In his 2009 book "Oil: Money, Politics, and Power in the 21st Century," Journalist/Broadcaster Tom Bower writes, "In reality, Chevron's breakthrough to secure the oilfield (in Kazakhstan) had been due to a combination of risk and dubious practice during excruciating negotiations that were saved from stalemate by James Giffen and John Deuss.... Giffen, a 62-year-old New Yorker acting on behalf of other oil companies, was suspected of paying $78 million between March 1997 and September 1998 into Swiss bank accounts... for the benefit of Kazakhstan's President ,,, and some ministers.... On March 31, 2003, Giffen was arrested at JFK International Airport under the Foreign Corrupt Practices Act and charged with bribing Kazakh officials. .... Giffen admitted depositing money in the Swiss bank accounts, but insisted that he had acted with the approval of the US government.... The prosecution remains in limbo with Giffen on $10 million bail." (pp. 104-05)
The following decisions are reported by Westlaw:
United States Court of Appeals,
Second Circuit.
In re GRAND JURY SUBPOENAS DATED MARCH 19, 2002 AND AUGUST 2, 2002.
The Mercator Corporation, James H. Giffen, Akin, Gump, Strauss, Hauer & Feld, L.L.P., Respondents-Appellants,
v.
United States of America, Movant-Appellee.
Docket No. 02-6239.
Argued: Nov. 13, 2002.
Decided: Nov. 15, 2002.
Opinion Filed: Jan. 28, 2003.
Government moved to compel attorneys for corporation to comply with grand jury subpoenas seeking Swiss bank records in connection with investigation of allegations that corporation bribed senior officials in foreign country. The United States District Court for the Southern District of New York, Denny Chin, J., 2002 WL 31040322, granted motion. Attorneys appealed. The Court of Appeals, Raggi, Circuit Judge, held that “selection and compilation” exception to work product doctrine did not apply to bank records.
Affirmed.
I. Background
For several years, the United States Attorney for the Southern District of New York has been investigating possible violations of the Foreign Corrupt Practices Act, 15 U.S.C. § 78dd-1 et seq. , by corporations and persons doing business with senior officials of a particular foreign country.FN1 Toward that end, more than two *382 years ago, the United States filed a Mutual Legal Assistance Treaty (“MLAT”) request with Swiss authorities seeking bank records relating to specific accounts held by the foreign country or its officials. As the government explains in its ex parte submission, the response received from Switzerland to date has been incomplete or unsatisfactory in several respects important to the prosecution of the charges under investigation.
FN1. Because both sides have filed submissions under seal and ex parte, and because a grand jury investigation is ongoing, our discussion of the background to this appeal is limited to those facts necessary to an understanding of the legal conclusions reached in this case.
Throughout the relevant time, Akin Gump has represented Mercator and Giffen, and, on their behalf, has communicated with prosecutors on matters relating to the pending criminal investigation. Specifically, in the fall of 2000, Akin Gump offered to produce records from six of the Swiss bank accounts identified in the MLAT request with the understanding that production did not waive future privilege claims by Akin Gump's clients. Prosecutors declined to accept the documents on these terms.
On March 19, 2002, a grand jury sitting in the Southern District of New York issued a subpoena to Akin Gump demanding production of any and all bank records in its possession relating to the six Swiss accounts discussed in 2000 with prosecutors. On August 2, 2002, it issued a second subpoena calling for Akin Gump's production of any and all bank records in its possession relating to twenty-four additional Swiss accounts, which records had also been sought pursuant to the MLAT request. In response to both subpoenas, Akin Gump invoked the work product doctrine, prompting prosecutors to file a motion with the district court on August 14, 2002 to compel compliance.
After reviewing the submissions of the parties and hearing oral argument on September 5, 2002, Judge Chin granted the motion to compel, entering a formal order on September 9, 2002. A few days later, on September 11, 2002, he issued a Memorandum Decision detailing his reasons for rejecting appellants' work product claim. See In re Grand Jury Subpoenas Dated March 19 and August 2, 2002, No. M 11-189, 2002 WL 31040322 (S.D.N.Y. Sept.12, 2002). Carefully reviewing the law applicable to the attorney work product doctrine, Judge Chin concluded that the subpoenaed bank records did not in and of themselves constitute work product because they were “the pre-existing records of third parties, created and maintained in the ordinary course of business by those third parties without any reference to litigation whatsoever.” Id. at *4. To the extent appellants argued that Akin Gump's selection and compilation of specific bank records transformed the documents into attorney work product, disclosure of which would reveal counsel's developing defense strategy, Judge Chin noted that in this circuit, “qualifying the ‘selection’ of records for [work product] protection ‘depends upon the existence of a real, rather than speculative, concern that the thought processes of ... counsel in relation to pending or anticipated litigation would be exposed.’ ” Id. at *6 (quoting Gould, Inc. v. Mitsui Mining & Smelting Co., 825 F.2d at 680). He expressly found that “Akin, Gump has failed to demonstrate such a genuine concern.” Id. Judge Chin ruled that, in any event, equity warranted disclosure of the subpoenaed records because it was “unlikely” that they would be procured from any other source given the difficulties that had plagued the MLAT request, as well as a 1987 Memorandum of Understanding between Switzerland and the United States limiting attempts to subpoena information from United States *383 branches of Swiss banks. Id. at *7 and n. 2.
United States Court of Appeals,
Second Circuit.
UNITED STATES of America, Appellant,
v.
James H. GIFFEN, Defendant-Appellee.
Docket No. 05-5782-CR.
Argued: Jan. 25, 2006.
Decided: Dec. 8, 2006.
Background: Defendant was charged with making illegal payments to foreign government officials in violation of Foreign Corrupt Practices Act, mail and wire fraud statutes, money laundering statute, and income tax laws. The United States District Court for the Southern District of New York, William H. Pauley, III, J., 379 F.Supp.2d 337, denied government's motion to preclude defendant from raising public authority defense at trial. Government brought interlocutory appeal.
Holding: The Court of Appeals, Leval, Circuit Judge, held that government could not bring interlocutory appeal under Classified Information Procedures Act (CIPA).
Appeal dismissed.
Background
I. The Indictment
Giffen, a United States citizen, was indicted on August 4, 2003, by a grand jury in the Southern District of New York.FN1 Giffen is the Chairman of the Board, Chief Executive Officer, and principal shareholder of Mercator Corporation, a merchant bank based in New York. From 1995 to 1999, Giffen and Mercator advised the Republic of Kazakhstan on oil and gas deals, and negotiated several major deals on the Republic's behalf. The indictment charges Giffen with bribing Kazakh officials in violation of the Foreign Corrupt Practices Act (“FCPA”) 15 U.S.C. § 78dd-2; defrauding the Republic of Kazakhstan in violation of the mail and wire fraud statutes, 18 U.S.C. §§ 1341, 1343, and 1346; money laundering to further and conceal the bribery and fraud, in violation of 18 U.S.C. §§ 1956 and 1957; and tax-related offenses in violation of 26 U.S.C. §§ 7206 and 7212, and 18 U.S.C. § 371.
FN1. The indictment has been superseded twice, but the changes are not relevant to this appeal.
The indictment alleges that Giffen paid more than eighty million dollars in bribes *32 to the President of Kazakhstan and two other Kazakh officials. The indictment alleges that Giffen created Swiss bank accounts in the names of offshore companies owned by the officials or members of their families. According to the indictment, Giffen made payments into those accounts from fees that he and Mercator received in oil deals they brokered for the Republic, as well as from escrow accounts holding payments due the Republic from oil transactions. According to the indictment, these deposits were bribes, disguised in some cases as loans or as payments of the fees of consultants who had helped negotiate oil deals for Kazakhstan. The indictment alleges that funds in these accounts were used to pay personal expenses of Kazakh officials and their families, such as tuition, jewelry purchases, vacations, and credit card bills. The indictment also alleges that Giffen “purchased luxury items, including fur coats, jewelry, speed boats, and snowmobiles, and provided those items free of charge to senior Kazakh officials,” and that he “spent a portion of the funds diverted from the oil transactions on luxury items, including millions of dollars in jewelry.”
The indictment asserts that by these acts Giffen violated the FCPA and also defrauded the Republic of Kazakhstan. The theory of the fraud allegations is that the money used to bribe the Kazakh officials belonged to Kazakhstan, and that Giffen participated in a fraudulent scheme to divert these moneys to the personal enrichment of the Kazakh officials. The indictment further alleges that Giffen engaged in money laundering to further and conceal the bribery and fraud. Finally, the indictment alleges that Giffen conspired to defraud the United States of its rightful tax revenues by concealing from the Internal Revenue Service (“IRS”) moneys he received, and by helping other United States taxpayers to conceal income from the IRS.
In March 2004, Giffen moved under Federal Rule of Criminal Procedure 16(d)(2)(a) to compel the government to produce documents in the possession of certain government agencies that discussed Giffen and Mercator. Giffen asserted that he had been in regular contact with personnel of those agencies and wished to explore a public authority defense to the charges in the indictment. On July 2, 2004, the district court granted Giffen's motion to compel, reasoning that Giffen “provides sufficient details from publicly available sources that describe his involvement in Kazakhstan on behalf of the United States government” to entitle him to discovery. The district court noted the government's acknowledgment “that it reviewed documents relating to Giffen and Mercator” at government agencies “during the course of its investigation,” and the district court stated that “Giffen is entitled to review those classified documents to assess the viability of a public authority defense.”
The second of these excerpted decisions suggests that Giffen was standing by his defense that he was acting for the US government.
Last August --- after the publication of Bower's book, the following story was posted by Foreign Policy Magazine:
In a stunning turn of events, the U.S. government agreed to a plea deal today in which it dropped all but minor charges in its long-running bribery case against James Giffen, the self-styled former counselor to the president of Kazakhstan.
Seven years after being led away from JFK Airport in handcuffs, Giffen pleaded guilty this afternoon to a misdemeanor tax violation and a minor bribery count against his company. He faces a maximum of six months in prison and a fine. Judge William Pauley will sentence him on Nov. 19.
Suggests Steve LeVine, the author of the piece:
If it is a considerable comedown for the federal government -- and it is -- it is also recognition of the changed U.S. reality since 9/11. Call it the triumph of American Putinism. In Russia, the truism above all truisms is the ascendent power of the intelligence apparatus -- the siloviki, in Russian. As Dana Priest documented in her recent "Top Secret America" series in the Washington Post, an entire parallel intelligence universe has been created in the U.S. since the Sept. 11, 2001, terrorist attacks, and Schwartz (Giffen's lead counsel) understood correctly that he could set up a collision between the Justice Department and the CIA in which the latter would probably prevail.
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