Most Americans have never heard of Jim Giffen and the bribery scandal known as "Kazakhgate" but it's a fascinating and byzantine story of corruption with links to 9/11, Iraq, Enron and the Bush Administration. More below the fold...
Aug. 25 (Bloomberg) -- In the mid-1990s, long before oil prices topped $60 a barrel, U.S. companies sought access to Kazakhstan, a Central Asian nation that the U.S. State Department says will be among the world's top 10 producers of crude by 2015.
First, they had to win approval from Jim Giffen, a New York investment banker who became an official in Kazakhstan's government and held sway over its energy deals.
``You couldn't go to a Kazakh minister, particularly if you were an American company, without going through Giffen,'' says Ed Chow, who managed external affairs at Chevron Overseas Petroleum Ltd., a unit of San Ramon, California-based Chevron Corp.
Chevron, the second-largest U.S. oil company, avoided Giffen by arriving in the country before he amassed power, says Chow, 55, who's now an oil and gas consultant in Leesburg, Virginia. Others couldn't.
http://quote.bloomberg.com/apps/news?pid=10000103&sid=a_jX.m5mrYFA&refer=news_index
Giffen is charged in the US with "13 counts of violating the Foreign Corrupt Practices Act (FCPA) and with 33 counts of money laundering. In March 2004, the U.S. government filed additional charges of tax evasion. Giffen,63, was charged with paying $78 million in bribes between 1995 and 2000 to [Kazakh President Nursultan] Nazarbayev and to former Kazakh Prime Minister Nurlan Balgimbaev". (http://www.wpherald.com/storyview.php?StoryID=20050823-012827-8539r)
Lucky for Chevron and Condoleeza Rice, who sat on their board of directors at the time (1993), that they happened to be the first ones in! Other oil execs have not been so lucky.
A Mobil executive who ran the company's oil efforts in Kazakhstan, Bryan Williams, 65, pleaded guilty in June 2003 to tax evasion stemming from the case.
A grand jury is probing whether Mobil participated in a scheme to bribe leaders of the world's ninth-biggest nation by geographical area, Neiman said in an April 4, 2003, court filing.
Giffen paid $20 million in bribes to Kazakh leaders after negotiating a $1.05 billion deal that awarded Mobil a share of a major Kazakh field, the indictment says. Mobil, now part of Irving, Texas-based Exxon Mobil Corp., the world's largest publicly traded oil company, denies wrongdoing.
``Exxon Mobil has no knowledge of any illegal payments made to Kazakh officials,'' Exxon Mobil spokesman Tom Cirigliano says.
Texaco's Role
Texaco's involvement in Kazakhstan has also come under scrutiny, according to a copy of a Justice Department subpoena from April 14, 2003.
After Texaco, now a unit of Chevron, won access to a field, Giffen paid $7.5 million in bribes to Kazakh officials, prosecutors say. ``All payments made by Texaco were properly made to the government of Kazakhstan into government accounts as instructed by the government,'' says Jeffrey Moore, a spokesman for Chevron.
The case against Giffen has been moving with glacierlke speed through the judicial system. One reason may be that "Giffen's actions were condoned by the Central Intelligence Agency, White House and State Department to curry favor with Kazakh President Nursultan Nazarbayev, 65... 'I have never had another case where I had as many witnesses, or really any witnesses, express the kind of fear about meeting with us that we had in this case, [Assistant U.S. Attorney Peter] Neiman said in court on June 3, 2004, when the defense unsuccessfully sought dismissal of the charges". (Bloomberg) Another is that "Kazakhstan, with proven reserves of 10 billion barrels of oil and 60 trillion cubic feet of natural gas, is the United States's most crucial ally in Central Asia and in a recent letter President George W. Bush told Kazakh President Nursultan Nazarbayev 'the United States views Kazakhstan a strategic partner in Central Asia.' Bush also praised Kazakh 'cooperation of recent months in combating terror.'" Yet another reason is that, on 9/11/2001, records of two grand jury investigations into Giffen's dealings were destroyed when the World Trade Center was attacked. (http://globalresearch.ca/articles/CHI205B.html) Whatever the reasons for the wheels of justice turning slowly, they are to Nazarbayev's advantage as it reduces the likelihood that he could be charged with conspiracy (WP Herald).
So who is Jim Giffen?
Giffen's shadowy activities began in the 1970s. A lifelong advocate of US trade with Russia, he sold oil field equipment to Russia--an enemy of the US at the time--while serving as vice president for Armco Steel. He developed close ties to Armco's president, William Verity, Jr., who later served as commerce secretary in the Reagan administration. Another notable Giffen associate was Michael Forrestal, who would later become a member of the National Security Council and a partner at Shearman & Sterling. (Shearman & Sterling remains Kazakhstan's legal adviser on oil and gas deals.)
http://globalresearch.ca/articles/CHI205B.html
Verity, among other things, is a Director of Eli Lilly and Company; the Chase Manhattan Bank of New York; the First National Bank of Southwestern Ohio; and the Mead Corporation of Dayton, Ohio. (http://www.findarticles.com/p/articles/mi_m1052/is_v10/ai_5117250). Coincidentally, an amendment to the bill that created the Department of Homeland Security protected Eli Lilly from lawsuits by victims of thimerosal, which many believe causes autism in children. Also coincidentally, Mead, a paper products company, bought the Houston, Texas-based Gulf Consolidated Services, a major distributor of pipes, values, fittings and electrical supplies to the oil-field and power generating industries in 1977 from its founder, John Duncan. Duncan was Chairman of the Enron Board's Executive Committee from 1986 to 2003. Duncan testified before the Permanent Subcommittee on Investigations of the Committee on Governmental Affairs that he thought Enron was acting responsibly because the board refused to authorize the purchase of two pulp mills for in excess of $300 million in October 2001. But that's another story...
The story of Jim Giffen is a fascinating and his trial could have far-reaching impact.
And with neighboring Uzbekistan's often repressive President Islam Karimov angrily announcing that he will evict the United States from its strategic Karshi-Khanabad, or K-2 air base in his country within six months, the strategic importance of Kazakhstan, four times the size of Texas and six times that of France will loom for American leaders greater than ever.
The United States has no military bases in Kazakhstan. And Nazarbayev appears unwilling to risk the ire of Russia and China by defying them and welcoming American troops into his country. But he wants to continue doing lucrative business with U.S. corporations, has maintained a Kazakh KAZBAT battalion of peacekeepers in Iraq and is a longtime member of Washington's Partnership for Peace program of bilateral military relations with nations around the world.
Now, with the Giffen case stalled and further legal complications looking unlikely to emerge from it in the near future, those warm relations may well continue. (WP Herald)