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FCPA Blog Daily News

« Credit For Compliance: The DOJ Gets Specific | Main | Mysteries Among Us »

No Punishment For 'Hero' Giffen 

Kazakhstani President Nursultan Nazarbayev with then U.S. President George W. Bush, 2006. Photo credt to WikipediaOil consultant James H. Giffen, once accused of paying $84 million in bribes to the president of Kazakhstan and other foreign officials, wasn't punished for a misdemeanor tax charge he pleaded guilty to in August to end his case.

Giffen, 69, escaped jail time, criminal fines, and probation when he appeared Friday before U.S. District Judge William H. Pauley in New York.

His prosecution started more than seven years ago when he was charged with conspiracy, violating the Foreign Corrupt Practices Act, wire and mail fraud, money laundering, and filing false tax returns.

In the highest-profile FCPA prosecution up to then, the DOJ alleged he made illegal payments while serving as a middleman for several Western oil companies.

The case came to a sputtering end this year when prosecutors allowed Giffen to plead guilty to failing to report a foreign bank account in a 1996 tax return. His now-dormant firm, Mercator Corporation, pleaded guilty to one count of violating the Foreign Corrupt Practices Act by giving two snowmobiles to officials in Kazakhstan in 1999.

“This ordeal must come to an end,” Judge Pauley said Friday. “Mr. Giffen was a significant source of information for the U.S. government and a conduit for secret communications to the Soviet Union and its leadership during the Cold War,” the judge said.

Giffen faced up to a year in prison on the misdemeanor tax charge but the government didn't ask for jail time.

Judge Pauley fined Mercator $32,00. He said the company had incurred $10 million in expenses and lost profits of at least $30 million while fighting the criminal case.

Giffen himself was prevented from traveling during the prosecution and had to post bail of $10 million until his guilty plea in August.

The judge said classified documents showed that Giffen had "advanced the strategic interests of the United States and American businesses in Central Asia. Throughout this time," the judge said, Giffen "continued to act as a conduit for communications on issues vital to America’s national interest in the region.”

When Giffen was arrested before boarding a flight to Paris at New York's Kennedy Airport in March 2003, the American citizen was carrying a diplomatic passport issued by Kazakhstan. His lawyers later argued that whatever he did there had the full approval of the U.S. government. To prove his innocence, Giffen requested production of classified documents from the CIA and other U.S. government sources.

Judge Pauley said, "How does Mr. Giffen reclaim his reputation? This court begins by acknowledging his service."

Giffen's friend, J. Bryan Williams, a former executive at Mobil Oil, pleaded guilty in September 2003 to tax charges and was sentenced to 46 months in prison. Prosecutors said the Virginia lawyer took a $2 million kickback from Giffen for helping negotiate a deal involving Kazakhstan's Tengiz oil field. Williams was released from prison in 2006.


Download the August 4, 2004 second superseding indictment in U.S. v. Giffen, et al. (S.D.N.Y., Docket No: 03-CR-404-WHP) here.

Download Giffen's August 6, 2010 plea agreement here.

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