The last issue of the New York Times Magazine has a compelling article from Peter Maass about an alleged CIA officer who bribed the president of Kazakhstan more than $78 million to guide oil and gas toward Europe and the United States instead of toward Russia and China. In the era of scarce oil, some governments are looking to drop bribery and corruption investigations lest they scare off important supply deals – an extremely negative development, to say the least.
From NYT Magazine:
The Fuel FixersBy PETER MAASSJames Giffen likes to share the wealth. His generosity to friends is said to have included $180,000 for jewelry, $30,000 for fur coats, a luxury speedboat, two snowmobiles and lots of cash. Overall, according to prosecutors in New York, Giffen gave more than $78 million to senior officials in Kazakhstan, for which he was indicted on federal bribery charges in 2003. What makes his case most remarkable, however, is not the startling amount of supposed corruption. Nor is it Giffen’s unindicted co-conspirator, Nursultan Nazarbayev, the president of Kazakhstan.What truly sets Giffen apart is that he has claimed in his defense that he was an operative for the Central Intelligence Agency. As a close adviser to President Nazarbayev, who in the 1990s agreed to a series of large oil contracts with American firms, Giffen says he was moonlighting for the American government as, basically, our man in Astana. Giffen’s lawyers have called him a patriot who helped ensure that Kazakhstan’s reserves of oil and natural gas would be controlled by American rather than Chinese or Russian companies. And they have noted an oddity — after their client was indicted on charges that could land him in jail for the rest of his life, his supposed partner in bribery, President Nazarbayev, was welcomed not only at the White House but also at the Bush family compound in Kennebunkport.The case raises a number of questions, including this one: in an era of scarce oil, can America afford to punish anyone who cuts corners to win deals for American firms? In 2003, when oil sold for less than $30 a barrel, it was possible to believe we could have our anticorruption statutes and our cheap gasoline. Four years later, with oil going for $95 a barrel, it’s not so clear. The British government, citing-national security concerns, has called off an investigation into bribery of influential Saudis. Delays in Giffen’s case suggest that some federal agencies may be more concerned with protecting secrets than with seeing the prosecution go forward. Much of the pretrial evidence has been sealed, but what is known is that Giffen’s lawyers have asked for sensitive documents that they contend will show official approval of their client’s activities.As an instrument of resource control, bribery has been the recourse of corporate executives and government officials the world over. In the 1970s, after American firms admitted to spending hundreds of millions of dollars bribing foreign officials, Congress passed the Foreign Corrupt Practices Act to put an end to these antics. For many years, the F.C.P.A. was not aggressively enforced and many companies outsourced bribery to middlemen or joint-venture partners. But as the corporate social-responsibility movement grew its baby teeth, the Justice Department began to show more interest in corporate bribery overseas. About 60 F.C.P.A. cases are now being investigated or prosecuted. Belatedly, American oil firms are being asked to, well, refine themselves.Is it too late? The F.C.P.A. was passed when these firms were colossi in the energy world. Today, Congress and Exxon Mobil cannot set global norms on their own. They have to deal with a range of masters, competitors and rogues including Hugo Chávez, Vladimir Putin, Mahmoud Ahmadinejad, Hu Jintao, Gazprom, Lukoil, Sinopec and Eni. Desperate buyers — and this category now includes the United States — must compete against one another as they try to fulfill the wishes and needs of the autocratic sellers of petroleum.I saw this firsthand when President Chávez signed an accord in Caracas with a Chinese company that would launch a satellite for Venezuela. Chávez delivered a lengthy and rambling speech, during which he flapped his arms in the air like a loon and raved about the beauty of Chinese women, the greatness of Chairman Mao and the evils of free enterprise, warning that “capitalists are generating death.” The Chinese on the stage, who seemed unlikely to share all of their host’s notions, slightly nodded their heads in the quiet approval that was required.By lending support to the particularly dubious regime in Sudan, China clearly puts its energy needs above moral concerns. But the American government cannot avoid the contradictions of needing oil but wanting to get it, or at least be seen to get it, in moral ways. This predicament has been evident for a long time in our dealings with dictatorships in, for instance, Saudi Arabia and Angola. The Giffen case is a timely iteration as we fret on the threshold of $100-a-barrel petroleum. The choice is simple: Make painful but necessary changes to reduce our addiction to oil, or sink deeper into our moral sludge.