Oil and glory, millions of dollars stuffed in suitcases, a fugitive
investor protected by Chechen mobsters, former Senator and Obama’s Middle East envoy George Mitchell, and a Central Asian president who was who was willing to give
away a purported half of his country’s oil wealth for $350 million in
cash — what more could you want out of international bribery scheme?
After a month-long trial held in the federal courthouse in downtown
Manhattan, a jury found multimillionaire handbag manufacturer Frederic
Bourke guilty of breaking laws that prohibit companies from bribing
officials of foreign governments.
Along with Viktor Kozeny, an investor buddy who was his neighbor at a
ski residence in Aspen, Bourke schemed to pay millions to the government
of Azerbaijan in order to gain control of the state-owned oil company
Former Azeri president Heidar Aliyev had agreed to privatize the state
oil company, SOCAR, in exchange for millions of dollars in payments from
Kozeny, a Czech national who was known in media reports as “The Pirate
of Prague” after accusations that he had enticed Czech investors into an unrelated
scam. (For the past few years, he’s been camping out in the Bahamas to
avoid extradition to the U.S.).
For the Azerbaijan venture, Kozeny raised hundreds of millions in
capital from individual investors like Bourke (who lost $180 million
of his own cash) and former U.S. Senator George Mitchell, from hedge
funds such as Omega Capital, and from the private equity unit of the now
troubled A.I.G. (an A.I.G. employee was originally indicted by the
government in 2005, but charges against him were dropped).
Bourke never gave any bribe money directly to the Azeris. He was
prosecuted only for conspiring to do so — the first time the feds have
brought a case of this
kind. Bourke was found guilty, essentially, because he knew about the bribes
but, as the legislative history frequently has it, “stuck his head in the sand.”
At the trial, one of Kozeny’s former employees testified that she first
heard about the scheme when she met Kozeny at a Moscow bar. Kozeny was
sitting with a high-level official of the Egyptian government. When she
asked Kozeny why the president of Azerbaijan would be willing to sell
off his country’s oil fields, Kozeny bragged openly that he was bribing
the president. According to Bloomberg’s David Glovin, the Egyptian official raised his eyebrows, and took another puff
of his cigar.
Current Obama envoy to the Middle East and former U.S. Senator George
Mitchell also testified at Bourke’s trial. The two had become friends
years back when the 75-year-old Mitchell was a senator, and Bourke and a
member of the Rockefeller family were trying to raise money for a state
park in Maine. Mitchell, who lost $200,000 in the scheme but was not
accused of wrongdoing, said he knew the venture was “risky.” But, he
added, the potential for high return “justified” the risk. He also said that, despite not being told about the bribes, he still
considers Bourke a close friend.
The Foreign Corrupt Practices Act, the U.S.’s signature anti-bribery
law, was virtually ignored by the government for two decades. In recent
years, though, the Department of Justice has been prosecuting bribery at
an unprecedented rate. Of course, this doesn’t mean that the government
has suddenly figured out of how track international money flows and
bribes — as in many other cases of this type, Bourke turned himself in
to the feds.
Bourke faces thirty years in prison, and should be sentenced soon. But
District Judge Shira Scheindlin, who is more well-known for presiding
over trials involving the Gotti family, has said she plans to give
Bourke less than ten years (no one ever gets even close to the maximum
in bribery cases). Right now, the wildly wealthy Bourke is free on $10
million bail. Image via wikipedia.