Last week, the DOJ announced that it “filed a motion to dismiss a forfeiture action against approximately $115 million alleged to be proceeds of foreign official corruption and involved in money laundering in accordance with a 2007 settlement that directed the funds to be used for the benefit of poor youth and families in Kazakhstan.”
As noted in the DOJ release, the funds were in connection with the “prosecution of James H. Giffen and his company, Mercator” and were “allegedly the proceeds of illegal bribe payments to senior Kazakh officials in exchange for oil transactions and property involved in money laundering.” The funds were previously released to “the BOTA Foundation, a new Kazakh foundation required to be independent of the government of Kazakhstan, managed by a respected international non-governmental organization and established with the assistance of the World Bank.”
In the DOJ release, Assistant Attorney General Leslie Caldwell stated:
“Transparent, responsible repatriation of corruption proceeds can make a real difference for communities harmed by the abuse of public office. In just five years of operations, the BOTA Foundation helped more than 208,000 people in need in Kazakhstan, turning more than $115 million in alleged bribe money into assistance to parents, families with disabled children and youth seeking higher education. Through our Kleptocracy Asset Recovery Initiative, the Department of Justice is committed to fighting back against impunity and seeking creative ways to reduce the harms caused by corruption.”
In this season of giving, it is easy to get warm, fuzzy feelings about the DOJ’s announcement.
However, something is missing from the story – something significant – and this post inserts the missing piece of the puzzle.
It is true that in 2003 James Giffen was criminally charged with “making more than $78 million in unlawful payments to two senior officials of the Republic of Kazakhstan in connection with six separate oil transactions, in which the American oil companies Mobil Oil, Amoco, Texaco and Phillips Petroleum acquired valuable oil and gas rights in Kazakhstan.”
However, Giffen’s defense was that his actions were made with the knowledge and support of the CIA, the National Security Council, the Department of State and the White House. The DOJ did not dispute that Giffen had frequent contacts with senior U.S. intelligence officials or that he used his ties within the Kazakh government to assist the United States. With the court’s approval, Giffen sought discovery from the government to support his public authority defense and much of the delay in the case was due to the government’s resistance to such discovery and who was entitled to see such discovery.
In 2010, the enforcement action took a sudden and mysterious turn when Giffen agreed to plead guilty to a one-paragraph superseding indictment charging a misdemeanor tax violation. The enforcement action ended with the presiding judge imposing no jail time on Giffen, praising him for advancing U.S. “strategic interests,” calling him a Cold War hero, and commenting that the enforcement action should have never been brought in the first place. Giffen himself stated: “Would I do it again? Absolutely. What we were doing was important.”
Giffen presumably prevailed over the DOJ not because of the facts or the law, but because he possessed significant leverage over the government in that he asserted his actions were taken with the knowledge and support of the highest levels of our government. A Foreign Policy columnist noted that Giffen’s legal team “understood correctly that he could set up a collision between the DOJ and the CIA in which the latter would probably prevail.” Likewise, a Harpers columnist noted that the Giffen enforcement action had “been the focus of political manipulation concern for years” and that the end of the case seemed to ratify that view and “the notion of an independent, politically insulated criminal-justice administration in America [took] another severe hit.”
