Article — From the March 2009 issue

Invisible Hands

The secret world of the oil fixer

( 2 of 7 )

The next morning, when I sat down for coffee with Calil and Eronat at the St. James, Eronat was reading the International Herald Tribune. He folded the paper, pushed it my way, and pointed to a story: Spain’s government was hesitating to allow the Russian company Lukoil to buy a controlling stake in Repsol YPF, Spain’s largest oil firm. “Oil is not a commodity,” Eronat said. “It’s a political weapon.”

Oil, first and foremost, is a $2 trillion international industry, and most of this annual haul is extracted from under undeveloped nations. As Dick Cheney put it when he was CEO of Halliburton, “The good Lord didn’t see fit to put oil and gas only where there are democratically elected regimes friendly to the United States.” Sometimes, a company will reach out to rulers of oil-rich states on its own, negotiating and striking deals with them through official emissaries. More often, though, a company will instead work through men like Calil and Eronat: independent fixers, whose job it is to know the leaders and other government officials for whom oil serves as both piggybank and “political weapon.” A fixer can open doors for his corporate clients, arranging introductions to the various potentates he knows. He can help companies navigate the local bureaucracy, or provide the lay of the land with political and economic intelligence, or point to important people or companies that should be courted or hired in order to curry favor. And, in some cases, the fixer can feed money to those in power, in payoffs that often would be illegal under the stringent American and European anti-bribery laws. Edward Chow, a former Chevron executive who spent more than three decades in the oil business, described to me the logic by which fixers thrive. With the U.S. anti-corruption laws, he explained, “There is no gray zone. The lines are drawn very strictly. On the other hand, executives of oil companies are sent overseas to make deals, and they are measured by performance: you either make the deal or you don’t. So you’re supposed to be clean but you’re also supposed to create business. That leads to a tension, and a temptation to use middlemen. Let him do whatever he needs to do; I’m not part of it and don’t want to know.”

Although bribery and other payoffs have undeniably been part of the fixers’ trade, the best are far more than bagmen to dictators. “There’s a real art to acting as an agent, and the role differs from country to country,” Robin Bhatty, an energy- industry analyst, told me. “In most of the world, business is done on a personal basis. The best way of getting something done is finding someone who knows someone who you want to know, and you use them to make introductions.” (“Just the same way you’re calling me now,” he added, after I asked him to put me in touch with some energy-industry officials I was hoping to interview.)

Because oil fixers play such an important and sensitive role, they can accumulate extraordinary power with heads of state, who often bestow on them the title of presidential adviser and grant them use of a diplomatic passport. “Trading in weapons is trading in sovereignty,” says Philippe Vasset, editor of the Paris-based newsletter Africa Energy Intelligence. “If you don’t have them, you can’t defend your borders. It’s the same with oil, which gives you the liberty to run your ships and planes and tanks, and your economy. If you don’t have it, you can’t run your country.”

Besides Calil and Eronat, key brokers of recent decades have included Marc Rich, the controversial Clinton pardon recipient who founded what is now the oil-trading firm Glencore and, in the 1970s, pioneered the practice of oil-for-commodities trades; John Deuss, who once owned his own tanker fleet and who during the 1980s smuggled vast quantities of oil to South Africa’s apartheid regime, then under an international trade embargo; Hany Salaam, a Lebanese middleman who made numerous deals for Occidental Petroleum Corporation during the days of Armand Hammer, its former chairman; and Oscar Wyatt, a Houston oilman and corporate raider who was jailed in 2007 in connection with the U.N. oil-for-food scandal. In the African oil market, two major players have been Samuel Dossou-Aworet, a longtime oil and financial adviser to Gabon’s president, Omar Bongo; and Gilbert Chagoury, another Lebanese who was especially close to Nigerian ruler Sani Abacha. “There used to be about forty people who ran the oil-trading business,” Eronat told me. “The world got bigger, especially when the oil market boomed and the hedge funds came in, but it’s still a pretty small group of people.”

At breakfast, Calil and Eronat spoke about another fixer, a mutual friend of theirs named James Giffen. A New York business consultant, Giffen is facing charges in an American court over allegations that he funneled more than $78 million to Nursultan Nazarbayev, the president of Kazakhstan. The money allegedly came from fees paid to Giffen by American oil companies that subsequently won stakes in Kazakh oil fields. Giffen also gave Nazarbayev and his wife gifts, including his-and-hers snowmobiles and hundreds of thousands of dollars’ worth of jewelry. “Oil fields are a battleground,” said Eronat. “If Jim had not been involved, other [non- American] firms would have gotten the contracts, and the loser would have been the U.S. government.”

Calil, who had recently visited Giffen in New York, concurred. “Jim never worked for the CIA, but he continuously informed the CIA,” he said, a line of argument that Giffen has advanced in court and that clearly has some merit. “He was never discouraged and in fact was encouraged to have that relationship with Nazarbayev. You don’t take him to court—you give him a medal.”

“Americans want their gasoline cheap,” Calil added. “But it’s not possible without cutting a few corners.”

Download Pdf
Share

Ken Silverstein Silverstein is the Washington editor of Harper’s Magazine and the author of Turkmeniscam: How Washington Lobbyists Fought to Flack for a Stalinist Dictatorship. His last article for the magazine, “Useful Amateurs,” appeared in the November 2008 issue.

More from Ken Silverstein:

Washington Babylon September 29, 2010, 11:37 am

Signing Out

Get access to 163 years of
Harper’s for only $19.97

United States Canada

THE CURRENT ISSUE

June 2013

How to Make Your Own AR-15

= Subscribers only.
Sign in here.
Subscribe here.

Long Division

= Subscribers only.
Sign in here.
Subscribe here.

The Separating Sickness

= Subscribers only.
Sign in here.
Subscribe here.

view Table Content