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Three charged in scheme to bribe government officials in former Soviet
Republic
Associated Press
October 6, 2005
By Larry Neumeister, Associated Press Writer
NEW YORK --Three men including an executive with American
International Group Inc. were charged Thursday with offering hundreds
of millions of dollars -- as well as shopping sprees, jewelry and
medical treatment -- to top officials in the former Soviet republic of
Azerbaijan to get favorable treatment in oil deals.
Investment promoter Viktor Kozeny, Frederic Bourke Jr. and AIG
executive David Pinkerton, were charged in a 27-count indictment in
U.S. District Court in Manhattan. The defendants each were charged
with violations of the Foreign Corrupt Practices Act, which makes it a
crime to offer payment to foreign government officials to obtain or
retain business.
The indictment said Kozeny, 42, an Irish citizen of Czech background,
was president and chairman of Oily Rock Group Limited and Minaret
Group Limited when he and the two other men -- both American citizens
-- tried to buy off senior Azerbaijan officials.
Bourke, 59, of Greenwich, Conn., was an investor with
Kozeny. Pinkerton, 44, of Bernardsville, N.J., was an executive at
American International Group Inc., a U.S.-based insurance company. He,
too, was part of Kozeny's investment group, authorities said.
Pinkerton was put on administrative leave at AIG until the charges are
resolved, the company said in a statement. He was managing director of
AIG Global Investment Corp and was in charge of AIG's private equity
group, the indictment said.
AIG said the investment in question was brought to AIG Global
Investment Group by a New York investment fund which put together a
group investing $180 million. That group, AIG said, included an AIG
subsidiary which invested approximately $15 million in 1998.
AIG said no assets of AIG clients were invested in the transaction and
that AIG, realizing it had been defrauded by Kozeny, joined other
investors in bringing lawsuits against him in the United States, the
United Kingdom and the Bahamas.
It said it was cooperating with the probe by federal prosecutors and
noted that no charges were brought against AIG.
U.S. Attorney Michael J. Garcia said hundreds of millions of dollars
in bribes were promised and tens of millions of dollars were actually
paid in the scheme that ran from August 1997 until about 1999.
"The case that we bring today involves nothing less than the brazen
attempt to steal the wealth of a sovereign nation," he told a news
conference.
Azerbaijan, rich in oil resources, began privatizing some of its
state-owned enterprises in the 1990s, Garcia said.
Garcia said the defendants tried to bribe key decision makers and
corrupt the privatization process.
Kozeny sent planeloads of cash from Switzerland to Azerbaijan to buy
vouchers to purchase shares in the State Oil Co., which held the
country's oil and gas reserves and its oil and gas exploration,
production and refining facilities, Garcia said.
Garcia said Bourke and Pinkerton knowingly participated in the scheme,
bribing top Azerbaijan officials with jewelry, shopping sprees and
medical treatment to ensure the national oil company would be sold
"and that they would get their unfair share."
Mark J. Mershon, assistant director in charge of the FBI's New York
office, said Kozeny's plan was to acquire millions of dollars worth of
options to buy stock in the oil company to gain a controlling interest
so the options could be resold for 10 times their value.
"Kozeny foresaw such a windfall that he could promise corrupt
Azerbaijan officials two thirds of his profits and still make a
killing," Mershon said.
Kozeny never gained control of the oil company, he added.
Bourke and Pinkerton surrendered to the FBI in Manhattan while Kozeny
was arrested Wednesday in the Bahamas, where he was awaiting a court
appearance.
If convicted, the men face up to five years on each count of violating
the Foreign Corrupt Practices Act.
Bourke and Pinkerton each pleaded not guilty before Judge Richard
Casey.
Barry H. Berke, Pinkerton's lawyer, said: "David Pinkerton has been
wrongfully accused of being a criminal based on a passive investment
that represents less than 1 percent of the investment portfolio he
managed."
Stanley A. Twardy Jr., a lawyer for Bourke, said: "We're looking
forward to proving his case in court."
Benjamin Brafman, a lawyer for Kozeny, said the Foreign Corrupt
Practices Act does not apply to him and he cannot be prosecuted for
charges related to payments he allegedly made to foreign officials.
He said Kozeny has not decided whether to fight extradition.
http://www.boston.com/news/local/connecticut/articles/2005/10/06/three_arrested_in_scheme_to_bribe_government_of_az erbaijan/
Republic
Associated Press
October 6, 2005
By Larry Neumeister, Associated Press Writer
NEW YORK --Three men including an executive with American
International Group Inc. were charged Thursday with offering hundreds
of millions of dollars -- as well as shopping sprees, jewelry and
medical treatment -- to top officials in the former Soviet republic of
Azerbaijan to get favorable treatment in oil deals.
Investment promoter Viktor Kozeny, Frederic Bourke Jr. and AIG
executive David Pinkerton, were charged in a 27-count indictment in
U.S. District Court in Manhattan. The defendants each were charged
with violations of the Foreign Corrupt Practices Act, which makes it a
crime to offer payment to foreign government officials to obtain or
retain business.
The indictment said Kozeny, 42, an Irish citizen of Czech background,
was president and chairman of Oily Rock Group Limited and Minaret
Group Limited when he and the two other men -- both American citizens
-- tried to buy off senior Azerbaijan officials.
Bourke, 59, of Greenwich, Conn., was an investor with
Kozeny. Pinkerton, 44, of Bernardsville, N.J., was an executive at
American International Group Inc., a U.S.-based insurance company. He,
too, was part of Kozeny's investment group, authorities said.
Pinkerton was put on administrative leave at AIG until the charges are
resolved, the company said in a statement. He was managing director of
AIG Global Investment Corp and was in charge of AIG's private equity
group, the indictment said.
AIG said the investment in question was brought to AIG Global
Investment Group by a New York investment fund which put together a
group investing $180 million. That group, AIG said, included an AIG
subsidiary which invested approximately $15 million in 1998.
AIG said no assets of AIG clients were invested in the transaction and
that AIG, realizing it had been defrauded by Kozeny, joined other
investors in bringing lawsuits against him in the United States, the
United Kingdom and the Bahamas.
It said it was cooperating with the probe by federal prosecutors and
noted that no charges were brought against AIG.
U.S. Attorney Michael J. Garcia said hundreds of millions of dollars
in bribes were promised and tens of millions of dollars were actually
paid in the scheme that ran from August 1997 until about 1999.
"The case that we bring today involves nothing less than the brazen
attempt to steal the wealth of a sovereign nation," he told a news
conference.
Azerbaijan, rich in oil resources, began privatizing some of its
state-owned enterprises in the 1990s, Garcia said.
Garcia said the defendants tried to bribe key decision makers and
corrupt the privatization process.
Kozeny sent planeloads of cash from Switzerland to Azerbaijan to buy
vouchers to purchase shares in the State Oil Co., which held the
country's oil and gas reserves and its oil and gas exploration,
production and refining facilities, Garcia said.
Garcia said Bourke and Pinkerton knowingly participated in the scheme,
bribing top Azerbaijan officials with jewelry, shopping sprees and
medical treatment to ensure the national oil company would be sold
"and that they would get their unfair share."
Mark J. Mershon, assistant director in charge of the FBI's New York
office, said Kozeny's plan was to acquire millions of dollars worth of
options to buy stock in the oil company to gain a controlling interest
so the options could be resold for 10 times their value.
"Kozeny foresaw such a windfall that he could promise corrupt
Azerbaijan officials two thirds of his profits and still make a
killing," Mershon said.
Kozeny never gained control of the oil company, he added.
Bourke and Pinkerton surrendered to the FBI in Manhattan while Kozeny
was arrested Wednesday in the Bahamas, where he was awaiting a court
appearance.
If convicted, the men face up to five years on each count of violating
the Foreign Corrupt Practices Act.
Bourke and Pinkerton each pleaded not guilty before Judge Richard
Casey.
Barry H. Berke, Pinkerton's lawyer, said: "David Pinkerton has been
wrongfully accused of being a criminal based on a passive investment
that represents less than 1 percent of the investment portfolio he
managed."
Stanley A. Twardy Jr., a lawyer for Bourke, said: "We're looking
forward to proving his case in court."
Benjamin Brafman, a lawyer for Kozeny, said the Foreign Corrupt
Practices Act does not apply to him and he cannot be prosecuted for
charges related to payments he allegedly made to foreign officials.
He said Kozeny has not decided whether to fight extradition.
http://www.boston.com/news/local/connecticut/articles/2005/10/06/three_arrested_in_scheme_to_bribe_government_of_az erbaijan/