SWISS INVESTIGATION INTO BUSH/CHENEY INVOLVEMENT IN OIL COMPANY BRIBES TO KAZAKHSTAN

The GOP presidential ticket may be fending off questions from reporters concerning a Swiss investigation linking George W. Bush and Dick Cheny to big oil's bribes and pay-offs to foreign interests.

by Martin Mann, August 14, 2000

Gov. George W. Bush and Richard Cheny, the Republican presidential and vice presidential candidates, known in Washington as the "oil ticket" for their intimate connections to the petroleum industry, may face worse corruption scandals in coming months than the lewd, mendacious and cash-hungry Clinton administration ever did. The Spotlight has learned from European and U.S. investigative sources.

As Cheney, a millionaire petroleum executive who served as defense secretary in the administration of George Bus, the candidate's father, rose to accept the vice-presidential nomination from the cheering Republican convention in Philadelphia, Swiss prosecutors quietly moved to impound over $130 million in allegedly laundered funds deposited in Swiss banks.

According to preliminary findings of the Swiss inquiry, the frozen funds represent under-the-table payoffs slipped to the top government officials of Kazakhstan by giant U.S. petroleum companies seeking favored access to that oil-rich country, a former Soviet province that attained independence after the collapse of Communism.

Advised by Swiss authorities that the suspect accounts -- more than $85 million found hidden in private numbered accounts controlled by Kazakh President Nursultan A. Nazarbayev in a single Geneva bank, Banque Pictet -- may violate the U.S. Foreign Corrupt Practices Act, federal authorities in New York launched an investigation of their own.

The U.S. probe quickly focused on James H. Giffen, head of the Mercator Corporation, known as an influential American financial advisor to Nazarbayev.

Last month, the Justice Department sent Swiss chief prosecutor Daniel Devaud a confidential memorandum naming Giffen and his public-relations company as targets of a formal federal criminal investigation.

According to this memorandum, the Giffen probe was triggered by the findings of FBI agents in New York indicating that the millions impounded at Banque Pictet and other Swiss money-centers represented illegal payoffs to Kazakh officials by three major U.S. oil companies: Exxon Mobil, BP Amoco, and Phillips Petroleum.

Giffen's alleged role was that of the go-between who secretly transferred these huge bribes from the U.S. oil corporations along circuitous international money-laundering routes to Kazakhstan's president and his top aides.

Spokespersons for Exxon Mobil, BP Amoco and Phillips Petroleum have denied any wrongdoing. Mark J. MacDougal, a Washington lawyer for Giffen also denied the charges.

But the Swiss-American inquiry is continuing. If it turns up solid evidence of bribery by U.S. oil interests -- sources close to the case call it "the most likely outcome" -- the next time-bomb of a question will be: How many other petroleum potentates are soiled by this sordid affair?

Until he was offered -- and accepted -- the Republican vice-presidential nomination this month, Cheny served as president of the Halliburton Corporation, the world's largest oil-service, exploration and engineering outfit.

A number of Halliburton's field operations have been linked to Exxon Mobil's and BP Amoco's overseas ventures in recent years. Investigators are poised to explore whether these links involved any operations in corruption-riddled Kazakhstan.

Washington is buzzing with excited rumors that some major Bush campaign contributors -- long time cronies of the presidential candidate -- will face not just stinging embarrassment but criminal indictment when these cases hit the headlines, especially if the Republicans fail to gain the White House this fall.


Note that the American media never picked up on this story. ELEVEN MONTHS AFTER MANN'S ARTICLE, THE NEW YORKER PUBLISHED THIS ONE BY SEMOUR M. HERSH: (excerpts) The Price of Oil; What was Mobil up to in Kazakhstan and Russia? by Semour M. Hersh New Yorker (Magazine), July 9, 2001 Pp. 48-65 In the fall of 1997, an international businessman named Farhat Tabbah filed suit in London against three American businessmen, the oil minister of Kazakhstan, and a subsidiary of the Mobil Corporation. He charged that they had cheated him out of millions of dollars in commissions on what was to have been a ten-year swap of oil between Kazakhstan and Iran. Mobil and the other defendant denied the allegations and successfully moved to suppress all Tabbah's affidavits and supporting documentation. A few months after Tabbah filed his lawsuit, he flew to the United States and gave his account of the swap plan to federal authorities. He also turned over several file drawers of documents, including internal Mobil faxes and memos, to agents of the United States Customs Service. Mobil conducted an investigation into its own actions and its potential liabilities. (American oil companies are forbidden by federal sanctions from trading with Iran or facilitating such trades without license from the Treasury Department.) That investigation, which lasted more than a year and was assisted by Patton Boggs, a Washington law firm, found evidence that J. Bryan Williams III, a senior executive in charge of many of the company's overseas crude-oil transactions, may have facilitated the planned Iranian oil swap. Williams was one of the three businessmen named in Tabbah's suit. Mobil's senior management, however, then in the process of negotiating a merger with Exxon, concluded that there was no need to report this evidence to the Securities and Exchange COmmission or to stockholders. Bryan Williams retired quietly in early 1998, at the age of fifty-eight, and, the next year, Mobil and Exxon merged to form Exxon Mobil, the world's largest and most powerful publicly traded oil company. Mobil investigators also uncovered an array of unseemly business dealings that took place in Russia and Kazakhstan in the mid-nineties. MOre than a billion dollars of Mobil's cash was paid to Russian companies in unorthodox transactions; questionable accounting practices were followed; and multi million-dollar transfers were made that, as a Patton Boggs report put it in one case, "did not have any apparent valid business purpose." The investrigators' working papers and summary reports, many of which were obtained for this article, suggest that Mobil's activities in Russia and Kazakhstan were not driven entirely by the desire for quick profit. The company also had a strategic goal: access to Kazakhstan's rich Tengiz oil field. Tabbah's court papers and the internal Mobil documents gathered for this account provide an unparalleled view of a major American oil company's dealings in the former Soviet Union. They raise questions about the company's decisions to enter deals that ultimately benefitted powerful figures in the region, including President Nursultan Nazarbayev, of Kazakhstan, and former Prime Minister Viktor Chernomyrdin, of Russia. A federal grand jury in Washington has been hearing evidence on the swap allegations, along with allegations of money laundering and bribery, since last year. Before a second grand jury, in New York, Mobil and other American oil companies that do business in Kazakhstan were being questioned about possible violations of the Foreign Corrupt Practices Act. Under the F.C.P.A., which was passed in 1997, it is unlawful for any American to bribe foreign officials, either directly or through an agent, "for the purpose of obtaining or retaining business." Exxon Mobil has refused to permit any of its employees to be interviewed for this account, and has asked former Mobil employees not to cooperate. The company has stated that it was not involved in the swap, did not own any of the oil that was swapped, and did not authorize any employees to participate in the planning and execution of the swap. Bryan Williams refuses to be interviewed, but, in a written statement, he denied any involvement in the swap. Williams also declared that Mobil had approved all the deals and contracts he worked on. When The New Yorker sent details of the allegations to Exxon Mobil for comment, an outside attorney, Martin London, responded on the company's behalf, stating that many of the allegations were erroneous," and that the "broad theme of your attack on Mobil's business integrity is both incorrect and actionable." It would be "inappropriate" for Exxon Mobil to discuss the allegations specifically, London wrote, because "there are ongoing grand-jury investigations relating to the matters addressed in your letter." The oil industry has long been swapping as a way to reduce the cost of transporting crude oil, by pipeline or other means, to refineries. The arrangement also provides a way to get oil from remote oil fields and isolated nations, such as Kazakhstan, to market. In a swap, the title to oil in one location is transferred to oil of an equivalent value that may be hundreds, or even thousands, of miles away. Because of the potential for abuse in such complicated transactions, major oil companies carefully monitor and record their swaps. "It's extremely rare for a legitimate company to play pricing games in a transfer," said Thomas Stauffer, a retired economics professor at Harvard and Georgetown who specializes in oil and taxation issues. "But in the Third World --and especially in places like Kazakhstan -- its an invitation to corruption. You can hide a lot of sins in an oil swap. Title to oil in any tanker might change a dozen times before it gets to port." Such sins include oil laundering -- concealing an illegal source of oil -- and sanctions busting. "Oil is oil," Stauffer said. It can be sold in any given market at any time." Men like Marc Rich, the fugitive financier who was pardoned by President Clinton in January, have earned hundreds of millions of dollars over the years by brokering oil deals with pariah nations such as Iran and the former regime in South Africa. In Mobil's case, the company's in house investigators came to believe that the proposed swap between Kazakhstan and Iran was but one element in a complex of seemingly high-risk business deals that were devised by Bryan Williams. The investigation also led to the two other Americans named in the Tabbah's suit: James H. Griffen, a New York merchant banker and advisor to Kazakhstan's President Nazarbayev; and Friedhelm Eronat, a businessman who often acted on behalf of Mobil overseas. The business dealings and friendships among these three men date back many years, and they have done billions of dollars worth of deals worldwide. The three might never have become the focus of grand-jury scrutiny if they hadn't fallen out with Farhat Tabbah. I - GETTING IN Kazakhstan and the other former Soviet Republics in the Caspian Sea region (Uzbekistan, Azerbaijan, and Turkmenistan) have become notorious for exploitation, corruption, and seemingly bottomless fields of oil whose boundary seldom benefits the average citizen. Almaty, the business capital of Kazakhstan, still has the solid look, the unemployment, the pollution of the Soviet days, despite a decade of increasing oil and gas production. Close to the Presidential palace, however, two new luxury hotels have been built for the foreign businessmen drawn by the country's natural resources. The Tengiz oil field is one of the most important finds since Alaska's Prudhoe Bay, in 1968. The Soviets tried to develop it in the nineteen-eighties, but instead triggered a gigantic blow out and a fire that burned for a year, with a column of flame six hundred feet high. Tengiz was not put into systematic production until the early nineteen-nineties, when newly independent Kazakhstan sold a half interest of the field to Chevron, the American oil company. Tengiz's output has steadily expanded since then. "It's a geologist's dream -- the sort of field you see once in a generation," Edward C. Chow, a retired Chevron executive, said. "It's a mother of an oil field, and we still don't know how much oil is in it." Bryan Williams turned out to be crucial to Mobil's efforts to get into Tengiz. As executive vice-president of Mobil Sales and Supply, he bought crude oil from oil companies controlled by foreign governments. A lawyer turned oil man, Williams had graduated from the University of North Carolina and New York University Law School and spent several years at Sherman ∓ Sterling, a prominent New York firm. In the early nineteen-seventies, he joined Mobil. His first major assignment was in Saudi Arabia, where Lucio A. Noto, who later became Mobil's C.E.O., was in charge of company operations. At Mobil, Williams was respected by his peers for his ability, his panache, and his daring. One retired Mobil senior executive said he was widely known as a "cowboy" -- a high-flier in a high-flying business. International spot-market crude-oil prices are extremely volatile -- the price of oil varies constantly from country to country -- and narrow profit margins can change within minutes, necessitating snap judgments. It was accepted at Mobil that successful oil man like Williams needed autonomy, with no second-guessing, as they routinely committed millions in the hunt for profits. Williams repaid the trust with smart deals. He consistently produced high profits, former Mobil officials told me, and eventually became a favorite of Noto. "Noto and Bryan were close," DOn Voelte, a former vice-president who left Mobil in 1997, recalled. ALthough Williams reported not directly to Noto but to the head of sales at Mobil headquarters, Voelte said that "Bryan was the go-to guy in the international trading area." Noto would "always chastise other Mobil folks, saying, "Just go to Bryan. He knows how to handle these things.'" ANother Mobil insider tells of a high-level meeting at which Noto signaled out Williams as "the only entrepreneur in the whole business." To get into Tengiz, Mobil needed the help of James Giffen, who represented the Kazahk government. (giffen was identified in press reports last summer as a target of a federal investigation into corruption and money laundering.) Giffen grew up in Stockton, California, where his father ran a men's clothing store. He was graduated from the U.C.L.A. law school in 19654 and spent eleven years with the Armco Steel Corporation, which struggled during the COld War to gain export approval for the sale of oil-drilling equipment and steel goods to the Soviet Union. In the mid-eighties, Giffen set up a banking company called Mercator, based in New York City. He was brash, intelligent, eager to make money. "I never had any evidence that he was anything more than a smart operator," Jack F. Matlock, Jr., who was the U.S. Ambassador to the Soviet Union from 1987 to 1991 recalled. "He was always working for No. 1 -- Jim Giffen. But I could understand that. I didn't detect anything irregular. Giffen spent years cultivating senior officials of the COmmunist PArty, such as Nursultan Nazarbayev, who was the Party's rising star in Kazakhstan. In the late eighties, Nazarbayev, a former steel worker and engineer, became First Secretary of the Kazahk Communist Party. After the Soviet collapse, in 1991, he won the Presidency of the country. Giffen then became an important Presidential adviser. Nazarbayev's regime was quick to cooperate with the first Bush Administration's plans to denuclearize the breakaway Soviet republics; more than a thousand warheads that had been deployed by the Kremlin in Kazakhstan at the height of the Cold War were sent back to Russia, without incident. The Clinton Administration's initial approach was to emphasize the building of democratic institutions -- a largely futile effort--but it soon turned to security issues, such as reducing drug trafficking. Diplomacy concentrated for the most part on providing opportunities for American oil companies seeking to do business in Kazakhstan, and on plans to build pipelines that would allow the new republics to deliver their oil and natural gas directly to the West by way of a Black Sea port in Turkey, thus bypassing both Russia, to the north, and Iran, to the south. AMerican officials say that Nazarbayev has misappropriated hundreds of millions of dollars. He has also shared generously the perquisites of his office (as he defined them) with his immediate family. His eldest daughter, Dariga, controls the national television network, and a son-in-law is the president of a state oil-and-gas pipeline. The country has not prospered under Nazarbayev's rule. Social conditions have deteriorated steadily; per-capita G.N.P. is just thirteen hundred dollars a year. The nation is so burdened with an external debt of more than eight billion dollars, and with a huge and rapidly growing level of capital flight: a fifth of the country's total money supply is now stashed in Swiss banks. Nonetheless, Nazarbayev has been viewed by many in Washington not as a despot but as a charismatic political leader who could hold his nation together. According to William Courtney, who was the first American Ambassador to Kazakhstan, Nazarbayev became "more authoritarian as his power grew, and came to depend on Jim Giffen more and more." By 1995, Courtney says, "Nazarbayev had inserted Giffen as an indispensable go-between for some key projects." IN the late nineteen-eighties, Giffen had helped Chevron buy into the Tengiz field. But a new president of Chevron's overseas division, Richard Matxke, decided not to deal further with Giffen, and Chevron's relationships inside Kazakhstan quickly soured. Matzke is said to have proudly told one colleague that his company "didn't pay a nickel" in middleman's fees after getting into Tengiz. However, Giffen subsequently demanded a "success" fee and received it -- seven and a half cents per barrel of Chevron's share of the Tengiz oil. It earned him millions of dollars in royalties --at least three million last year alone. More and more, Kazakhstan insiders told me, Giffen's power became tied to his ability to help Nazarbayev and his government cronies, including Nurlan Balgymbayev, the oil-and-gas minister, benefit from the oil business. Balgymbayev, who was named as a defendant in Tabbah's suit, began his career, in the nineteen-seventies, as an engineer in the Soviet oil fields. He became friendly in those years with Viktor Chernomyrdin and the other men who created Gazprom, the powerful Russian energy consortium. In 1994, after an unhappy year with Chevron, Balgymbayev was appointed Kazakhstan's oil-and-gas minister. He routinely told foreign oil companies seeking to do business in Kazakhstan that any prospective deal had to involve Giffen and Mercator, which had offices there. Dan White, a former ARCO executive, said that when, in late 1995, he arrived to open an ARCO office in the former Soviet Union a senior American diplomat in Kazakhstan told him, "The best way to get what you want is to see Giffen." One afternoon, White happened to encounter the Kazakh oil minister in a hotel lobby. They exchanged a few pleasantries, and then Balgymbayev raced off to the airport. At that moment, White recalled, "the fellow next to him says, 'I'm Jim Giffen,'" and told him, "Dan, nobody gets to Balgymbayev without coming through me." Giffen paused, White told me, and said, "You know this is a strange place here. A lot of people carry guns, and bad things happen to people." (end of excerpt, at end of page 51 of an article that continues to p. 65) The New Yorker article must be the starting point for any man seeing to expose the true authors of the crash bombing terror acts of September 11th, the Great Frame-Up.


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