Leon Black, who founded Apollo Global Management Inc. three decades ago in the aftermath of one scandal, is retiring as chief executive in the aftermath of another, this time involving the notorious sex offender Jeffrey Epstein.
Just months after Apollo announced an internal investigation into Black’s long association with the late financier, the investment firm said in a statement Monday that he would retire as Apollo CEO no later than July 31, while remaining chairman. Marc Rowan, one of Black’s top lieutenants, will succeed him as CEO as part of a governance overhaul that will also eliminate weighted voting rights.
Apollo said an outside law firm hired to conduct the review found that the asset manager never retained Epstein for any services and that he never invested in any Apollo-managed funds.
While the law firm, Dechert, found no evidence that Black was involved in any way with Epstein’s criminal activities, its report revealed that the CEO had paid $158 million to the disgraced financier from 2012 to 2017, a sum much greater than previously known.
In recent months, some clients raised questions about Black’s judgment following revelations about his connections to Epstein, whose arrest and subsequent suicide captivated high-caste Manhattan. Monday’s news caps a remarkable decades-long run for Black, 69, one of the most powerful figures in private equity.
Apollo’s executive committee and the board unanimously decided Rowan should be the next CEO, Black wrote in a letter to Apollo investors. To strengthen its corporate governance, the company announced the addition of two independent directors: Pamela Joyner, founder of Avid Partners; and Siddhartha Mukherjee, a scientist and award-winning author.
The firm also said it’s adopting a “one share, one vote” structure, eliminating multiple classes of stock to ensure that shareholders’ voting rights better align with their economic interests.
Black founded Apollo in 1990 with partners from Drexel Burnham Lambert, which collapsed in a scandal that led to the conviction of junk-bond king Michael Milken. The fledgling firm started buying distressed assets at deep discounts, including Midtown Manhattan office buildings, the luggage maker Samsonite and the owner of Vail resorts.
In the decades that followed, Black built Apollo into a $433 billion Wall Street behemoth.
“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,” Black said in the statement. “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.”
For years, Rowan, 58, was seen as something of an underdog. While he was the mastermind behind some of Apollo’s most profitable wagers, including the money machine that grew into insurer Athene, he was often in the shadows. He’s considered more staid than Apollo’s third co-founder, Josh Harris, who was seen as having a closer relationship with Black and deemed his most likely successor.
Rowan had taken a step back in recent months in what he called a “semi-sabbatical,” though he continued to work on deals and remained visible among employees.
Rowan came back from behind to win the job, according to one Apollo investor. He was considered the more serious choice, and better suited to deal with the investors that mattered most -- pension funds and insurers.
The alternative asset manager has faced heightened scrutiny since a New York Times article in October revealed that Black had wired at least $50 million to Epstein after his 2008 conviction for soliciting prostitution from a teenage girl. The story didn’t accuse Black of breaking the law.
Black has apologized for doing business with Epstein, calling it “a terrible mistake.” The men had been acquaintances since at least the early 1990s. Black said he paid the late financier millions of dollars annually from 2012 through 2017 for advice on estate planning, taxes, philanthropy and the structuring of art entities.
Epstein, who committed suicide in a New York jail cell in 2019, occasionally met with Black at Apollo’s headquarters and he pitched personal tax strategies to the firm’s executives.
Black has a net worth of almost $10 billion, according to the Bloomberg Billionaires Index, with his fortune stemming from his stake in Apollo and its funds.
In his letter to investors, Black said he plans to donate $200 million toward initiatives that “seek to achieve gender equality and protect and empower women” so that he can “begin to address the grievous error of having maintained a professional relationship with Mr. Epstein.”
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