In my recent previous posts on the BOTA Foundation, I recapped its history and provided what I think were some of the critical factors which led it to be recognized as the most successful example the United States Department of Justice has had to date in returning recovered corruption assets. But what are the lessons from BOTA that might be applicable to future foundations established for the same purpose?
Entries in James Giffen (35)
As noted in my previous post, BOTA has been cited by several major newspapers in recent months as the most successful example that the United States has for accountable, transparent and effective return of recovered corruption assets, and in its final report on the foundation, the World Bank called BOTA “a remarkable achievement.”
The agreement to start the Foundation emerged in 2007 after more than two years of discussion between the Governments of the United States, Switzerland and Kazakhstan (known as “the Parties”) about the disposition of $84 million, plus interest, that had been frozen in a Swiss account since 1999.
The BOTA Foundation was able to take the $115 million from the corruption case associated with James GIffen and use it effectively and efficiently to assist more than 200,000 poor children, youth and their families in Kazakhstan.
BOTA was the first foundation established to restitute assets associated with an FCPA prosecution to victims of corruption. What were its key lessons that could be relevant to future foundations established for the same purpose?
BOTA had three programs, with its largest, the Conditional Cash Transfer (CCT) Program, briefly explained in the previous post. Funds from the Pictet and Cie bank account associated with James Giffen and President Nazarbayev were used in two other ways to help poor children and youth in Kazakhstan: via a NGO grants program, called the Social Service Program (SSP), and through a scholarship program known as the Tuition Assistance Program (TAP).
The background of BOTA Foundation was explored in previous posts. Starting with this post I would like to explain what BOTA actually did in its five and a half years of operation.
The BOTA Foundation explained (Part Five): The roles of the U.S., Switzerland, and the World Bank in BOTA's creation
In the case of BOTA, it took four to tango: the governments of Kazakhstan, the United States, Switzerland and the World Bank. For Kazakhstan, as explained in the previous post, BOTA provided a face-saving "out" for President Nazerbayev. Talks between the U.S., Switzerland and Kazakhstan on the disposition of the $84 million, plus accrued interest, in the Swiss Pictet and Cie Bank, started in 2003, shortly after James Giffen was arrested and charged with violating the Foreign Corrupt Practices Act.
What were the motivations of the key actors responsible for the creation of BOTA Foundation -- the governments of the United States, Switzerland, and Kazakhstan? And what role did the World Bank play, as well as opposition politicians and civil society activists in Kazakhstan? Let's start where Giffen did business: Kazakhstan.
The story of the failed FCPA prosecution of James Giffen is likely familiar to many readers of the FCPA Blog. Following a three-year investigation by the DOJ that started in 1999, in March 2003 Giffen was arrested as he was boarding a Paris bound plane at JFK.
The story of BOTA's capital and creation starts with politics and oil in Kazakhstan, the last of the ex-Soviet republics to gain its independence in 1991. As well chronicled in Steve LeVine's definitive account of the era, The Oil and the Glory, during the 90s there was a scramble amongst Western interests to secure oil drilling rights in the Caspian Sea, which had some of the largest untapped reserves in the world.