Chevron Gets Request in Bribery Probe

ChevronTexaco Corp. disclosed Thursday it had received a subpoena from the U.S. Justice Department as part of a long-running investigation into alleged oil industry bribery in Kazakhstan, where the company is a major investor.

The San Ramon-based firm is “fully complying” with a subpoena from federal prosecutors in New York, said company spokeswoman Maripat Sexton.

“We have no reason to believe that we’re a target of the investigation,” she added.

Justice Department spokesman Bryan Sierra declined to discuss the matter, citing the department’s policy that it does “not comment about or confirm the existence of subpoenas or investigations.”

Kazakhstan’s oil dealings are at the heart of an expanding probe in which James Giffen, an investment banker and advisor to Kazakh President Nursultan Nazarbayev, was indicted in March on bribery charges for allegedly transferring $78 million in payments from Mobil Oil Corp. and other companies to senior government officials. Giffen has pleaded not guilty.

In April, a former executive at Mobil and then at ExxonMobil Corp. after a merger, was indicted for allegedly taking a $2-million kickback in connection with Mobil’s investment in the central Asian republic’s Tengiz field. He pleaded guilty to tax evasion charges in June.

ChevronTexaco, through predecessor company Chevron, holds a 50% interest in the Tengiz project. Through Texaco, it also holds a 20% stake in Karachaganak, Kazakhstan’s second-richest petroleum reserve.

The ChevronTexaco subpoena, as reported Thursday by the Financial Times newspaper, seeks documents related to the oil company’s projects and dealings with high-level officials in Kazakhstan, a country that has emerged as an important source of oil outside the Middle East.

The newspaper said prosecutors also asked ChevronTexaco to testify before a federal grand jury involved in the case, but ChevronTexaco’s Sexton could not confirm that Thursday, saying only that the subpoena was “a request for information.”

Sexton said the oil company received the subpoena May 2, but chose not to disclose the request in a news release or in the company’s regulatory filings. “Since it’s merely a document request, there’s no requirement to report” it, she said.

Amy Myers Jaffe, a senior energy advisor at Rice University’s Baker Institute, called the investigation “probably the most visible, broadest case that we’ve seen in the industry in years about how companies act overseas ... and it will become a landmark case in terms of defining what you can and cannot allow a local agent to do.”

Serving ChevronTexaco with a subpoena in the case -- whether or not its own conduct is suspect -- “is not surprising,” Jaffe said. “It seems to me that they would be a material witness just because they were partners with Mobil.”

ChevronTexaco shares rose 51 cents to $73.50 Thursday on the New York Stock Exchange.

*

Reuters was used in compiling this report.