U.S. Probing Businessman’s Alleged Kazakhstan Oil Deal

The FBI is investigating whether a U.S. businessman illegally funneled $35 million from three oil companies to high-ranking Kazakhstan officials, including President Nursultan Nazarbayev, Newsweek reported Sunday.

The investigation comes as the United States, Russia and Iran vie to win Kazakh approval for competing oil-export routes for the former Soviet republic’s potentially vast oil reserves. The race has heated up as a mammoth oil drilling effort off the Kazakh Caspian Sea may have hit success.

If the site yields oil, Kazakhstan is likely to become one of the world’s major energy producers, and the U.S. would like to ensure that the oil bypasses Iran and Russia.

In its July 10 issue, which was released Sunday, Newsweek reported that the Justice Department was looking into whether American businessman James Giffen, official counselor to Nazarbayev, may have violated the Foreign Corrupt Practices Act as well as racketeering statutes.

A Justice Department document dated June 12 and obtained by Newsweek detailed alleged payments by Exxon Mobil Corp., BP Amoco and affiliates of Phillips Petroleum Co. of more than $65 million to offshore shell companies and accounts that investigators believe Giffen controlled, the magazine reported.

Of the $65 million, according to the document, about $35 million allegedly went to three current or former Kazakh officials, “or their families,” including Nazarbayev, Newsweek reported.

Giffen runs a private New York merchant bank called Mercator Corp. The magazine quoted his lawyer, Mark MacDougall, as saying “we are confident that Mercator will be shown to have acted lawfully.”