Global Policy Forum

By David Glovin

The U.S. government is investigating the role of Mobil Oil Corp., a unit of Exxon Mobil Corp., in a scheme to bribe leaders of Kazakhstan in return for oil rights in the central Asian nation, a prosecutor said.

"Mobil Oil is the subject of the government's ongoing investigation," Assistant U.S. Attorney Peter Neiman said.

Neiman's remarks came during a court proceeding at which oil consultant James Giffen pleaded not guilty to charges that he violated the Foreign Corrupt Practices Act by paying $78 million in bribes to Kazakh leaders. Prosecutors said he made illegal payments to two senior government officials in six oil deals, including Mobil's purchase of a stake in Kazakhstan's Tengiz field.

"This is the first time in years that an American oil company has been held to account for the Foreign Corrupt Practices Act," said Amy Jaffe, an energy expert at the James A. Baker III Institute for Public Policy at Rice University in Houston. "The industry is going to have to watch to see how that affects the image of American companies, and American companies will have to take stock of all their business practices and how they use agents."

Exxon Mobil, based in Irving, denied any wrongdoing. "Exxon Mobil has no knowledge of any illegal payments made to Kazakh officials by any current or former employee," said Tom Cirigliano, a spokesman for the world's largest publicly traded oil company.

Kazakhstan is the largest oil producer after Russia among the former Soviet states. The Tengiz field is one of the country's largest, with estimated reserves of 6 billion barrels of oil.

According to New York Times reports, prosecutors have told a judge in sealed documents that Kazakhstan President Nursultan Nazarbayev accepted bribes in connection with his country's oil concessions.

On Wednesday, J. Bryan Williams, a former Mobil executive who played a key role in the $1.05 billion Tengiz deal, was indicted for tax evasion, for concealing a $2 million kickback he allegedly got from Giffen. Williams will appear in court Monday.

Giffen, 62, is the chairman of Mercator Corp., a merchant bank, and served as an intermediary between Kazakh leaders and Western oil companies. In the mid-1990s, Mobil paid Mercator more than $51 million for work on the Tengiz deal, prosecutors said. Although Mobil paid Giffen's fee, he was working for the Kazakh government and not Mobil, the company has said.

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