US prosecutors accused Giffen of bribery paid to Nazarbayev and Nurlan Balgimbayev, former Prime Minister of Kazakhstan, to secure contracts over the Tengiz oil fields for Western companies in the 1990s. James Giffen was arrested in 2003 at John F. Kennedy International Airport in New York while attempting to board a plane to Paris, though in doing so it was later learned he was in no way attempting to flee the country. He had a return ticket and it was a normal planned business trip. He was charged by the US attorney's office of the Southern District of New York with violation of the Foreign Corrupt Practices Act of 1974 and with money laundering. He was carrying a Kazakhstani diplomatic passport, though dual citizenship is not allowed by the laws of Kazakhstan. The attorney's office also charged J. Bryan Williams III, a former Mobil executive, with tax evasion relating to kickbacks from Mobil's business in Kazakhstan.
According to the federal bribery charges, Giffen was accused of creating Swiss bank accounts and transferring $20 million, paying tuition at exclusive boarding schools for family members of Kazakh officials, and buying millions of dollars in jewelry. Giffen's lawyers assert that Giffen was acting with the full knowledge and approval of the US government. Giffen requested access to classified information at his trial to back up his claims. The government opposed the revelation of classified information.
Kazakhstan officially said that the charges had nothing to do with their country as they concern an American citizen, though several American attorneys addressed the US Department of Justice on behalf of Kazakhstan. They requested to stop the proceedings taking into account the strategic importance of US relations with Kazakhstan.
In the Kazakhgate trial, Giffen asserted that he was acting with the approval of the CIA, which refused to release secret papers relating to this activities. His defense said Giffen had merely been following orders from the Kazakh government, which as a foreign state had the right to define legality according to its own views, and serving the interests of the United States.
In August 2010, Giffen pled guilty to a tax misdemeanor under anti-corruption laws; the other charges, which could have carried a penalty of several decades in prison, were dropped. Mercator Corporation, which is owned by Giffen, pled guilty to one count of making an unlawful payment to a senior government official of the Republic of Kazakhstan, in violation of the Foreign Corrupt Practices Act.
The case concluded in November 2010; U.S. District Judge William Pauley, who said he had been able to refer to classified documents that had not been made public in the trial, ordered neither prison time nor a fine for Giffen.
Kаzаkhgаtе in fiction
According to the Financial Times, James Giffen is referenced by former CIA agent Robert Baer in his book "See No Evil" as "Mr. Kazakhstan" for his ability to influence oil policy in that country. George Clooney produced the film "Syriana" based on this book. Tim Blake Nelson played the role of Giffen.
- Peter Maass, The Fuel Fixers, The New York Times, December 23, 2007.
- Kazakhgate fires up Kazakhstan's election campaign Eurasia Insight
- Marlena Telvick, Indictments allege bribes were paid for Kazakhstan oil, San Francisco Chronicle, April 7, 2003
- Kazakhstan President Nazarbayev Accepted Bribes, U.S. Alleges, Bloomberg, April 16, 2003.
- Timothy O'Connor, "Mamaroneck banker can use spy defense at trial," The Journal News, January 26, 2007.
- Eurasia.net, "Letter Indicates that Attorneys for Kazakhstan Were Concerned about President's Possible Indictment in US Corruption Case," Eurasia Insight, March 8, 2003.