New Internationalist


February 2004

First of an occasional series in which Adam Porter ventures into the muckier reaches of Big Oil

Yet another oil man has been caught greasing palms: US banker and oil negotiator James Giffen. The head of the Mercator Corporation, a ‘boutique bank’ from Washington, this 62-year-old CEO has been charged with funnelling $78 million into accounts controlled by Nursultan Nasabayev – who just happens to be President of Kazakhstan – and Nurlan Balgimbayev – who just happens to be ex-oil minister of Kazakhstan. Reports say that the Kazakh Government’s lobbying to drop the charges against Giffen, have been ignored. This could spell the start of a new angst-ridden phase of US-Kazakh relations. Wait till they get to Kazakhstan’s heroin industry. Drugs and oil? Afghanistan II? Invasion in 2006? I’ll take the bets.

Mobil (which subsequently merged with Exxon) was the company on whose behalf Giffen was negotiating. They were of course shocked and appalled by his actions. ‘Mobil has no knowledge of any illegal payments made to Kazakh officials by any current or former Mobil employees,’ they said. This as former Mobil executive J Bryan Williams was convicted of tax evasion when he admitted to hiding $7 million in what he described as ‘income’ and what prosecutors have described as ‘kickbacks.’ He was indicted three days after Giffen. The prosecution claimed the $7 million payment was in connection with Mobil’s negotiations to gain access to the Tengiz oil field, something Williams has denied. The Tengiz contract for Mobil in Kazakhstan was negotiated by?you got it: James Giffen. Williams refused to name his co-conspirators. He received 46 months in jail.

In fact greasing palms seems to be the ‘in thing’ in the funky old oil industry. Remember the military coup in the tiny African island of São Tomé & Príncipe? It made the news for about 20 minutes back in the summer? Ever wonder what it was about? Well, the coup leaders backed down and reinstated the President of São Tomé & Príncipe, who then announced an ‘oil windfall’ for the country, to the tune of around $550 million in total – $200 million of which will be paid upfront this year. Amazing, huh? To put this in context: the annual GDP of São Tomé & Príncipe is about $45 million. Its exports are around $8 million. But this time the jails of the world will be less full – the coup leaders were granted an amnesty.

Front cover of New Internationalist magazine, issue 364 This column was published in the February 2004 issue of New Internationalist. To read more, buy this issue or subscribe.

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This article was originally published in issue 364

New Internationalist Magazine issue 364
Issue 364

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