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An American businessman accused of paying $78 million in bribes to officials in Kazakhstan may review documents in the possession of the Central Intelligence Agency and the State Department in preparing his defense, a Southern District of New York judge has ruled. Judge William H. Pauley III also narrowed last week the charges against the businessman, James H. Giffen, dismissing eight of 65 counts of the indictment against him. Giffen’s company, the New York City-based Mercator Corp., was hired by the government of Kazakhstan in 1995 to help arrange for foreign companies to invest in the former Soviet Republic’s extensive oil and gas fields. Mercator and Giffen, its chairman, who was named “counselor to the president of Kazakhstan,” were paid $67 million by the country for concluding six oil and gas deals. In April 2003, the U.S. government charged Giffen with diverting $78 million to Kazakhstan officials from payments made by the companies involved in the deals. Instead of the Kazakhstan treasury, the money went to Nurlan Balgimaev, Kazakhstan’s former prime minister, and Nursultan Nazarbaev, its current president, the U.S. government says. The U.S. government has publicly said it is investigating the role of Mobil Oil, which secured through Giffen a 25 percent stake in the Tengiz oil field, one of Kazakhstan’s largest, with estimated reserves of 6 billion barrels of oil. J. Bryan Williams, a former Mobil executive, was accused of receiving a $2 million kickback from Giffen. In September, Williams, who played an important role in Mobil’s $1 billion Tengiz deal, was sentenced to nearly four years in prison for evading taxes on $7 million, including the $2 million kickback. According to a statement issued by Mobil, Williams, under oath in open court, asserted that the company had no knowledge of his receipt of the funds and denied the payments were a “kickback” for work done by Mobil. Giffen sought access to CIA and State Department records in an effort to mount a defense that he was working under the authority of the U.S. government. The government did not dispute that Giffen had frequent contacts with U.S. intelligence officials or that he used his contacts within the Kazakhstan government to promote U.S. interests. In a book entitled “See No Evil: The True Story of a Ground Soldier in the CIA’s War on Terrorism,” the author, Robert Baer, described Giffen as the “de facto ambassador to Kazakhstan.” Judge Pauley wrote that Giffen had presented sufficient information from publicly available sources to permit discovery of potentially classified information. “If the United States was encouraging Giffen to ingratiate himself to senior Kazakh officials,” Judge Pauley wrote in U.S. v. Giffen,03-404, “then [he] may be able to assert a public authority defense.” In narrowing the indictment, Judge Pauley concluded that the U.S. government had gone too far in seeking to apply the federal wire and mail fraud statutes to schemes to deprive citizens of foreign nations of the “intangible right to honest services” of their government’s leaders. While there are “legions” of precedents that would support the view that the two statutes would apply to the corruption of officials in this country, Judge Pauley wrote, the application of the law to the Kazakhstan citizenry is “more ethereal.” To apply the statutes in that context would be “unconstitutionally vague,” he ruled in what he said was apparently an issue of first impression. The government was represented by Assistant U.S. Attorney Peter G. Neiman and Philip Urofsky, special counsel for international litigation at the U.S. Justice Department’s fraud section. Giffen was represented by a team of lawyers from Kronish, Lieb, Weiner & Hellman: Steven M. Cohen, William J. Schwartz, Scott J. Pashman, Matthew E. Beck and Kevin D. Galbraith.

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