning, growth initiatives, investment opportunities and supporting Apollo, which has been my life’s work, in whatever ways I can", he added.
