- The Washington Times - Wednesday, December 3, 2003

ALMATY, Kazakhstan — The government has rehired a man awaiting trial in U.S. court on charges of funneling $60 million in kickbacks to President Nursultan Nazarbayev, according to Western oilmen in Almaty.

Eight months after James Giffen was indicted in a New York federal court, his New York-based pocket merchant bank, Mercator Corp., is back helping the oil-rich central Asian nation negotiate deals with major oil firms.

According to sources familiar with the talks, Mr. Giffen is represented at the negotiating table by his son, David, in high-stakes talks with a consortium developing the giant Kashagan oil field. He is officially described as a “consultant” to Kazmunaigaz, the state oil company, which also regulates the industry.

Costing an estimated $20 billion over the next 20 years, it is the largest oil-field-development project in the world and the haggling is reportedly over hundreds of millions of dollars.

The partners in the North Caspian Consortium are ExxonMobil, Shell, Total and Agip, the operator, with 20.37 percent each, and ConocoPhillips and Inpex of Japan sharing the rest.

The indictment, returned last April, charges that Mobil Oil Corp. and Philips Petroleum, among others, wired millions to accounts controlled by Mr. Giffen, $60 million of which he purportedly wired into Mr. Nazarbayev’s secret accounts.

Since then, Mobil and Exxon have merged to create ExxonMobil and Conoco and Philips have become ConocoPhillips.

Sources close to the negotiations said ExxonMobil executives have expressed displeasure at having to face Mercator at a time the oil giant is under investigation for its payments to Mercator.

Mr. Giffen posted a $10 million bond after he was arrested March 30. He is restricted to the New York area and has surrendered his Kazakh passport, a New York criminal court clerk said. A spokesman for the U.S. Attorney’s Office in New York said there was no restriction on his professional activities.

Mercator’s return to business in Kazakhstan was, one well-informed lawyer said, “rather curious, given earlier statements in the litigation made by Kazakhstan distancing itself from Giffen. It shows that Giffen continues to exert a lot of influence at the top.”

In an interview published late last month in the Wall Street Journal, Mr. Nazarbayev said of the Giffen case: “First of all, this is an American investigation of an American-based company. … The only thing is that Giffen was the adviser to the government of Kazakhstan. But American companies should be grateful because he brought them to Kazakhstan.”

ExxonMobil in Houston and Almaty declined comment, as did the state oil company whose chairman leads the Kazakh delegation to the current talks.

The indictment charges that Mobil deposited $51 million in Mercator’s New York account, of which $22.3 million ended up in the Swiss account of Orel Capital Ltd., a British Virgin Islands company controlled by Mr. Nazarbayev. Orel is the Russian word for eagle, the national symbol of Kazakhstan.

Mr. Giffen is also accused of funneling $7.5 million paid by Philips Petroleum, now ConocoPhilips and a party in the current negotiations, into the Swiss account of Berkut Holdings Ltd., another BVI corporation reportedly controlled by Mr. Nazarbayev. Berkut means eagle in Kazakh.

Mr. Nazarbayev is called KO2 in the indictment. It also states that Mr. Giffen paid for the tuition of KO2’s daughter at George Washington University, whose administration confirmed to The Washington Times that Mr. Nazarbayev’s daughter was enrolled there at the time.

Swiss court documents in possession of The Times stated that both accounts were controlled by Mr. Nazarbayev, who has ruled Kazakhstan since 1988.

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