Giffen Watch: Former Kazakhstan Consultant Cannot Examine CIA Documents

The latest from the federal courtroom hosting the foreign bribery case of uber-middleman James Giffen is that only his lawyers can examine files disgorged from the Central Intelligence Agency. Unless the CIA grants specific permission for a requested document, Giffen himself cannot look at the classified material.

That's from a decision issued by federal Judge William Pauley in New York. The ruling was handed down June 5th, but I haven't seen it published anywhere. At the time of Giffen's 2003 arrest, it was the biggest U.S. foreign bribery case since the law was enacted in 1977.

The 68-year-old Giffen has a long history of business in the Soviet Union and then Kazakhstan. Starting in 1969, he stood as a middleman in deals between American businesses and Soviet enterprises. In 1987, he introduced Chevron to Mikhail Gorbachev, leading to the company's eventual acquisition of the supergiant Tengiz field in Kazakhstan, its single-biggest oil property. After the Soviet collapse, he cozied up to Kazakhstan leader Nursultan Nazarbayev, becoming his main oil adviser and, for a time during the late 1990s, the go-to middleman for any major oil deal in the Central Asian country.

Six years ago, that world came tumbling down when Giffen was arrested at JFK. The charges are that, as Nazarbayev's consultant, he channeled some $80 million in payments from American oil companies to European bank accounts held by the Kazakh president and other leading Kazakhs.

As discussed last month, the CIA documents represent Giffen's last line of defense. He claims that the entire time he was working with Nazarbayev, he was also briefing U.S. intelligence agencies. As effectively a U.S. intelligence asset, Giffen says, he believed his actions were approved by the U.S. But to prove his case, he argued that he required access to classified documents.

The case has been stalled until now over the documents -- most of the time, the CIA simply refused to cooperate with the prosecution; now it is cooperating, but it doesn't want Giffen himself to have automatic access to the classified documents.

In April, Judge Pauley sided with the CIA's position, as channeled through the prosecution. Giffen's lawyers asked him to reconsider; the argument went that Giffen himself might notice aspects of the documents that his lawyers wouldn't.

Pauley ruled against Giffen. The next hearing is Sept. 23d. William Schwartz, Giffen's lawyer, declines to comment.

James Giffen's First Line of Defense Appears to Fall

He may yet be the beneficiary of an intervention the likes of Ted Stevens, or Keith Weissman or Steven Rosen. Short of that, it appears that former Kazakhstan middleman James Giffen is going on trial.

As O&G readers know, Giffen is the most extraordinary of the middlemen whose wiles made the Caspian era work. He was responsible for Chevron, Mobil, Texaco, Phillips and other oil companies getting their deals in Kazakhstan. But in 2003, he was arrested at JFK Airport on bribery and money-laundering charges, and his case has been languishing ever since. At that time, it was the biggest U.S. foreign corrupt practices case in history.

The last time we discussed the case, this former uber-consultant to Kazakhstan President Nursultan Nazarbayev appeared to be succeeding magnificently with his I-was-a-CIA-asset defense. That is, the 69-year-old Giffen asserted that, if he indeed did serve as a channel for some $80 million in oil company payments to the Kazakh president and his pals, as U.S. prosecutors in New York contend, he did so with the understanding that he was serving the interests of U.S. intelligence agencies. It being the time of the ultra-secretive Bush administration, the CIA predictably appeared to drag its heels in producing the top-secret documents that Giffen's lawyers sought in order to prove his case. That was six years ago. Finally, last September, exceedingly patient U.S. Judge William Pauley told prosecutors effectively to put up or shut up. That is, they either had to make their case with the documents, or risk a ruling that Giffen's 6th amendment rights to a speedy trial were in jeopardy. Indeed that seemed to be Giffen's calculus -- he could get some or all the charges dropped if he simply relied on what seemed the most hard-and-fast of the Bush era doctrines, that of scant regard for the Watergate-era laws of a free flow of information.

Until now. The court releases almost no information about the case, treating it almost as cautiously as the Guantanamo detainee cases. Giffen's lawyer, William Schwartz, himself did not answer two emails I sent him for comment. But there are hints on the most recent entries on the case docket.

On April 23, there are two entries. One shows that the CIA has finally produced at least some -- and perhaps many -- of the documents that Giffen sought.

The Agency is still playing coy. Judge Pauley appears to have granted a prosecution request that only Giffen's lawyers -- and not he himself -- be permitted to examine the documents, unless the CIA grants specific permission for specific papers. Apparently U.S. officials do not trust Giffen with such access.

In the second of the two April 23 entries, Schwartz has written a letter regarding Pauley's ruling. One can infer that he is arguing that unless Giffen is permitted to directly review the documents, his defense team cannot be expected to understand all possible hints or references contained within them. Hence, it is another dimension of the fair-trial argument.

Whatever the case, these are mere details. The next hearing is June 4. Giffen can and probably will still mount his CIA defense. But, short of an unlikely plea deal, look for a trial to begin this year.

Electricity in Kabul and (Don't Hold Your Breath) Possible Reconciliation in Kazakhstan

Lights in Kabul: The Associated Press has an excellent story on one reason why Afghan President Hamid Karzai and the U.S. can't get much political traction in that country -- six years after the Taliban were dispersed, Kabul has just three hours a day of electricity at this time. Though I've been tracking Afghanistan since first going there almost two decades ago, I had no idea that the standard of living in the capital was still so miserable. There's a simple rule I learned talking to people in the Caucasus, Central Asia, Afghanistan and Pakistan -- if you want political support, give them simple things like electricity, clean water, schools, roads and hospitals. (tip to The Oil Drum)

Kazhegeldin to return? The opposition blogosphere in Kazakhstan is lit up with new reports that former Prime Minister Akezhan Kazhegeldin is -- this time really -- returning to Kazakhstan a decade after going into exile. I'm told that this time the talk could be serious. Recall that it's Kazhegeldin who has single-handedly made President Nazarbayev's life miserable over the last decade. Well, not entirely single-handedly -- Nazarbayev himself has played a role with his clumsy handling of rival and critical voices. Yet Kazhegeldin financed the information war in Washington and London that led to a plummet in Nazarbayev's reputation in the West through the revelations of what became known as Kazakhgate. In terms of post-Soviet pocket-lining, we're not talking big numbers -- American businessman Jim Giffen is accused of channeling about $80 million in oil company payments to the numbered bank accounts of Nazarbayev, his family and associates. But it shocked, shocked Washington to see actual evidence that its allies have power AND money aspirations, and moreover that they (listen up) rig their elections! Kazhegeldin and Nazarbayev have had secret talks numerous times over the years, but until now have not managed to reach agreement on Kazhegeldin's return. One main issue has been the very real apprehension that Kazhegeldin could be imprisoned or killed.

Photo: pittaya
Rights: Creative Commons

The Wheels of Justice in New York

On Friday, a three-and-a-half-year-old question will hang again before Federal Judge William Pauley in New York: When will James Giffen's foreign bribery trial commence? (Photo by Andy Freeburg)

The California-born Giffen, former chief oil adviser to Kazakhstan President Nursultan Nazarbayev, has managed to stall his trial -- the largest foreign bribery case since the U.S. law was passed in 1977 -- since his arrest at JFK Airport in March 2004.

The trial is bound to be intriguing, not only because of the sums involved, but also because the theatrical Giffen himself -- with a three-and-a-half-decade-long insider's career in the Soviet Union and former Soviet Union -- is one of the most colorful foreign characters of the Caspian oil boom era. The case has come to characterize many of the excesses of the epoch.

In addition, Nazarbayev is an unindicated co-conspirator -- again, a symbol of the alleged official corruption of the post-Soviet period -- and the case has already damaged U.S. relations with Kazakhstan, an important U.S. ally on the Caspian Sea.

Federal prosecutors claim that the 66-year-old Giffen passed on some $80 million in payments from U.S. oil companies to Nazarbayev and some other prominent Kazakhs from oil deals that the American negotiated during the 1990s.

Giffen so far has not disputed that claim, but has asserted that when he served as Nazarbayev's adviser, he was simultaneously consulting with and assisting U.S. intelligence agencies including the CIA on Kazakhstan matters.

The judicial delay has resulted from wrangling between Giffen's lawyers -- insisting on CIA documentation that they claim will prove his asserted defense -- and ultra-resistant prosecutors from perhaps the most secretive presidential administration in U.S. history.

Giffen's apparent hope is that eventually the prosecutors will drop some of the more serious charges rather than release documents they are seeking.

There have been signs of meddling from the Justice Department in terms of attempting to classify sensitive testimony already long released in open court. Otherwise, like Giffen himself, the prosecutors have not publicly indicated that they are prepared to compromise.

In the past, Judge Pauley has pressed the two sides to accelerate their work so jury selection can begin. But he canceled the most recent scheduled pre-trial hearing, since apparently there was no indication that the sides were nearer to being ready to try the case.

Will Judge Pauley finally going to put his foot down and set a date? The trial certainly will not begin this year. But if Pauley does act, it could easily start in the first half of 2008.