Leon Black steps down as Apollo CEO in wake of Epstein scandal

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 one 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 CEO no later than July 31 and would remain chairman.

Marc Rowan, one of Black’s top lieutenants, will succeed him as CEO.

In a statement, Apollo said an outside law firm hired to conduct the review found that Apollo never retained Epstein for any services and that Epstein never invested in any Apollo-managed funds. The law firm, Dechert, also found no evidence that Black, 69, was involved in any way with Epstein’s criminal activities at any time.

But in recent months some Apollo clients have questioned Black’s judgment after a series of revelations about his connections to Epstein. The financier’s arrest — on suspicion of sex trafficking and of abusing underage girls — and subsequent death raised questions about what people in Epstein’s circles knew about his activities. The news caps a remarkable decades-long run for Black, 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 is adding two independent directors: Pamela Joyner, founder of Avid Partners, and Siddhartha Mukherjee, a scientist and award-winning author.

The firm said it’s also 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 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 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 company’s 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.”

On Monday, Apollo announced that its conflicts committee completed an independent review of Black’s previous professional relationship with Epstein and publicly released the findings. Black’s payments to Epstein totaled $158 million from 2012 to 2017, according to Dechert’s report.

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 Epstein’s 2008 conviction for soliciting prostitution from a teenage girl. The story did not 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 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 he can “begin to address the grievous error of having maintained a professional relationship with Mr. Epstein.”