Mamaroneck banker can use spy defense at trial

Friday, January 26, 2007

Mamaroneck banker can use spy defense at trial

Timothy O'Connor
The Journal News

A Mamaroneck businessman can claim he was working as a U.S. spy in a case where he is accused of securing tens of millions of dollars in bribes for the leader of an oil-rich former Soviet republic, a federal appeals court has ruled.

James Giffen, 65, is charged with violating the Foreign Corrupt Practices Act during his time as a counselor to Nursultan Nazar-baev, the president of Kazakhstan. He was indicted more than three years ago by a federal grand jury in Manhattan on charges of money laundering, mail fraud, wire fraud, and tax offenses.

Federal prosecutors charge that Giffen went to elaborate lengths to disguise the bribery scheme, in which he allegedly funneled more than $80 million to Kazakh officials between 1995 and 1999. He is accused of creating Swiss bank accounts, paying tuition at exclusive boarding schools for family members of Kazakh officials, and buying millions of dollars in jewelry. But his case has stalled while defense lawyers and federal prosecutors have sparred over Giffen's efforts to claim he was actually working for the CIA and the State Department in Kazakhstan and that U.S. officials were aware of his activities.

A federal judge has ordered many of the documents in the case be filed under seal based on the inclusion of classified information. Giffen wants to use that classified information at his trial to back up his claims. The government has opposed the revelation of classified information.

Judge William Pauley ruled Giffen could make what is called a "public authority" defense. Federal prosecutors appealed. In a decision filed this week, the U.S. Court of Appeals said it lacked jurisdiction to sustain the government's appeal.

Giffen was described as "Mr. Kazakhstan" by former CIA field operative Robert Baer in his book "See No Evil: The True Story of a Ground Soldier in the CIA's War on Terrorism." He wrote that Giffen, through his company, Mercator Corp., held the "keys to the kingdom" for oil companies wishing to do business in the oil-drenched Asian nation. In the fictionalized film version of the book, "Syriana," there is a character who closely resembles Baer's description of Giffen.

But Giffen maintains he did spy work for the U.S. for decades. In court papers, he claims to have worked as an unofficial conduit between the United States and the Soviet Union during the Cold War. He said he was regularly debriefed by U.S. officials and told them about the Swiss bank accounts as early as late 1995.

The huge, untapped Tengiz oil field in Kazakhstan was regarded as a viable hedge against Middle Eastern hegemony in the oil trade. Giffen claims he told U.S. officials all about the bribe schemes involving U.S. oil companies anxious to do business in Tengiz.

Lawyers for Giffen could not be reached for comment.

Reach Timothy O'Connor at tpoconnor@lohud.com or 914-694-3523.