Oil consultant Jim Giffen was told by a U.S. judge six months after his 2003 arrest in an international bribery scheme that he would go on trial in the fall of 2004. He’s still waiting.
Since his arrest 7 1/2 years ago as he was preparing to board a flight to Kazakhstan, Giffen, 69, has denied federal charges that he paid bribes to leaders of the former Soviet republic to facilitate oil transactions. Giffen, an American citizen, says U.S. intelligence agencies condoned his actions or gave him reason to believe they did.
Now, his lawyers and prosecutors are fighting over whether the defense is entitled to see classified U.S. documents that may help Giffen at a trial. The delay has spawned conspiracy theories from critics of the Kazakh government, which in 2002 sought to limit the U.S. probe according to court records. Lawyers outside the case speculate whether the U.S. remains committed to it.
“It’s wholly inappropriate,” Michael Perlis, a lawyer at Stroock & Stroock & Lavan LLP in Los Angeles, said in an interview. Perlis helped draft the Foreign Corrupt Practices Act, the U.S. anti-bribery law at the center of the Giffen case, while at the Securities and Exchange Commission in the 1970s. “Either get your case going or get rid of it.”
Giffen, who worked as an intermediary in Kazakhstan in the 1990s for U.S. companies including Mobil Oil Corp., was scheduled yesterday to appear for at least the 20th time in federal court in Manhattan. That court conference was rescheduled for July 29.
A resident of the New York suburb of Mamaroneck in Westchester County, Giffen 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.
Last year, the Justice Department won convictions in three FCPA prosecutions: a 2005 case over bribes in Azerbaijan, a 2007 case dealing in part with payments to a high-ranking Nigerian official, and a 2008 case over bribes in Thailand.
In March, Daimler AG, the Stuttgart, Germany-based maker of Mercedes-Benz cars, agreed to pay $93.6 million to settle a U.S. bribery probe. Alcatel-Lucent SA, the world’s biggest supplier of fixed-line phone networks, agreed to pay $137.4 million in February.
On July 7, ENI SpA and a former Dutch subsidiary agreed to pay $365 million to resolve claims that they bribed Nigerian government officials to win construction contracts.
The Giffen case, which predates all of those prosecutions, remains stalled. Five scheduled trial dates have passed without action.
The delays included a one-year hiatus while an appeals court weighed whether Giffen may claim at his trial that U.S. intelligence services, including the Central Intelligence Agency, authorized him to pay off Kazakh leaders. Since then, prosecutors have fought to withhold or redact scores of classified documents, forcing the trial judge to launch a review of each one without the participation of Giffen or his lawyers.
‘Speaking in Tongues’
“I recognize that we might as well be speaking in tongues for the defendant,” U.S. District Judge William Pauley said at the last court conference, on April 13, as prosecutors offered vague details about the possible disclosure of 80 documents.
There’s also a dispute over whether Giffen himself may read documents once they are turned over to the defense, as Pauley wrestles with provisions of the federal Classified Information Procedures Act. Meanwhile, U.S. agencies have moved very slowly in turning over documents to Justice Department lawyers, according to statements in court by the judge and prosecutors.
“The government started this prosecution,” Pauley said in court on April 13. “And the government agencies can’t sit back and be recalcitrant about their obligations.”
Giffen’s lawyer, William Schwartz of Cooley LLP in New York, declined to comment. In court in September 2008, Schwartz raised the possibility that he would seek a dismissal because the delay in document disclosure has compromised Giffen’s right to a speedy trial. He hasn’t done so.
In court in April, Schwartz refused to consent to a prosecutor’s request for another postponement, called the process “very unsettling.” He urged Pauley to summon lawyers for government agencies to a meeting to hash out whether Giffen may see specific documents.
The issue is expected to be addressed again at the July 29 conference. Yusill Scribner, a spokeswoman for U.S. Attorney Preet Bharara in Manhattan -- the fifth top prosecutor to oversee the case since Giffen’s 2003 arrest -- declined to comment, as did Paula Weiss, a spokeswoman for the CIA.
Richard Dean, a lawyer at Baker & McKenzie LLP in Washington whose practice focuses on the FCPA and isn’t involved in the case, said there’s a growing sense among attorneys that the Giffen case will never reach a jury.
‘String it Out’
“The general lesson is the longer you can string it out, the better the chances the government will lose interest, that it becomes too hard,” Dean said in an interview. “It’s almost always the case that delay is the friend of the defense.”
Perlis, who also isn’t involved in the Giffen case, said it has taught him that, while prosecutors will be tenacious in pursuing FCPA allegations, it’s possible for individual defendants to fight charges.
“If you can afford it, and if you have an arguable case, fight,” he said.
Unnamed officials in Kazakhstan urged the U.S. to limit the Giffen probe, according to court records and a judge’s ruling in 2002 in a related dispute before the charges were filed. Reid Weingarten, a lawyer for Kazakhstan, told the Justice Department in a letter that year that the country’s relations with the U.S. would deteriorate if prosecutors pursued an investigation of Kazakh officials.
Peter Zalmayev, who heads the Eurasia Democracy Initiative, a New York-based non-governmental organization that promotes human rights in Central Asia, said he began to suspect that delays in Giffen’s case were intentional after President George W. Bush met with Nazarbayev in 2006 to discuss ways to expand U.S. access to Kazakh oil. He believes the prosecution is stalled because of the influence of GlobalOptions Group Inc., a crisis management firm.
Morton Taubman, an attorney for GlobalOptions, said the New York-based company didn’t interfere with Giffen’s case.
He said GlobalOptions was hired by a London-based firm that represented a Kazakh company controlled by Nazarbayev’s daughter, World Media Corp., to retain lawyers to monitor the Giffen case.
“We weren’t representing Kazakhstan,” Taubman said in a phone interview.
Zhanbolat Ussenov, a spokesman for Kazakhstan’s embassy in Washington, declined to comment on the Giffen case.
Zalmayev said in an interview that Giffen’s case should “send a signal to corrupt dictators elsewhere in the region that they will be scrutinized.”
He said he fears corrupt officials may draw a different conclusion. “You can buy expensive lobbyists in Washington to absolve you, and that will be a crying shame.”
The case is U.S. v. Giffen, 03-CR-00404, U.S. District Court, Southern District of New York (Manhattan).