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International authorities highlight role of Kazakh elites’ American wheeler-dealer

Crescent International

The trusted adviser of Kazakhstan’s president Nursultan Nazarbayev on oil-matters, economic planning, education, investments, health-care, pensions and communications is an American deal-fixer who shuttles between his offices in Almaty (the Kazakh commercial capital) and the New York headquarters of his company, Mercator. James Giffen, a California-born lawyer, is officially counsellor to the president, but he is also a consultant of Kazakh Oil, the company run by Nurlan Balgimbayev, a personal friend. He carries a Kazakh diplomatic passport, an armed bodyguard, a Mercedes with a chauffeur, and a translator.

The 50-year-old Giffen is valued in Almaty as a deal-fixer who can show the autocratic and corrupt leaders of the former Soviet republic how to enrich themselves while claiming to be constructing a modern state. Martha Brill Olcott, who specialises in Kazakh affairs, said in a newspaper interview on January 6 that “Giffen showed Nazarbayev and the Kazakh elite what kind of possibilities were available to the leaders of oil-rich countries.”

But the fixer’s zeal has alarmed and embarrassed the US and Swiss authorities: they have documented a bewildering number of transfers of money into Swiss and other secret bank-accounts for Kazakh officials, their families and Giffen himself. The documents have led US prosecutors to “suspect” that more than $60 million have been transferred through government-accounts into private accounts controlled by Nazarbayev, Balgimbayev, head of the state oil-company and Giffen’s friend, and Giffen. The private accounts are in the names of corporations and foundations registered in the Virgin Islands (a tax-haven) and Switzerland.

One document, for instance, shows that Giffen transferred $34.5 million on May 21, 1999, to the Swiss account of a company called Tulerfield that is registered in the Virgin Islands. Tulerfield was set up for the benefit of Balgimbayev, whose daughter also received $8 million.

Nor did Giffen neglect himself. He was instrumental in the transfer of $29 million from an account at Credit Agricole to another account at the same bank established for Hovelon Trading DA, a company registered in the Virgin Islands. But he made several transfers out of the $29 million, including $12 million to the account of a Virgin Islands company called Orel Capital Ltd. The company “appears to have been set up” for the benefit of Semrek, a Liechtenstein foundation whose “principal economic beneficiary” appears to be president Nazarbayev himself.

The US companies making the payments, the Kazakh authorities and Giffen’s defence lawyer, Mark MacDougall, do not deny the payments. MacDougall argued that the US justice department “had misinterpreted them”

“The payments by US oil-companies were deposited into escrow accounts and disbursed solely at the direction of senior officials of the Republic of Kazakhstan,” he added. “That money has not disappeared and was used to fund proper Kazakh government activities or is still on deposit in the banks in Switzerland.”

The companies, which all operate in Kazakhstan, refuse to discuss any of the transfers or private accounts, saying only that they made the payments into Treasury accounts and know nothing of further transfers.

Neither the companies nor Giffen appear to be unduly worried. For one thing these investigations do not target US companies; they focus only on Giffen’s role, and the US prosecutors are unlikely to want to rock the boat in a country where Washington has huge strategic interests. Nor are they likely to punish the man who has played so significant a role in securing those interests.

Prosecutors say that they are concentrating on finding out whether Giffen has violated the US Foreign Corrupt Practices Act, which forbids Americans from bribing foreign officials. But in countries where Washington has strategic interests, Americans routinely bribe foreign officials not only to obtain favours but in order to gain control of local leaders. In fact, the vague investigations into bribes and transfers may serve to secure Washington’s hold on the Kazakh elites.

But the prosecutors are also enquiring into Giffen’s role in the exchange of oil-deals between Iran and Kazakhstan, and the extent to which the deals have breached sanctions against the Islamic Republic. If Giffen is punished in any way, it will probably be because Washington wants to get at Tehran or because it wants to warn the Kazakh rulers not to get too close to the Islamic state.

Article from

Crescent International Vol. 29, No. 23

Dhu al-Qa'dah 07, 14212001-02-01

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