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U.S. v. James Giffen

 
:
Giffen, James
:
DOJ Criminal
:
March 28, 2003
:
U.S. v. James Giffen
:
U.S. v. Giffen, No. 03-cr-663 (S.D.N.Y. 2003); U.S. v. Giffen, No. 03-cr-404 (S.D.N.Y. 2003).
:
Utilities-Oil
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Kazakhstan
:
1995; 1996; 1997; 1998; 1999; 2000
:
Former Prime Minister and President of Kazakhstan
:
James Giffen was an influential adviser to the government of the Republic of Kazakhstan. Giffen, a merchant banker, was chairman of Mercator, a New York-based merchant bank that represented Kazakhstan in connection with the sale of interests in Kazakh oil fields and pipelines. Allegedly, Giffen paid millions of dollars in bribes to top-level Kazakh officials to retain their favor and his advisory capacity.

The Complaint focuses on one transaction in particular, by which Mobil Oil acquired an interest in the Tengiz oil field. J. Bryan Williams, a former executive at Mobil Oil Corporation (now Exxon-Mobil) and a personal friend of Giffen, allegedly received a $2 million kickback from Giffen as part of this transaction, and bribes were also allegedly paid to the Kazakh officials.

After a lengthy investigation, Giffen was indicted on March 28, 2003 for violating the FCPA. In addition, on March 15, 2004, federal prosecutors in New York charged Giffen with filing false tax returns by omitting $2 million in income related to his relationship with Mercator.

Giffen challenged subpoenas issued by the United States seeking certain foreign bank records in the possession of Giffen's attorneys based upon the attorney work product doctrine. The United States District Court rejected the claim of privilege and ordered that the records be produced. Giffen appealed, and, on January 28, 2003, the United States Court of Appeals for the Second Circuit affirmed the lower court's decision.

In November 2004, the District Court granted Giffen's request to access CIA documents to determine whether he had a viable public authority defense based on his claim that he was essentially a CIA asset when he made the payments in question. In October 2005, the District Court denied the government's motion in limine to preclude Giffen from advancing a public authority defense and using classified documents to support that defense. The government filed an interlocutory appeal of this denial, and, in December 2006, the Second Circuit refused to hear the appeal on the ground that it was prematurely filed although it severely criticized in dicta the District Court's interpretation of the public authority defense.

Separately, on May 3, 2007, the government filed a civil forfeiture action against approximately $84 million, plus interest, on deposit in a Swiss bank account belonging to the government of Kazakhstan, alleging that the money in the account included the approximately $51.7 million in proceeds of the FCPA violations and wire frauds charged against Giffen. The government also filed a Stipulation and Order setting forth its agreement with Kazakhstan for the money (if it is not claimed) to fund three programs to benefit Kazakhstan, one for programs to benefit poor children, the second to improve public financial management, and the third to implement a comprehensive strategy for transparency in the oil, gas and mining industries there.

Giffen's trial had been scheduled for February 2007; however, several discovery-related issues were litigated over the course of several years. The government issued a superseding indictment on August 6, 2010, charging Giffen with the failure to supply information required under his 1996 tax return. On August 6, 2010, Giffen entered a guilty plea relating to the misdemeanor for failing to disclose control of a Swiss bank account on his 1996 tax return; in consideration the government agreed to drop further prosectution. Similarly Mercator entered a guilty plea to the government's superseding indictment on charges of making unlawful payments to a senior government official of Kazakhstan in violation of the FCPA. Giffen was sentenced to "time served" although Mercator had to pay a $32,400 fine.

In a related action, on September 18, 2003, J. Bryan Williams pled guilty to conspiracy and tax evasion and was sentenced to 46 months in prison. Williams was also ordered to pay a $25,000 fine and was required to pay taxes on the $2 million kickback he received. In April 2009, the U.S. government, at the request of the Chief Counsel of the IRS, instituted an action seeking to enforce its assessment of two “Report of Foreign Bank and Financial Accounts” (“FBAR”) penalties against Williams for willfully failing to disclose his assets in Swiss bank accounts for the tax year 2000. Despite Williams’s previous guilty plea, the court in U.S. v. Williams, 2010 WL 3473311 (E.D.Va., Sept. 1, 2010) denied the government's request to enforce civil FBAR penalties against Williams.
:
Anti-bribery (Domestic Concern), Conspiracy - Anti-Bribery
:
Not stated.
:
0
:
Domestic Concern
:
U.S.
:
51,000,000
:
Wire/check
:
Direct, Shell entity
:
78,000,000
:
Switzerland
:
Switzerland
:
No
:
No
:
Switzerland