James Giffen’s trial ends: A slap on the wrist, and the triumph of American Putinism

In a stunning turn of events, the U.S. government agreed to a plea deal today in which it dropped all but minor charges in its long-running bribery case against James Giffen, the self-styled former counselor to the president of Kazakhstan. Seven years after being led away from JFK Airport in handcuffs, Giffen pleaded guilty this afternoon to ...

David Burnett/Newsmakers
David Burnett/Newsmakers
David Burnett/Newsmakers

In a stunning turn of events, the U.S. government agreed to a plea deal today in which it dropped all but minor charges in its long-running bribery case against James Giffen, the self-styled former counselor to the president of Kazakhstan.

Seven years after being led away from JFK Airport in handcuffs, Giffen pleaded guilty this afternoon to a misdemeanor tax violation and a minor bribery count against his company. He faces a maximum of six months in prison and a fine. Judge William Pauley will sentence him on Nov. 19.

Giffen had been charged with funneling about $80 million in money from U.S. oil companies to bank accounts benefitting Kazakh President Nursultan Nazarbayev, his associates and relatives. The indictment described Giffen's gifts of expensive speedboats, fur coats, jewelry, and tuition for a Nazarbayev daughter to an exclusive Swiss school. But it was an exceedingly complex case -- although the government had slam-dunk documents tracking the transactions, it needed to prove criminal intent, and show that the transactions actually violated both U.S. and Kazakh law.

In a stunning turn of events, the U.S. government agreed to a plea deal today in which it dropped all but minor charges in its long-running bribery case against James Giffen, the self-styled former counselor to the president of Kazakhstan.

Seven years after being led away from JFK Airport in handcuffs, Giffen pleaded guilty this afternoon to a misdemeanor tax violation and a minor bribery count against his company. He faces a maximum of six months in prison and a fine. Judge William Pauley will sentence him on Nov. 19.

Giffen had been charged with funneling about $80 million in money from U.S. oil companies to bank accounts benefitting Kazakh President Nursultan Nazarbayev, his associates and relatives. The indictment described Giffen’s gifts of expensive speedboats, fur coats, jewelry, and tuition for a Nazarbayev daughter to an exclusive Swiss school. But it was an exceedingly complex case — although the government had slam-dunk documents tracking the transactions, it needed to prove criminal intent, and show that the transactions actually violated both U.S. and Kazakh law.

But Giffen’s lawyers, led by William Schwartz, made it even more difficult for the government with their defense. They argued that even if what the government said was true, Giffen was innocent because he was in effect an agent of the Central Intelligence Agency, in addition to being a de-facto adviser to the National Security Council and the State Department. The term of art is a "public authority" defense — Giffen asserted that, in numerous debriefings by these agencies and departments, he was led to believe that he was serving U.S. strategic purposes by being close to Nazarbayev. Schwartz argued that U.S. officials knew or should have known what was required in order to achieve and keep this proximity to power in Kazakhstan.

If it is a considerable comedown for the federal government — and it is — it is also recognition of the changed U.S. reality since 9/11. Call it the triumph of American Putinism. In Russia, the truism above all truisms is the ascendent power of the intelligence apparatus — the siloviki, in Russian. As Dana Priest documented in her recent "Top Secret America" series in the Washington Post, an entire parallel intelligence universe has been created in the U.S. since the Sept. 11, 2001, terrorist attacks, and Schwartz understood correctly that he could set up a collision between the Justice Department and the CIA in which the latter would probably prevail.

So that’s what happened. Under the prior administration, Vice President Dick Cheney was going to back up the philosophy that U.S. intelligence agencies should not cooperate with the Justice Department by coughing up secret discovery documents demanded by Schwartz. Since Judge Pauley had made clear that Giffen had the right to such documents under the Constitution, this put the government in the position of not being able to uphold the original charges.

In the end, Giffen pleaded guilty to failing to disclose in his 1996 tax return that he was a signatory on a Swiss bank account for Condor Capital Management, to which Nazarbayev was the beneficiary. And, on behalf of Giffen’s company, Mercator Corp., Schwartz pleaded guilty to giving Nazarbayev those $16,000 speedboats.

<p> Steve LeVine is a contributing editor at Foreign Policy, a Schwartz Fellow at the New America Foundation, and author of The Oil and the Glory. </p>

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