Giffen said today in federal court in Manhattan that he failed to supply information about a foreign bank account in a 1996 tax return. Mercator Corp., Giffen's investment bank, pleaded guilty to a single violation of the Foreign Corrupt Practices Act, the U.S. anti-bribery law. Under U.S. sentencing guidelines, he faces no more than six months in prison and may receive no jail time when he's sentenced on Nov. 19.
Giffen, 69, was arrested in March 2003 and accused of paying $84 million to Kazakh President Nursultan Nazarbayev and other senior officials in violation of the FCPA. He is free on $250,000 bail and living in Mamaroneck, a New York suburb, since his arrest.
"Jim Giffen is gratified to begin to put this matter behind him, more than seven years after the indictment in the case and 10 years after the investigation began," his lawyer, William Schwartz of Cooley LLP in New York, said after the court proceeding.
Giffen declined to comment after the hearing, saying only that it was "another step" in the process.
Michael Perlis, a lawyer at Stroock & Stroock & Lavan LLP in Los Angeles who isn't involved in the case, called the plea "a face-saver for the government."
Giffen "was basically exonerated from the more serious charges against him," said Perlis, who helped draft the FCPA while working at the Securities and Exchange Commission in the 1970s.
An American citizen who worked as a middleman for U.S. oil companies in the 1990s, Giffen has denied allegations that he bribed leaders of Kazakhstan to facilitate oil transactions. He said U.S. intelligence agencies condoned his actions or gave him reason to believe they did.
In the 1990s, Giffen worked as a representative for Kazakhstan in the former Soviet republic's negotiations with U.S. companies including Mobil Oil Corp. Mobil, now part of Irving, Texas-based Exxon Mobil Corp., wasn't accused of wrongdoing.
Prosecutors alleged that Giffen made the payments to facilitate six oil deals, including Mobil's purchase of a stake in Kazakhstan's Tengiz field, one of the world's largest. Prosecutors in 2004 publicly identified Nazarbayev, a U.S. ally, as a recipient of Giffen's alleged payments.
Giffen's was among the largest FCPA prosecutions ever when the U.S. started it, signaling the country's expansion of anti- corruption efforts worldwide. The law bars companies or individuals working in the U.S. from paying bribes to foreign officials to win business.
For years, the Giffen case was bogged down in appeals and fighting between defense lawyers and prosecutors over access to classified documents from the Central Intelligence Agency and other government agencies. The Kazakh government tried to limit the U.S. probe as early as 2002, according to court records.
In court, Giffen told U.S. District Judge William Pauley today that he "willfully did not check the box" on his 1996 tax return indicating that he had signatory authority over a Swiss bank account in the name of Condor Capital Management, a British Virgin Islands company. He didn't address the bribery allegations.
"He is no longer facing umpteen years in prison," Schwartz said in court. "This is a misdemeanor."
Schwartz entered the guilty plea on behalf of Mercator. He said one reason Mercator gave a gift in 1999 of two snowmobiles to a senior Kazakh official, whom he didn't name, was to induce the official to act improperly.
The U.S. in 2007 reached a deal with officials in Kazakhstan and Switzerland, where $84 million in secret accounts had been frozen, to use the funds to pay for programs for poor children and to improve transparency in the Kazakh oil industry. Giffen and Mercator today surrendered "any right, title, or interest" in $84 million that was frozen in Switzerland.
"I commend the prosecutors for having the courage to take another look at this case," Pauley said as he accepted the plea.
Last year, the U.S. Justice Department won convictions in three FCPA trials: a 2005 case over bribes in Azerbaijan, a 2007 case dealing in part with payments to a high-ranking Nigerian official, and a 2008 case over bribes in Thailand.
"It's a sputtering end for such a high-profile prosecution," said Richard Cassin, the founder of Singapore- based law firm Cassin Law LLC, who also writes the FCPA Blog.
"The case shows how complicated FCPA prosecutions can be. Foreign rulers and governments are always involved, evidence is overseas, and in Giffen's case, the shadowy world of intelligence and energy policy all converged."
The case is U.S. v. Giffen, 03-CR-00404, U.S. District Court, Southern District of New York (Manhattan).