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YOUR MONEY

Oil, Cash and Corruption

By RON STODGHILL NOV. 5, 2006
ON a warm afternoon in late September, Nursultan A. Nazarbayev strode across
the tarmac at Andrews Air Force Base to board his private 767. Surrounded by an
entourage of security guards and political advisers, Mr. Nazarbayev, the president
of Kazakhstan, was heading home after an eventful visit that included a meeting
with President Bush in the White House and a boating jaunt in Maine with the
president’s father, George H. W. Bush. He also attended a swank fete at the
Capital Hilton Hotel where his hosts, the business mogul Ted Turner and former
Senator Sam Nunn, praised him for closing a major nuclear test site.

Warm welcomes aside, human rights groups frequently characterize Mr.

Nazarbayev as a dictator who, during 15 years of rule, established a hammerlock
on his country’s oil riches and amassed a fortune at the expense of an
impoverished citizenry. Supporters say he has wedded a draconian political order
to clear-eyed economic policies, making his country hospitable to foreign
investment. But his White House visit came at a tender moment. About a month
earlier, the Bush administration introduced its National Strategy to
Internationalize Efforts Against Kleptocracy, an initiative aimed at preventing
public graft worldwide by, among other things, denying corrupt leaders access to
the United States financial system.

“Kleptocracy is an obstacle to democratic progress, undermines faith in

government institutions and steals prosperity from the people,” President Bush
said. “Promoting transparent, accountable governance is a critical component of
our freedom agenda.”

Mr. Nazarbayev’s
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dedication to battling corruption overseas — possibly explaining why the

administration decided against holding a state dinner in the Kazakh leader’s
honor. But behind the scenes, a legal drama has been playing out that analysts
say may more fully explain why Mr. Nazarbayev and the White House are
engaged in such an elaborate form of political kabuki.

In February, the United States attorney’s office in Manhattan is scheduled to

go to trial in the largest foreign bribery case brought against an American citizen.
It involves a labyrinthine trail of international financial transfers, suspected
money laundering and a dizzying array of domestic and overseas shell
corporations. The criminal case names Mr. Nazarbayev as an unindicted co-
conspirator. The defendant, James H. Giffen, a wealthy American merchant
banker and a consultant to the Kazakh government, is accused of channeling
more than $78 million in bribes to Mr. Nazarbayev and the head of the country’s
oil ministry. The money, doled out by American companies seeking access to
Kazakhstan’s vast oil reserves, went toward the Kazakh leadership’s personal use,
including the purchase of expensive jewelry, speedboats, snowmobiles and fur
coats, federal prosecutors say.

Beyond the large amounts of cash involved and the top-flight access such sums
often secure, the case against Mr. Giffen has opened a window onto the high-
stakes, transcontinental maneuvering that occurs when Big Oil and political
access overlap — a juncture marked by intense and expensive lobbying, overseas
deal-making and the intersection of money, business and geopolitics. It is a
shadow world of nebulous boundaries that people like Mr. Giffen establish and
define, often on the fly. The case also illustrates the government’s struggle to
reconcile its short-term energy interests with its longer-term political goal of
encouraging democracy in countries the international community has deemed
corrupt.

To be sure, many an American president has entertained a foreign leader

under a cloud of suspicion, but Mr. Nazarbayev’s role in a federal criminal
investigation makes him an unusual entry into that company. Bush
administration officials have acknowledged that the Kazakh government falls
short in its democracy-building efforts. But some foreign policy specialists see
Kazakhstan as an important ally in the administration’s campaign against
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all of which promise to make the opening of the Giffen trial more than just hit-
and-run bribery fare.

“The administration is naturally reticent about Giffen’s case,” said Raymond

W. Baker, an energy policy analyst on loan to the Brookings Institution, a liberal
research group. “It would probably be a lot easier on everyone if he had gotten
away with it.”

IN a world long accustomed to outsize public corruption, some analysts say

Mr. Nazarbayev is in a class by himself. “I can’t think of a leader in the free world
as notoriously corrupt as Nazarbayev,” said Jonathan Winer, a former deputy
assistant secretary of state during the Clinton administration. “We’ve known
about his corruption for at least 15 years because our own intelligence agencies
have told us.”

Mr. Nazarbayev is certainly a mixed bag of goods, others said, but that is the
way the world works. As Jerry Taylor, a senior fellow at the Cato Institute, a
libertarian research group, put it, “Kazakhstan’s human rights record may be
checkered, but if the United States were to disengage from those countries with
checkered human rights and other bad actors, we’d be history.”

The Clinton administration itself embraced Kazakhstan in the 1990s and

praised Mr. Nazarbayev for leading his country toward economic and democratic
reform. Administration officials, including the former Secretary of State
Madeleine K. Albright, also met with Mr. Nazarbayev in Kazakhstan.

“The Clinton administration certainly had enough information about

Nazarbayev’s corruption,” Mr. Winer said. “The information on him was open,
notorious and present.”

The work of defending the curious financial and diplomatic portfolio of Mr.
Giffen is the job of William J. Schwartz and Steven M. Cohen, of Cooley Godward
Kronish in Manhattan. The firm’s 48th-floor conference room offers some of the
standard accoutrements of the white-collar defense bar — handsome wood
paneling, a flat-screen television, a skyline view facing south toward Wall Street
and a long oval table surrounded by leather chairs and punctuated at its center by
a bouquet of sharpened white pencils.
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In the spring of 2003, federal agents arrested Mr. Giffen as he and Mr.
Schwartz prepared to board a flight from New York to Paris. Prosecutors accused
him of overseeing a tangled bribery network in the 1990s designed to buy access
and influence in Kazakhstan for oil giants like Exxon Mobil, BP Amoco (now BP)
and Phillips Petroleum (now ConocoPhillips). The payments, prosecutors said,
violated the Foreign Corrupt Practices Act, which forbids American citizens or
corporations from paying bribes to foreign officials to obtain business. None of
the oil companies have been accused of any wrongdoing.

While Mr. Giffen’s lawyers have conceded that their client shuffled money
from one secret bank account to another, they have maintained that he did not
act alone. “Mr. Giffen was working with the knowledge of our government,” Mr.
Schwartz said. “Jim’s access in Kazakhstan was a function of a bizarre historical
time.”

At the heart of Mr. Giffen’s defense is a motion filed by his lawyers in June
2004 to Judge William H. Pauley III of Federal District Court in Manhattan,
seeking access to classified government documents for his defense.

For now, each of the names, titles, and government affiliations of individuals
mentioned in the document are blacked out on virtually every page. Mr. Giffen’s
lawyers have argued that much of the evidence necessary to prove his innocence
rests with various officials and agencies that helped him conduct business in
Kazakhstan. Without such witnesses, the lawyers say, it will be difficult for them
to prove their client was performing his duties as an American. Court filings by
Mr. Giffen’s lawyers suggest that senior officials at the Central Intelligence
Agency, State Department and White House encouraged him to use his close ties
with Kazakh leaders to ferry valuable intelligence back to the United States.
Judge Pauley has written an opinion supporting the motion, but the United States
attorney’s office has appealed it.

“Before this is over, Giffen’s lawyers will file a variety of motions to get at the
classified stuff, but the history of that isn’t terribly terrific,” said Jack Blum, a
former investigator for the Senate Foreign Relations Subcommittee. “Senior
officials can very conveniently avoid governmental embarrassment by keeping
everything classified.” Mr. Blum added, “When you have a kind of blink-and-nod,
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Spokeswomen from the C.I.A. and the White House declined to comment.

Congress passed the Foreign Corrupt Practices Act in 1977 after concluding
that bribery abroad had become an important foreign policy issue that
“embarrasses friendly governments, causes a decline in foreign esteem for the
United States and casts suspicion on the activities of our enterprises, giving
credence to our foreign opponents.”

Mr. Giffen’s lawyers say he cannot be found guilty of bribing a foreign

government because his activities were part of his official duties as an adviser to
the Kazakh government and they received the blessing of senior American
officials who regularly debriefed him on his activities.

That contention has prompted a blizzard of motions, memorandums and

filings between the federal government and Mr. Giffen’s lawyers. Federal
prosecutors have sought to block Mr. Giffen’s access to documents on the
grounds that disclosing them could breach national security interests.

It was not only individuals in Kazakhstan who received some of their client’s
bounteous fees, former associates of Mr. Giffen said. In 1998, two years before
federal investigators began looking into Mr. Giffen’s activities in Kazakhstan, he
invited Mark Siegel, a Washington political consultant, to join a group of policy
experts to develop a blueprint for reforming Kazakhstan’s economy and
government. It was an ambitious task, Mr. Giffen conceded, but its participants
would be well compensated. Mr. Siegel, a former executive director of the
Democratic National Committee, agreed to a monthly retainer of $30,000 for his
firm and soon found himself on a flight to Almaty, Kazakhstan’s former capital.

As it turned out, Mr. Siegel was in high-powered company. Mr. Giffen had
harnessed prominent businessmen, policy experts, lobbyists and former
government officials to serve on the committee. Among those included in the
group were Robert Blackwill, a former ambassador during the first Bush
presidency, and Philip D. Zelikow, now a counselor to Secretary of State
Condoleezza Rice, Mr. Siegel recalled in an interview. Neither Mr. Blackwill nor
Mr. Zelikow responded to interview requests.

“We were a kind of a Great White Hope,” Mr. Siegel said. The committee was
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experts in the group. Mr. Nazarbayev “came across as a reformer open to free
markets and fair elections.”

According to his lawyers, Mr. Giffen, at Mr. Nazarbayev’s direction, paid

several million dollars in fees from Swiss accounts — many of the same accounts
named in Mr. Giffen’s indictment — to committee members for their expertise on
a range of policy issues involving Kazakhstan.

The group’s recommendations can be found in two spiral-bound documents

that came to be known simply as the Red Books. Mr. Giffen’s lawyers, as well as
Mr. Siegel, said the creation of the committee reflected Mr. Giffen’s interest in
helping Mr. Nazarbayev move his country away from an authoritarian
government to a more democratic model. While the Red Books lists an impressive
array of financiers and policy makers in its membership ranks, some of those
named in the document said they never worked with Mr. Giffen. One of those
people, John C. Whitehead, the former chairman of the investment banking giant
Goldman Sachs, acknowledged being an acquaintance of Mr. Giffen but said he
was never part of the group. “I’ve never been to Kazakhstan,” Mr. Whitehead said,
“and I’ve certainly not had that kind of formal relationship with Jim Giffen.”

Mr. Giffen’s lawyers declined to discuss any other aspects of his work with
the committee, but said that the committee’s existence proved that the scope of
his influence with policy makers far transcended energy matters.

SUPPORTED or not by the federal government, Mr. Giffen reportedly

managed to orchestrate what the government describes in its indictment as an
elaborate money laundering and tax fraud scheme carried out in six separate oil
transactions from 1995 to 1999, all of which involved defrauding the government
of Kazakhstan. Mr. Giffen is accused of hiding some of the proceeds in each of the
deals through a series of wire transfers that ultimately landed in Swiss bank
accounts. One deal Mr. Giffen’s indictment details involved Mobil Oil’s 1996
purchase of a 25 percent interest in Kazakhstan’s Tengiz oil field. Located in the
mineral-rich Caspian region, Tengiz is the sixth-largest oil field in the world,
producing 285,000 barrels a day, or about a third of the country’s daily
production.

The indictment states that after Mobil paid Mr. Giffen a $51 million fee for
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sent the money on a circuitous path through a number of other accounts,

including one registered to a British Virgin Islands company. Exxon and Mobil
merged in late 1999 to form Exxon Mobil, the world’s largest oil company. Russ
Roberts, an Exxon spokesman, said Mobil was not the source of any payments to
Mr. Giffen.

“Exxon Mobil has no knowledge of any illegal payments made to Kazakh

officials by any current or former Mobil employees,” Mr. Roberts wrote in an e-
mail response to an interview request. “We also have no knowledge of any illegal
payments received by any current or former Mobil employees.” Mr. Roberts said
neither Mr. Giffen nor his company, Mercator, had represented Mobil or Exxon
Mobil.

In 2003, a former Mobil manager pleaded guilty to evading taxes on $7

million he received from Mr. Giffen starting in 1993. Mr. Roberts noted that Mr.
Giffen’s payments to the manager had begun several years before any Mobil
acquisition in Kazakhstan and that Mobil had not been the source of the
payments. Although prosecutors described the payments to the manager as
“kickbacks” for work done on Mobil’s behalf, the manager, Mr. Roberts said,
repudiated that accusation. Mr. Roberts declined to further discuss the matter.

But according to the indictment, Mr. Giffen wired another chunk of what
court papers describe as a Mobil fee, about $20 million, into another pair of Swiss
accounts. Nurlan Balgimbaev, the former prime minister and oil minister of
Kazakhstan, controlled one of the accounts, according to the indictment. A
Liechtenstein trust, of which Mr. Nazarbayev and his family were beneficiaries,
controlled the other account, the indictment asserts.

In the process, the government asserts, Mr. Giffen paid $36,000 of Mr.
Balgimbaev’s personal bills for the upkeep of a house in Newtown, Mass., spent
$30,000 to buy fur coats for Mr. Nazarbayev’s wife and daughter and bought a
Donzi speedboat as a gift from Mr. Nazarbayev to Mr. Balgimbaev.

ConocoPhillips and BP, two of the other oil companies which the indictment
says paid Mr. Giffen, declined to comment. A lawyer and former federal
prosecutor who represents the Republic of Kazakhstan, Reid H. Weingarten,
declined to discuss the case. But few involved on either side of Mr. Giffen’s case
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have denied that his ties to Mr. Nazarbayev were substantial, longstanding and
gilded.

“Everyone agrees on one thing, which is that Nazarbayev took bribes,” said
Rinat Akhmetshin, director of the International Eurasian Institute, a Washington
research group that supports Mr. Nazarbayev’s political opponents. Mr.
Akhmetshin said the case was being closely followed in Kazakhstan and that Mr.
Nazarbayev’s political future could turn on the trial’s outcome. “The moment
Giffen goes to jail, Nazarbayev is finished as a politician,” he said.

JAMES GIFFEN’S financial ascent — from a young banker on the make into
a well-heeled political insider with a bodyguard, a chauffeur-driven Mercedes-
Benz and a Kazakh diplomatic passport — was a serendipitous blend of lucrative
financial opportunities in Eastern Europe and Central Asia and old-fashioned
elbow grease.

The son of a clothier in Stockton, Calif., Mr. Giffen, who is now 65, had ties to
the Soviet Union dating back to the early 1970s. After graduating from the
University of California, Berkeley and the School of Law at U.C.L.A., he started
his career at a minerals trading firm before joining a subsidiary of the Armco
Steel Corporation (later acquired by AK Steel). Armco was led by C. William
Verity Jr., a champion of increased trade with the Soviet Union who would later
serve as commerce secretary in the Reagan administration. Mr. Giffen became a
vice president at the Armco subsidiary, which sold drilling equipment to the
Soviet Union.

Although Mr. Giffen did not speak Russian, and the Soviets showed little
interest at the time in trading with the West, he persistently courted Russia’s
leaders. Nattily dressed and with a cigarette constantly in hand, Mr. Giffen
exuded an affecting bluster and self-assurance — many who know him call it
bravado — that eventually gained him the ears of high-ranking Soviet leaders. By
the mid-1980s, Mr. Giffen had left Armco and founded his own company,
Mercator, a boutique merchant bank headquartered in New York. He began the
company with a five-year contract from Armco and a board of directors that
included Mr. Verity and two former government officials.

Over the next decade, his lawyers have said, Mr. Giffen came to count
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government, the Communist Party and the K.G.B. In the late 1980s, Mr. Giffen
convinced Chevron, Eastman Kodak, Ford Motor and RJR Nabisco to form a
coalition aimed at penetrating the Soviet market through joint ventures — deals
that Mercator would handle.

Although that initiative collapsed with the Soviet Union in 1991, Mr. Giffen
had apparently become a conduit for information involving United States-Soviet
affairs. On one occasion, the White House asked him to describe a meeting he had
had with Mr. Gorbachev and to suggest trade issues that the first President Bush
should raise with Mr. Gorbachev, according to filings in the federal court case. A
memo, which an American official apparently prepared for the first President
Bush, recounts Mr. Giffen as stating the president had “hit paydirt” with Mr.
Gorbachev and that “whatever President Bush wants to do, Gorbachev will try to
do.”

When 15 independent states emerged from the collapse of the Soviet Union,
Mr. Nazarbayev contacted Mr. Giffen, his lawyers say. Mr. Nazarbayev, head of
Kazakhstan’s Communist Party, and Mr. Giffen, who was president of the U.S.-
U.S.S.R. Trade and Economic Council, had become close friends by that time,
said Mr. Schwartz, the lawyer.

DURING Chevron’s discussions to acquire an interest in the Tengiz oil field,

the company became one of Mr. Giffen’s clients. The company says the
relationship was short-lived. “In the early 1990s, Chevron obtained the services of
Mr. Giffen with respect to business opportunities with Russia and the individual
republics,” the company said in an e-mail response to an interview request.
“Chevron terminated that relationship in 1992.”

Mr. Nazarbayev asked Mr. Giffen to play an advisory role within the newly
sovereign nation of Kazakhstan, according to Mr. Giffen’s lawyers.

As the country’s first president, Mr. Nazarbayev was determined to attract

the involvement of multinational oil companies in developing his country’s
bountiful oil fields, according to political and economic analysts. To that end, Mr.
Nazarbayev hired Mr. Giffen to serve dual roles. As a special adviser to
Kazakhstan, Mr. Giffen oversaw the country’s efforts to attract investment from
the United States, while his company, Mercator, advised the Kazakh government
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“Giffen was able to cast himself as a bigger-than-life figure who really knew
how to work the West,” said Martha Brill Olcott, a specialist on Central Asian and
Caspian affairs with the Carnegie Endowment for International Peace.
“Nazarbayev liked that and they created a relationship of great personal trust.”

Mr. Giffen’s and Mr. Nazarbayev’s close relationship sparked resentment

among some senior Kazakh officials. “The biggest problem with Giffen was that
he was trying to create an instrument of government that would keep himself and
the president in power,” said the former prime minister of Kazakhstan, Akezhan
Kazhegeldin. “He never dreamed he’d be so close to power.”

In a telephone interview, Mr. Kazhegeldin declined to discuss Mr. Giffen’s

indictment but said that he and Mr. Giffen had clashed on several occasions.
Within Kazakhstan’s senior ranks, Mr. Kazhegeldin had gained a reputation as a
champion of free enterprise economics and someone favored among Western
leaders, Ms. Olcott said. Mr. Kazhegeldin himself asserted that his penchant for
economic reform and his calls to reform his country’s autocratic government
ultimately alienated both Mr. Giffen and Mr. Nazarbayev.

Now living in Italy and London, Mr. Kazhegeldin said he had spent millions
of dollars on lobbyists and public affairs specialists in the hope of defeating Mr.
Nazarbayev in Kazakhstan’s next election, scheduled for 2011. “There is a small
group of people getting rich — and I mean really rich — in Kazakhstan while the
rest of society remains really poor,” Mr. Kazhegeldin said. “The leadership is not
interested in pushing a market economy. They keep two sets of books, one for
themselves and another for everyone else.”

Mr. Kazhegeldin, however, is a veteran of the pell-mell economic scramble of

the post-Soviet years. He amassed his wealth as a rogue salesman in the waning
years before the Soviet Union’s dissolution, selling scrap metal on the black
market while studying international business at Moscow’s K.G.B. Academy,
according to a résumé furnished by a close associate who asked not to be
identified because of the nature of the work he does for Mr. Kazhegeldin. After
the spy school kicked him out in 1989 for his moonlighting activities, Mr.
Kazhegeldin went on to make his millions exporting chemical fertilizer, the
associate said.
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Mr. Nazarbayev began his own investigation of Mr. Kazhegeldin’s finances in

the fall of 1998 — to score political points, Mr. Kazhegeldin’s supporters said —
which snowballed into an international scandal when it led the United States
government to examine Mr. Giffen’s activities more closely.

In fall 1999, the Kazakh government accused Mr. Kazhegeldin of embezzling

several million dollars into an offshore account that he controlled. Mr.
Kazhegeldin denied any wrongdoing and said neither he nor any family members
had access to the account.

Mr. Kazhegeldin accused Mr. Nazarbayev of arranging the deposit and

leaking information about it to the news media to secure victory in a 1999
presidential election. A 1999 State Department examination of the Kazakh
investigation into the accounts reportedly linked to Mr. Kazhegeldin concluded
that the investigation, “while possibly grounded in facts, appeared motivated
politically.”

After Kazakh officials contacted Belgian and Swiss authorities to examine

Mr. Kazhegeldin’s possible role in the looting of government funds, the Swiss
contacted the Justice Department to discuss what appeared to be a pattern of
questionable transactions between Kazakhstan and American and European oil
companies.

As federal investigators reviewed the transactions in 2000, they noticed that

Mr. Giffen was party to many of them, according to his lawyers. Over the next two
years, investigators focused more closely on Mr. Giffen and subpoenaed records
from Mercator. A treaty between the United States and Switzerland permitted
investigators to obtain detailed records of Mr. Giffen’s financial activities in New
York and Switzerland, according to his lawyers. In February 2003, the United
States attorney’s office in Manhattan won a grand jury indictment against Mr.
Giffen on fraud charge. A month later, as Mr. Giffen boarded a flight from New
York to Paris with his lawyers, federal authorities arrested him.

As the Giffen trial moves forward, with the possibility that more information
about Mr. Giffen’s interactions with the Kazakh government, Washington policy
makers and multinational corporations may emerge, it promises to shine a
spotlight on the terms of engagement when the United States courts resource-rich
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“Corruption is at the heart of what causes poverty in third world countries,”

said Mr. Blum, the former Congressional investigator. “We tell ourselves that in
the short term, we can buy these guys who will serve the national interest, but in
the long run it always turns into a disaster.”

The World Bank, the Washington economic development organization that

focuses its efforts on needy countries, has brought much of the current debate
about overseas financial corruption to the fore. In the early 1990s, the bank
started measuring corruption within the governments of its member countries.
The initiative was controversial because until then, economists had largely
considered corruption to be an ethical or cultural issue. The bank began
interviewing hundreds of private citizens, as well as employees in government
and business, trying to pin down the pattern and prevalence of corruption in
areas like banking, real estate, health care, media and education.

“What we realized was that corruption is not just a moral or ethical issue but
an economic development issue,” said Daniel Kaufmann, an economist who
began the World Bank’s corruption studies. “We estimated that with good
governance, there is a threefold increase in per capita income as funds that
should be allocated toward the gross domestic product are not siphoned off.”

BY 1995, Mr. Kaufmann’s team developed a rating system that measured

factors like corruption control, absence of violence, government accountability
and regulatory quality in various countries. The ideas became a cornerstone of
the bank’s agenda. Since the mid-1990s, it has started more than 600
anticorruption programs in nearly 100 countries. Under Paul D. Wolfowitz, who
became head of the World Bank last year, it has continued its anticorruption
efforts. In what Mr. Wolfowitz described as efforts to stem corruption, he recently
threatened to cut loans and development contracts in India and Kenya. Mr.
Wolfowitz, a former deputy defense secretary in the Bush administration and an
architect of its policies in the Middle East, has received the White House’s
backing in prioritizing anticorruption campaigns. But some research groups, and
some of the bank’s own administrators, have criticized Mr. Wolfowitz for using
the World Bank to advance the White House’s foreign policy goals in countries
like Iraq, where the bank recently increased its lending support.

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poorest people — including when it goes against the grain on issues like trade,
debt relief and support for official development assistance,” the spokesman wrote
in an e-mail message.

Kazakhstan, and Mr. Nazarbayev’s stewardship of the country, have been

fodder for World Bank scrutiny. According to the bank’s 2005 Worldwide
Governance Indicators, Kazakhstan ranks with Angola, Bolivia, Kenya, Libya and
Pakistan among the world’s corruption hotspots.

Other anticorruption watchdogs, like Transparency International, also rate

Kazakhstan poorly for its governance practices. The State Department’s 2005
Kazakhstan Country Report on Human Rights Practices noted that the
Kazakhstan government’s “human rights record remained poor” and that
“corruption remained a serious problem.”

Despite such low scores and scathing critiques, the World Bank has lent
Kazakhstan more than $2 billion for 28 projects since 1992. In fiscal 2006,
commitments to Kazakhstan totaled $130 million, with overall commitments for
active projects at $648 million.

Juan José Daboub, who oversees the World Bank’s governance program,
declined to comment specifically on corruption issues in Kazakhstan or on Mr.
Nazarbayev’s leadership.

“We respect what countries pick in terms of leadership,” said Mr. Daboub.
“We are not judges, prosecutors or investigators.”

But Mr. Baker, the energy analyst at the Brookings Institution, saw things
differently: “If you’re a country with a lot of oil, you get a lot of free passes.”

Human rights groups have spent years blasting Mr. Nazarbayev for shutting
newspapers critical of his regime; passing laws that threatened to prosecute
individuals whose actions were considered threats to the country’s economic
development efforts; tolerating and participating in vast graft; and the like. But
rarely have American policy makers openly opposed Mr. Nazarbayev’s leadership
and actions, analysts said.

“He has done a pretty sophisticated job of reaching out to many sectors,” said
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Washington. “He is not like a lot of leaders, who put all of their eggs in the White
House basket.”

Even so, the White House, through successive administrations, has been a
reliable and enormously influential ally of Mr. Nazarbayev, and its continued
embrace of Kazakhstan’s leader rankles some members of Congress.

“It’s just hypocritical for President Bush to issue statements on combating

foreign corruption and then to embrace a dictator,” said Senator Carl Levin of
Michigan, the ranking Democrat on the Senate Governmental Affairs Committee.
“It sends a real negative message to countries that you’re trying to win support
from.”

Senator Levin characterized Mr. Nazarbayev as “an iron-fisted dictator who

imprisons his opponents, bans opposition parties and controls the press.”

But some say the White House should be worldly wise when it comes to
supporting certain countries in volatile but resource-rich regions. Ariel Cohen, a
senior fellow at the Heritage Foundation, a conservative research group, said the
Bush administration had effectively balanced its long-term foreign policy goals
involving energy issues with its human rights standards in Central Asia. Because
of turmoil in other Central Asian countries, Kazakhstan has emerged as a possible
military foothold for the United States there.

“When it comes to Kazakhstan, it’s all about three things; energy, democracy
and security,” Mr. Cohen said. “I would argue that relative to his competition in
Central Asia, Nazarbayev is the most successful in pursuing each of them. Sure,
there is still corruption and insufficient rule of law, but this is a country that 15
years ago had no statehood. They have started from scratch.”

If Mr. Giffen’s trial gets under way in February, it may enrich and shed light
on the debate about the United States’ engagement with Kazakhstan and other
countries that have poor anticorruption records.

FOR their part, Kazakh officials worry that Mr. Giffen’s trial may set their
nation on a backward course. Mr. Weingarten, the lawyer representing the
Kazakh government, wrote a letter in 2002 to the Justice Department on behalf
of his
Access client.
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of The letter was straightforward:
by creating “Even if it were possible for the
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the United States would deem it in its interest to indict the leader of an important
strategic ally.”

Even more important, said some of Mr. Giffen’s allies, is that the whole
messy affair of moving bribes and laundered money around the world has caused
Mr. Giffen’s work to become unfairly mischaracterized.

“If this whole thing was just about oil, it was one of the biggest snow jobs in
U.S. history,” said Mr. Siegel, the Washington lobbyist who aided Mr. Giffen’s
efforts in Kazakhstan. “I believed that we were doing God’s work.”

A version of this article appears in print on , on Page BU1 of the New York edition with the headline:
Oil, Cash and Corruption.

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