Oaktree Employee Faces Extradition to U.A.E.

An employee of distressed-debt firm Oaktree Capital Management LP was arrested in London and faces the possibility of being extradited to the United Arab Emirates on charges that he stole millions on Oaktree's behalf.

Martin Graham, a senior vice president in Oaktree's London office, appeared before the Westminster Magistrates' Court last week as part of the process to determine whether he will be extradited to Sharjah, in the U.A.E., where last year a court sentenced him to three years in prison.

News of the arrest was reported by the Financial Times.

The charges were brought by the founder of the Gulmar Group, a defunct oil-and-gas contractor that Oaktree owned, who accused Mr. Graham of stealing a portion of a $644 million arbitration award from Venezuelan state oil company Petró leos de Venezuela SA, or PdVSA. That award was issued after Venezuela attempted to nationalize several of Gulmar's ships, and some of Gulmar's minority shareholders think they are entitled to a portion of the funds.

Oaktree said the charges against Mr. Graham are "meritless" and that he was convicted in absentia and without being informed of the charges or given an opportunity to defend himself.

"Mr. Graham intends to resist his extradition through the legal process, and Oaktree fully supports him," the firm said. "Oaktree further expects the conviction, which lacks any factual basis, will ultimately be overturned or withdrawn."

Mr. Graham is free on bail and continues working in Oaktree's London office, a spokeswoman for the firm said.

Oaktree and the minority shareholders of Gulmar have been fighting over the PdVSA funds for several years. In 2012, Mr. Graham was named managing director of a Gulmar subsidiary called Gulmar Offshore Middle East, or GOME, and he negotiated a payout of the arbitration award from PdVSA, according to an Oaktree regulatory filing. GOME paid a portion of the funds to its creditors and then went into administration in London, court records show.

AlixPartners LLP, the administrator of GOME, said it has found no evidence Mr. Graham did anything improper. AlixPartners commissioned an outside law firm to investigate the matter, and "No wrongdoing was identified on the part of Mr. Graham either personally or in his capacity as a director of GOME," AlixPartners said.

Mr. Graham will appear in court to determine whether he will be extradited to Sharjah. The treaty between the U.K. and the U.A.E. states that in the case of convictions in absentia, extradition will be granted only if a retrial or appeal is awarded.

The complaint against Mr. Graham was filed by Jean-Michel Tissier, a French national based in Sharjah, who founded Gulmar. The Sharjah court ordered Mr. Graham to pay Mr. Tissier about $1.6 million. Efforts to reach Mr. Tissier weren't successful.

Mr. Graham joined Los Angeles-based Oaktree in 2007 after working in the financial restructuring unit of Cadwalader Wickersham & Taft LLP. Efforts to reach him through his attorney weren't successful.

Write to Chris Cumming at chris.cumming@wsj.com

(END) Dow Jones Newswires

June 28, 2016 13:35 ET (17:35 GMT)

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