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Disclaimer: The corruption cases databases are a product of the staff of the International Bank for Reconstruction and Development / The World Bank. It is intended for general information purposes only. The findings, interpretations, and conclusions expressed in the Database do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. Neither the World Bank Group nor its officers or employees shall be liable for any losses that may result directly or indirectly from the use of or reliance upon such information.

Case Name: 

Kazakh Oil Mining / The Mercator Corporation

Case ID: 
249
Case Cluster : 
Kazakh Oil Mining
Jurisdiction of Settlement: 
United States
Jurisdiction of Settlement / Enforcement Agency: 
Department of Justice; United States Attorney for the Southern District of New York
Jurisdiction of Foreign Public Official(s) : 
Kazakhstan
Year of Settlement: 
2010
Month/Day of Settlement (or Notes): 
08/06
Other Jurisdictions of Settlement: 
Unknown
Settlement with Individual or Legal Person?: 
Legal Person
Type of Settlement: 
Criminal
Legal Form of Settlement: 
Guilty Plea
Monetary Sanctions (Types): 
Criminal Fine; Criminal forfeiture
Total Monetary Sanctions (US$): 
$32,000.00
Criminal Fine/Penalty (US$) : 
$32,000
Criminal Forfeiture / Confiscation (US$): 
$0
Monetary Sanctions Returned / Ordered Returned (US$): 
$0
Monetary Sanctions Returned / Ordered Returned (Explanation): 
BOTA Foundation (see Summary for explanation)
UNCAC Articles(s) Implicated: 
Art.16
Art.23
Art.26
OECD Anti-Bribery Convention Articles Implicated: 
Art. 1, Art. 2, Art. 7
Offenses - Alleged: 
Bribery of Foreign Officials
Offenses - Settled: 
Bribery of Foreign Officials
Public Procurement Contract / SOE Involved?: 
Yes
Summary: 
According to the June 2011 United States Report to the OECD, "On April 2, 2003, James H. Giffen, the Chairman of The Mercator Corporation (Mercator), a merchant bank with offices in New York and the Republic of Kazakhstan, was indicted in the Southern District of New York on charges that he made a series of illegal payments to senior Kazakh officials in connection with numerous oil deals in that country. According to court documents, Giffen allegedly made corrupt payments to senior Kazakh officials in connection with the following transactions in which Giffen represented the Republic of Kazakhstan: 1) Mobil Oil's 1996 purchase of a 25% share in the Tengiz oil field; (2) Mobil Oil's 1995 agreement to finance the processing and sale of gas condensate from the Karachaganak oil and gas field; (3) Amoco's 1997 purchase of a share in the Caspian Pipeline Consortium; (4) Texaco and other oil companies' purchase of a share in the Karachaganak oil and gas field in 1998; (5) Mobil and other oil companies' 1998 purchase of exploration rights in the Kazakh portion of the Caspian Sea, and; (6) Phillips Petroleum's 1998 purchase of Caspian Sea exploration rights. Subsequently, on August 6, 2010, Mercator was charged with one count of violating the anti-bribery provisions of the FCPA in connection with the purchase of two snowmobiles in November 1999. These snowmobiles were later shipped to Kazakhstan for delivery to a senior Kazakh official.According to the original indictment, Giffen and Mercator were advisors to the Kazakh government on strategic planning, development of foreign investment and the negotiation of priority investment projects relating to the exploration, development, production, transportation, and processing of oil and gas. During this period, Giffen had held the title of counselor to the President of Kazakhstan. According to the charges, Mobil oil agreed to pay the success fees owed by Kazakhstan to Giffen and Mercator, and out of those fees, Giffen made unlawful payments of $22 million dollars to secret Swiss accounts beneficially owned by two high level Kazakh officials." (Source: US Report to the Organisation for Economic Co-operation and Development, "Steps taken to implement and enforce the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions," Information as of May 31, 2011, The Mercator Corporation Case Summary at 104-106.) Please note that the amount of forfeited and returned sums are noted on the Kazakh Oil Mining - US Settlement Bota Foundation entry only so as to avoid double counting of settlement sums.
Sources : 
US Report to the Organisation for Economic Co-operation and Development, "Steps taken to implement and enforce the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions," Information as of May 31, 2011, The Mercator Corporation Case Summary at 104-106, accessed at http://www.oecd.org/dataoecd/18/8/42103833.pdf. US v. Mercator Corporation, Case No. 1:03-cr-404-WHP (S.D.N.Y.), Superseding Information filed August 6, 2010, accessed at http://www.justice.gov/criminal/fraud/fcpa/cases/mercator/08-06-10mercator-info.pdf; Plea Agreement filed August 6, 2010, accessed at http://www.justice.gov/criminal/fraud/fcpa/cases/mercator/08-06-10mercator-plea-agmt.pdf; Judgment filed November 23, 2010, accessed at http://www.justice.gov/criminal/fraud/fcpa/cases/mercator/11-30-10mercator-judgment.pdf. United States Attorney for the Southern District of New York Press Release, "New York Merchant Bank Pleads Guilty to FCPA Violation; Bank Chairman Pleads Guilty to Failing to Disclose Control of Foreign Bank Account," August 6, 2010, accessed at http://www.justice.gov/criminal/fraud/fcpa/cases/giffen/08-06-10giffen-press-plea-usao-sdny.pdf