Judge rebukes prosecution in Kazakhstan-related corruption case

Alec Appelbaum 7/30/04

The federal judge in New York presiding over a case involving a merchant banker accused of funneling millions of dollars in bribes to top Kazakhstani officials rebuked prosecutors during a July 29 hearing, criticizing the government for its tardy submission of documents to be reviewed by the judge and defense lawyers. The prosecution's delay, as well as unresolved questions concerning procedural issues, means the trial of the accused, James H. Giffen, will likely be pushed back from its originally scheduled October 4 start date.

In response to a pre-trial motion, US Federal Judge William H. Pauley III ruled that Giffen was entitled to review government documents concerning the case. The US government contends that Giffen violated the Foreign Corrupt Practices Act by facilitating the payment of $78 million into personal accounts controlled by top Kazakhstani officials, in connection with a $1 billion deal between the government and Mobil Oil Corp. [For additional information see the Eurasia Insight archive].

The indictment against Giffen did not identify the government officials. Subsequently they were identified as President Nursultan Nazarbayev and then-prime minister Nurlan Balgimbayev. [For additional information see the Eurasia Insight archive].

Giffen's defense team wants to review the government documents as part of its sweeping contention that Giffen was acting with the knowledge of US national security agencies, including the Central Intelligence Agency. The defense has sought to undermine the prosecution's case, arguing that Giffen believed that he was acting as a de facto agent of the American government.

During a June 3 pre-trial hearing, defense attorney William J. Schwartz said US officials sought to take advantage of Giffen's firm ties with Nazarbayev, aiming to gain insight into the policy-making process in the strategically important Central Asian state. "The United States was very interested in exploiting his [Giffen's] closeness [to Nazarbayev and other Kazakhstani officials]," asserted Schwartz. The defense attorney has also sought dismissal of the case on the grounds that US law does not apply to Giffen's actions made on behalf of Kazakhstani officials. [For background see the Eurasia Insight archive].

Government lawyers submitted the documents at 6:25 pm on July 28, leaving Giffen's attorneys little time for review in advance of the hearing the next day. This, in turn, left Judge Pauley clearly annoyed. The judge announced that he was inclined to postpone the start of the trial in order to give Giffen's defense team ample time to prepare. "It's not likely that we're going to have a trial on October 4," Pauley said.

About 30 minutes after the start of the hearing, Pauley granted a request by prosecutors to close the courtroom on national security grounds. Assistant US Attorney Peter G. Neiman argued that many of the documents open to review by Giffen's lawyers could contain sensitive government information. Prior to the closing of the courtroom, prosecutors and defense lawyers sparred over several procedural matters concerning the trial, including guidelines for the taking of depositions of Swiss citizens and officials. Some of bank accounts into which Giffen allegedly funneled bribes are located in Switzerland.

The Giffen case is connected with a broad corruption scandal, known in Kazakhstan as "Kazakhgate." [For additional information see the Eurasia Insight archive]. Talk of a delay of the Giffen trial would appear to reduce the chances that it could have an impact on Kazakhstan's upcoming parliamentary elections, which are scheduled for September 19.

Editor's Note: Alec Appelbaum is a freelance reporter based in New York.

Posted July 30, 2004 © Eurasianet