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International Law

: The FCPA Blog

James Giffen And America's Secrets

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In the 1990s, according to the Justice Department, American businessman James Giffen had the title of counselor to the president of Kazakhstan. His job was to help with "priority investment projects relating to the exploration, development, production, transportation, and processing of oil and gas." That made him hugely important in Kazakhstan and far beyond.

In 1991, Kazakhstan had become the last republic to declare independence from the Soviet Union. Its spectacular oil and gas reserves suddenly became available and American energy companies wanted in. From 1996 to 1998, four of them landed deals -- Mobil Oil, Amoco, Texaco and Phillips Petroleum.

In 2003, a federal grand jury in New York indicted Giffen. It alleged that he used $78 million collected from the U.S. oil companies as success fees or escrowed deposits to bribe Kazakhstan's president and its oil and gas minister. Giffen was charged with violating the Foreign Corrupt Practices Act, conspiracy to violate the FCPA, mail and wire fraud, failing to disclose foreign bank accounts, money laundering and conspiracy to launder money. He faced more than 80 years in prison.

That was then. Now, more than six years after the DOJ announced the indictment, the question is whether James Giffen will ever go on trial. "The diplomats usually win over the prosecutors," one Washington insider told us recently, "and it would seem Kazakhstan is too important to continue the Giffen case."

When arrested, Giffen was carrying a Kazakhstan diplomatic passport. His lawyers have said whatever he did there had the full approval of the U.S. government.

To prove it, two years ago Giffen asked the American government to produce documents from its files about his activities in Kazakhstan. Last month federal district judge William H. Pauley III issued an order saying the government had produced "a substantial volume" of classified information under CIPA -- the Classified Information Protection Act (18 U.S.C. App. III. Sections 1-16). But at the government's request, the judge said only Giffen's lawyers can review the classified material. If they think they need to show any of it to Giffen himself, they first need permission from the government agency that produced it, presumably the CIA or a similar enterprise. A copy of the order can be downloaded here.

There's more. Mary Jacoby at Main Justice (free by registration) wrote a story last week about a "strange letter from Sen. Mark Pryor to then-Attorney General Michael Mukasey . . . in which the Arkansas Democrat weighs in" on Giffen's case. The letter (a copy can be downloaded from Main Justice) argued against granting immunity from prosecution to Rakhat Aliyev, the former son-in-law of Kazakh president Nursultan Nazarbayev, who claims to have incriminating information about the ruling family.

Why, Mary Jacoby asks, would "a senator from Arkansas care about Borat-land?" And why won't the senator's office identify the "constituent" who asked the senator to write the letter? She calls it An FCPA Whodunit and says anyone with information can contact her at tips@mainjustice.com.

So here's the situation: Giffen's 62-count indictment and almost everything else in the court record is now a state secret, hidden from view. Of the 194 items in the docket, only a dozen are available to the public -- mainly innocuous scheduling orders and notices of lawyers' appearances. The government's responses to Giffen's discovery demand are deemed so sensitive they're even off limits to Giffen himself. How then would a jury ever get to see them? And there's the intrusive letter about the case from an Arkansas senator to the attorney general -- written at the request of a person the senator's office won't identify.

Here's the question: Can the government protect all of its secrets and give Giffen a fair trial at the same time?

A copy of the Justice Department's April 2, 2003 release announcing James Giffen's indictment can be downloaded here.

Next up: China, natural resources, and corruption.
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Full post as published by The FCPA Blog on July 15, 2009 (boomark / email).