The Mercator Corporation ("Mercator"), a corporation headquartered and incorporated in New York, advised Kazakhstan in connection with various transactions related to the sale by Kazakhstan of portions of its oil and gas wealth.
James H. Giffen was the principal shareholder, board chairman, and chief executive officer of Mercator. On or about June 17, 1992, Giffen was named as a Counselor to the President of Kazakhstan, a semi-official title that enabled him to influence and act as an advisor on numerous oil and gas transactions.
In about December 1994, Mercator entered into an agreement with the Kazakh Ministry of Oil and Gas Industries in which Mercator was tasked with assisting the Ministry in developing a strategy for foreign investment in the oil and gas sector and coordinating the negotiation of numerous oil and gas transactions with foreign partners. Between 1995 and 2000, Mercator was paid approximately $67 million in success fees under the agreement for its work for Kazakhstan. In addition, during the same time period, Giffen, on behalf of Mercator, caused approximately $70 million paid by various oil companies into escrow accounts at Banque Indosuez and its successor, Credit Agricole Indosuez, in connection with the purchase of oil and gas rights in Kazakhstan to be diverted into secret Swiss bank accounts under his control. Out of the success fees paid to Mercator and the funds diverted by Giffen from the oil transactions into the secret Swiss bank accounts, Giffen, on behalf of Mercator, directly and through intermediaries made unlawful payments and gifts totalling more than $84 million to three senior officials of the Kazakh Government who had the power to substantially influence whether Giffen and Mercator obtained and retained lucrative business as advisors and counselors to the government of Kazakhstan.
On April 2, 2003, the DOJ filed a sixty-two count Indictment in the Southern District of New York ("S.D.N.Y.") against Giffen. This indictment was superseded by two later indictments, and on August 4, 2004, the DOJ filed a sixty-five count Second Superseding Indictment in the S.D.N.Y. against Giffen alleging (1) conspiracy to commit mail and wire fraud and to violate the anti-bribery provisions of the FCPA; (2-14) direct and aiding and abetting violations of the anti-bribery provisions of the FCPA; (15-22) wire fraud and aiding and abetting wire fraud; (23) conspiracy to commit money laundering; (24-59) money laundering; (60-63) filing false tax returns; (64) conspiracy to defraud the U.S.; and (65) obstructing the enforcement of the revenue laws. On August 6, 2010, the DOJ filed a one count superseding Information in the S.D.N.Y. against Giffen pursuant to a Plea Agreement of the same date alleging a willful failure to file an income tax return. Under the terms of the plea agreement, the DOJ further sought the dismissal of the claims made in the earlier indictments, and Giffen agreed to plead guilty to the single charge in the Information. Furthermore, Giffen and the DOJ agreed to a sentence based on the Sentencing Guidelines. On November 23, 2010, the court sentenced Giffen to imprisonment of time served and ordered him to pay a mandatory assessment of $25.
On August 6, 2010, the DOJ filed a single count Information in the S.D.N.Y. against Mercator alleging direct and aiding and abetting violations of the anti-bribery provisions of the FCPA. On the same date, Mercator entered into a Plea Agreement with the DOJ. Under the terms of the agreement, Mercator pleaded guilty to the single charge in the Information, and Mercator agreed to be sentenced according to the Sentencing Guidelines. The agreement noted the guidelines ranges under both the 1998 and 2009 Sentencing Guidelines. On November 23, 2010, the court ordered Mercator to pay a criminal monetary fine of $32,000 plus a mandatory assessment of $400.
