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Kazakhstan: ChevronTexaco Quizzed in Bribery Probe

by Joshua ChaffinFinancial Times
September 11th, 2003

WASHINGTON - ChevronTexaco is being questioned by the Justice Department as prosecutors broaden an investigation into alleged bribery in Kazakhstan's oil industry.

The US oil company received a subpoena from federal prosecutors in New York asking it to testify before a federal grand jury about a Kazakh oil and gas project in which the company was participating.

The subpoena, sent in May, also requested that Chevron-Texaco hand over any documents relating to dealings with Nursultan Nazarbayev, Kazakhstan's president, Nurlan Balgimbaev, a top oil minister, and James Giffen, a special adviser to Mr Nazarbayev who was indicted this year on bribery charges.

Mr Giffen, a US merchant banker, has pleaded not guilty to accusations that he funnelled more than $78m in payments from Mobil and other western oil companies to "very senior" Kazakh officials.

The Kazakh government has denied any wrongdoing, although Swiss legal documents indicate that at least one of the bank accounts where the money was found was controlled by Mr Nazarbayev.

J. Bryan Williams, a former ExxonMobil executive, pleaded guilty in June to tax evasion charges stemming from the probe.

The politically-sensitive investigation has strained ties between the US and Kazakhstan, which has promoted itself as a key ally in the war on terror and a potentially vast source of non-Middle Eastern oil.

ChevronTexaco said all its payments to Kazakhstan were "properly made" and in accordance with local and US laws.

The company said it was fully complying with the grand jury request and that it had "no reason to believe" it was a "target of the investigation".

Texaco entered Kazakhstan in 1997, signing a production sharing agreement with Russia's Lukoil, Italy's Agip and British Gas to develop the Karachaganak field.

The field is estimated to hold up to 2.4bn barrels of oil, and 16,000bn cubic feet of gas.

The Karachaganak agreement was unveiled at a ceremony in Washington attended by Mr Nazarbayev and Al Gore, then US vice-president.

The US government alleged in its indictment of Mr Giffen that Texaco and the other partners paid $17m into a government-controlled escrow account at Credit Agricole Indosuez as part of the transaction.

At least $5m of that money was eventually transferred by Mr Giffen through several offshore accounts to one controlled by a senior Kazakh official, the government said.

The subpoena requested any ChevronTexaco documents relating to offers or promises to pay money or gifts to Kazakh government officials, their families, or government consultants.





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