James P. Giffen, who has been at the center of the most significant case ever brought under the Foreign Corrupt Practices Act for a decade now—the so-called “Kazakhgate” scandal—heads back to court today. Bloomberg’s David Glovin offers an interesting discussion of the case:
Giffen, who is scheduled to appear in federal court in Manhattan, worked as an intermediary in Kazakhstan in the 1990s for U.S. companies including Mobil Oil Corp. A resident of the New York suburb of Mamaroneck in Westchester County, he was charged in March 2003 with funneling $84 million to leaders of the Central Asian republic, including current President Nursultan Nazarbayev. Mobil, now part of Irving, Texas-based Exxon Mobil Corp., isn’t accused of wrongdoing.
According to prosecutors, Giffen paid bribes to facilitate six oil deals, including Mobil’s purchase of a stake in Kazakhstan’s Tengiz field, one of the world’s largest. Prosecutors in 2004 publicly identified Nazarbayev, a U.S. ally, as a recipient of Giffen’s alleged payments.
The case was among the largest FCPA prosecutions ever when prosecutors launched it, signaling the expansion of U.S. anti-corruption efforts worldwide. The American law bars companies or individuals working in the U.S. from paying bribes to foreign officials to win business.
Why is this case languishing? Over the past decade, I discussed the case many times with Kazakhstani officials and businessmen. They were uniformly intrigued by it and keen to learn the details of their government’s darker practices—details that have steadily emerged from the case. They were also all of the same view: this case would ultimately go nowhere because it was not in the interest of the United States to expose damaging information about President Nazarbayev. Moreover, several offered that the Kazakhstani government fully understood how to “spin” the American system by hiring prominent lobbyists and consultants and engaging the right political figures. It would be able to forestall the case, they assured me. I would reply that the American system didn’t work that way—that our Justice Department was independent and that prosecutorial decisions were insulated from such lobbying. Truth is, I was never myself absolutely convinced of that, and I always felt a bit naïve saying it.
Glovin’s article presents some information about the depth of Kazakhstan’s considerable efforts to throw a wrench in this case, quoting Peter Zalmayev in the process. It has hired some of the best lawyers in the country, including a former attorney general, and, as Ken Silverstein has noted, it appears to have made use of the services of a company whose board is heavily populated with FBI alumni. Still, it’s not completely clear that this is the cause of the delay. The dealings in federal court have shown that the U.S. Government is not of one mind about the desirability of this prosecution. The Justice Department is standing behind the prosecutors involved, though it has obviously declined to give them the resources that the case calls for. But the recent hiccups in the case make clear that the intelligence community, led by the CIA, wants this case to go away because it is poised to reveal some embarrassing chapters in their Central Asian playbook. The CIA’s withholding of documents looks almost like an effort to sabotage the prosecution.
Today, Justice Department spokesmen tell Congress that battling corruption in foreign business dealings is a high priority. They argue that corruption is undermining the war on terror, costing taxpayers billions of dollars in Iraq and Afghanistan. But the handling of the Giffen case provides skeptics with plenty of reason to doubt the sincerity of the Justice Department’s claims. Within the government there are no shortage of career personnel who believe that a properly delivered bribe to a foreign government official is a necessary sort of compromise. A government that winks at corruption in the supposed name of national security may have a hard time prosecuting it in a commercial setting.
