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New Arrest Swings 'Kazakgate' Open

US officials have arrested a man they say channelled bribes from oil giants to the Kazak government, which is now less and less able to keep the lid on the growing scandal.
By IWPR staff

James Giffen, former advisor to Kazak president Nursultan Nazarbaev, has been arrested in the US on charges of bribing Kazak officials. While the authorities in Astana are doing their best to ignore the event, this may be the turning point in the long-running "Kazakgate" scandal.


Giffen, 62, a US businessman, was arrested at JFK international airport in New York on March 30 and charged with 'making unlawful payments to Kazak government officials'. (See: US Attorney's Press Release). According to the US Attorney in New York, Giffen violated the Foreign Corrupt Practices Act.


With Giffen's arrest - currently he is released on bail - it will be more difficult for the Kazak authorities to dismiss as an opposition ploy the unfolding corruption scandal known as "Kazakgate" (See: Giffen's indictment), which started to reveal itself in 1999, following the freezing of Swiss bank accounts belonging to the Kazak president's family and inner circle.


From 1995, Giffen held a number of posts in the Kazak government, including the post of presidential advisor. As intermediary between Western corporations and the Kazak government, he allegedly acted as a conduit for multi-million dollar bribes from oil companies to senior Kazak officials to secure deals on oil fields and pipelines.


The US Justice Department claims more than 20 million US dollars passed through Mercator bank and offshore accounts belonging to Giffen. The charges also state that the Mobil oil company (now part of Exxon Mobil Corp) paid Giffen multi-million dollar payment to assist its talks over the Tengiz oil field in western Kazakstan. (See: Giffen's case).


The gradually emerging "Kazakgate" scandal has heightened political tension in Kazakstan, and the authorities have been targeting public and media figures who have revealed details on Kazakgate. The best-known case involved journalist Sergei Duvanov, who was jailed for three and a half years for rape in a trial that many rights activists and international organisations strongly suspect was politically motivated.


The persecution and imprisonment of Duvanov started last summer when the authorities released charges against him, accusing him of insulting the honour and dignity of the president. The case was based on the article by the journalist entitled "Silence of the lambs", which mentioned the corruption scandal involving the Kazak leadership.


Another journalist, Lira Baiseitova, who was also investigating the scandal, was forced to leave the country, after threats against her and after her daughter died under suspicious circumstances in police custody last year.


Several opposition newspapers, notably SolDAT, were harassed for publishing articles exposing details of the scandal. Newspaper offices were attacked, publishing houses refused to print the texts, and issues of SolDAT printed abroad were confiscated on occasion.


The Kazak Foreign Ministry would not comment to IWPR or offer any official reaction to Giffen's arrest.


On one level, the government in Kazakstan may think it can escape scrutiny despite increased international attention, because the case is not directed precisely against it.


A Wall Street Journal correspondent in Central Asia, Steve LeVine, who has been following the case, says the investigation in New York has not uncovered the names of the two Kazak officials to whom the money was sent, nor would US prosecutors be likely to undertake criminal proceedings against those Kazak officials. Astana may simply distance itself from the court hearing, describing it as an internal US matter they will not interfere with.


Others agree the Kazak leadership may get off lightly. Andrei Chebotariov, of Transparency International-Kazakstan, the local office of the worldwide anti-corruption organisation, says the Bush administration has no interest in blowing the scandal out of proportion. He believes the US will want to establish the degree of involvement of Giffen and American companies, but will not go after Kazaks.


"The US government is too aware of its business interests in Kazakstan and won't won't jeopardize the position of big oil companies".


But rights activists and opposition figures in Kazakstan believe the government will have to react in some way, as the arrest has considerable significance for the country's internal and foreign policy situation.


"This is one of those cases when the president cannot refrain from giving an explanation of events that have taken place in the US," well-known opposition leader Pyotr Svoik said. He also called for a public investigation into abuses of power connected with illegal financial schemes.


"The government must set up a commission and take part in the investigation," he said. "The Permanent Council on Democratisation [the latest government's initiative to support democracy] should also be involved and seek explanations from the government and take part in the investigation."


Others have remarked that by ignoring Giffen's arrest, as the Kazak government is now doing, they are making their own situation more difficult.


"If there is no reaction it will mean that the Kazak government is not prepared to give an intelligible answer, and this will only increase suspicion," said Guljan Ergalieva, of the Democratic Choice of Kazakstan, an opposition movement.


Ergalieva said Giffen's arrest in itself had no legal consequences for Kazakstan. "But it's another matter if the US court delivers a guilty verdict and proves the guilt of the participants of the trial, as that will mean new scandals for Kazakstan."


Opposition activists are calling for the public to be given information on the matter and a public debate to be opened. But most media groups in Kazakstan have avoided reporting on corruption cases in the past, and they have not yet mentioned Giffen's arrest.


"Kazakstan's oil supplies are common property of the people, so everyone has the right to demand a report on their use and on the funds received from them," said Mariya Gorokhova, co-ordinator of an NGO Mirotvorchestvo (Peace Making).


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