Business & Economics:
GUILTY PLEA IN OIL CASE REFOCUSES ATTENTION ON KAZAKHSTAN BRIBERY SCANDAL
6/17/03

A former oil executive has pleaded guilty to charges of tax evasion and conspiracy to defraud the US government in connection with a deal to develop Kazakhstan’s energy sector. The guilty plea of J. Bryan Williams is helping to refocus attention on a bribery case involving unnamed Kazakhstani officials and merchant banker James Giffen.

Williams pleaded guilty June 12 in US District Court in New York to hiding over $7 million in taxable income, including a $2 million payment made in 1996 by "people, organizations or governments" with whom he was doing business on behalf of what was at the time known Mobil Oil Corp. Federal prosecutors estimated that Williams did not pay over $3.5 million in taxes, according to a transcript of the June 12 court proceedings.

According to court documents, Williams opened two bank accounts in 1993 in the name of a corporation, Alqi Holdings Ltd. Between 1993 and 2000, over $7 million was deposited in the two accounts, which earned $800,000 in income, court documents show. Williams went on to acknowledge that much of the money was subject to taxation, adding that he did not properly report the income to the Internal Revenue Service "in order to evade the substantial taxes owed thereon." Federal prosecutors described Alqi Holdings as not "really a company, just a bank account."

"I knew what I was doing was wrong and unlawful. I, therefore, believe that I am guilty of evading the payment of taxes for the tax years 1993 through 2000," Williams said. "I also believe that I acted in concert with others to create a mechanism, the Alqi accounts, which I intended to allow me to escape detection by the IRS."

While admitting that he conspired with others, Williams declined to disclose any names. When presiding Federal District Judge Harold Baer Jr. pressed Williams to name a co-conspirator, identified in court documents as CC-1, the former oil executive stated: "I don’t know who CC-1 is."

Williams disputed Baer’s characterization of the $2 million payment as a "kickback," instead classifying the money as "income" that he did not properly report to the IRS. The payment in question is supposedly connected with Williams’ role in negotiations that led to Mobil taking a 25 percent stake in the Tengiz oil field. Williams’ legal counsel, David Schertler, said that the defendant was not obligated under the plea agreement reached with federal prosecutors to adopt or accept "the facts as stated in the conspiracy count."

According to assistant US attorney Peter Neiman, the conditions of Williams’ plea in court allow the defendant to merely agree that there were other conspirators involved in the criminal acts, without requiring him to disclose their identities. "He certainly knows who those people are," Neiman said during the June 12 court proceedings. The assistant US attorney also stated that, under his plea agreement, Williams waived his right to appeal if he received a prison term of between 46 and 57 months, or less. Sentencing is scheduled for September 18.

Williams, who resigned from the company now known as ExxonMobil in 1999, was indicted April 3, a few days after prosecutors indicted Giffen, a merchant banker who brokered the Tengiz oil deals for Kazakhstan in 1996. [For background see the Eurasia Insight archive]. Giffen has denied charges that he paid $78 million in kickbacks while cementing a $1.05 billion investment by Mobil in the Tengiz field. The indictment against Giffen, whose trial is scheduled to begin June 23, alleges that the merchant banker made illicit payments to bank accounts controlled by two unnamed Kazakhstani government officials.

Observers consider Giffen, who was a reportedly a financial adviser to Kazakhstani President Nursultan Nazarbayev, to be a key figure in an ongoing investigation concerning possible violations of the Foreign Corrupt Practices Act (FCPA) involving Western oil companies, including ExxonMobil, and Kazakhstani government officials. [For background see the Eurasia Insight archive].

ExxonMobil representatives did not respond to repeated requests for comment on the FPCA investigation, or on Williams’ case. When pleading guilty, Williams stated: "I did not disclose these business relationships [payments to Alqi accounts] to Mobil oil, although I understood I had an obligation to do so."