The Republic of Azerbaijan instituted a program in the mid-1990s to privatize its State-owned industries. Under that program, enterprises in certain industries, including oil and gas, telecommunications, and utilities could only be privatized if the President of Azerbaijan issued a special decree. One of those enterprises, in the oil and gas industry, was SOCAR, the State Oil Company of the Azerbaijan Republic, which owned Azerbaijan's substantial and extremely valuable oil deposits.
Under the privatization program, the Azeri government issued free vouchers to all Azeri citizens, which allowed them to bid for shares of industries to be privatized. Privatization vouchers were freely tradable and were bought and sold, typically with U.S. currency. Foreigners could also participate in the privatization program, but only if they purchased government-issued "options" for each voucher they held. The Azeri government sold these options at an official price.
Beginning in or about the summer of 1997, Viktor Kozeny, a Czech national and a resident of The Bahamas, invested heavily in the Azeri privatization program through two companies he controlled, Oily Rock Group Ltd. ("Oily Rock") and Minaret Group Ltd. ("Minaret"). Specifically, Kozeny directed individuals working for him to purchase Azeri vouchers and options. Kozeny also recruited American individuals and institutions to invest in the privatization program. Collectively, Oily Rock, Minaret, Oily Rock shareholders, and co-investors are referred to as the "investment consortium."
Thomas Farrell directed the voucher purchasing and safeguarding operation of Oily Rock and held the position of Co-Managing Director of Minaret. From about July 1997 until about January 1999, Thomas Farrell and others paid bribes and authorized the payment of bribes (a) to induce senior officials with the Azeri government to allow the investment consortium's continued participation in privatization, (b) to privatize SOCAR, (c) and to permit the investment consortium to acquire a controlling interest in SOCAR.
On March 10, 2003, the DOJ filed a two count indictment against Farrell charging both conspiracy to violate the anti-bribery provision of the FCPA as well as substantive violations of the anti-bribery provision of the FCPA. On the same date, Farrell agreed to plead guilty, and on April 26, 2013, the court sentenced Farrell to time served in prison and ordered him to pay a mandatory special assessment of $200. The delay in sentencing was caused by the DOJ's desire to have Farrell testify in the cases against his co-conspirators.
