Prior to merchant banker James Giffen's indictment for allegedly engaging in corrupt transactions with top Kazakhstani officials, legal counsel for Kazakhstan repeatedly sought assurances from US justice officials that President Nursultan Nazarbayev would not be implicated in the case, according to a letter obtained by EurasiaNet. The letter also suggested that pressing ahead with the Giffen case could result in the deterioration of US-Kazakhstani bilateral relations.
The nine-page letter, dated September 9, 2002, is addressed to US Deputy Attorney General Larry D. Thompson and is signed by Reid H. Weingarten, an attorney for the Washington, DC, law firm of Steptoe & Johnson. In it, Weingarten, writing "on behalf of his client, the Republic of Kazakhstan," seeks Thompson's intervention in what was at the time a grand jury investigation focusing on possible violations of the Foreign Corrupt Practices Act (FCPA) by Giffen, who is chairman of the merchant bank Mercator Corp.
Ultimately, Weingarten's letter did not succeed in swaying the criminal investigation, which the US Attorney's office for the Southern District of New York (SDNY) describes as "ongoing." On March 30, authorities arrested Giffen and subsequently indicted him on charges of making more that $78 million in illicit payments to "two senior officials of the Republic of Kazakhstan in connection with six separate oil transactions," according to a press release issued by the US Attorney's office, SDNY. [For additional information see the Eurasia Insight archive]. Mercator brokered many of Kazakhstan's most lucrative oil deals with Western conglomerates.
Weingarten's letter was written several days after US Judge Denny Chin issued a ruling September 5, 2002, that allowed the grand jury investigation to proceed. In the note, Weingarten complains that unspecified offers of "the Republic's cooperation in return for reasonable accommodation by the prosecutors have been rejected by the US Attorney for the SDNY and the Assistant Attorney General in charge of the Criminal Division." The letter goes on to cite "the significant geopolitical implications of the investigation" in an attempt to justify the need for Thompson's intervention.
Attorneys for Kazakhstan were apparently concerned that Nazarbayev, or other top Kazakhstani officials, would be explicitly named as targets of the grand jury investigation, or possibly even indicted, the letter indicated. Weingarten wrote that on two occasions on July 27, 2001 and on March 18, 2002 -- he met with SDNY prosecutors, seeking an effective guarantee that Nazarbayev would not be indicted.
In addressing Thompson, Weingarten renewed the offer of Kazakhstan's cooperation in return for "certain limited accommodations that would not deter the prosecutors' investigation in any meaningful respect." Specifically, Weingarten requested "a formal assurance that President Nazarbayev will not be indicted."
"Such an assurance would be of significance to the Republic and have no impact on the investigation," the letter said.
In addition, Weingarten requested the lifting of a US-imposed freeze on about $80 million maintained in a Swiss bank account with the Republic of Kazakhstan listed as the beneficiary. The assets had been frozen in connection with the corruption investigation. "Returning the funds to Kazakhstan would again demonstrate good faith, but not preclude the prosecutors from continuing with their investigation," Weingarten asserted.
Weingarten additionally argued that foreign officials cannot be prosecuted under FCPA, adding that "President Nazarbayev's official actions would be absolutely immune from the judicial authority of another foreign state under the head-of-state immunity doctrine."
The indictment against Giffen alleges that between 1995 and 2000 the merchant banker diverted upwards of $78 million in fees paid by oil companies, via Swiss banks, to accounts controlled by two top Kazakhstani government officials, who are identified only as "KO-1" and KO-2." The indictment goes on to allege that the two unidentified Kazakhstani officials used the funds obtained from Giffen for their own personal purposes.
"In making these unlawful payments, Giffen also defrauded the people of Kazakhstan out of the honest services of its officials, defrauded the Republic of Kazakhstan out of millions of dollars from these oil transactions, and laundered money to promote and conceal his crimes," said the SDNY press release of April 2.
Weingarten admitted in the letter to Thompson that his "requests would be somewhat unusual in the run-of-the-mill criminal investigation." He went on to say, however, that the Giffen case "is no ordinary investigation and that the prosecutors' actions in this case will have significant impact beyond the US criminal justice system." EurasiaNet obtained the Weingarten letter from a source who is not affiliated with any party involved in the criminal investigation.
The letter cautions that "any indictment naming a Kazakh official as an unindicted co-conspirator, or the recipient of a bribe would be viewed as an affront to Kazakhstan, could have a destabilizing political effect in Kazakhstan, and could deteriorate [sic] US-Kazakh relations."