U.S. BUSINESSMEN CONVICTED FOR PAYING BRIBES TO AZERI LEADERS

/PanARMENIAN.Net/
13.07.2009 11:13 GMT+04:00

Frederic Bourke, the co-founder of handbag maker Dooney & Bourke
who was once part of the Ford family, was convicted by a U.S. jury
of conspiring to pay bribes to government leaders in Azerbaijan in
a 1998 oil deal. The federal jury in Manhattan returned its verdict
yesterday after a monthlong trial that featured testimony from former
U.S. Senator George Mitchell. Jurors found Bourke conspired with Czech
expatriate Viktor Kozeny to bribe to Azerbaijan leaders including
former President Heidar Aliyev to spur the sale of the state-owned oil
company. The verdict is a win for U.S. prosecutors as they step up
enforcement of the Foreign Corrupt Practices Act, the law that bars
payments to non-U.S. officials in return for business. Few criminal
cases under the FCPA have gone to trial. "By bringing and winning the
case, the government has expanded the FCPA’s coverage," said Richard
Cassin, the founder of Singapore-based law firm Cassin Law LLC,
who also writes the FCPA Blog. "This was probably the hardest FCPA
prosecution the government has ever brought. Bourke didn’t pay the
bribes himself. He only knew about them." Bourke, 63, was on trial
for investing with Kozeny knowing he gave Azeri leaders millions
of dollars in cash and a secret two-thirds interest in a venture
Kozeny formed to buy the state oil company, known as Socar. Defense
attorney John Cline said an appeal is "very likely." Bourke was
accused of conspiring to violate the FCPA, conspiring to violate
money-laundering laws and lying to agents of the Federal Bureau of
Investigation. He was acquitted of money laundering. U.S. District
Judge Shira Scheindlin said she will impose less than the 10-year
prison sentence that prosecutors said Bourke faced. He is free on
$10 million bail. Bourke, a Greenwich, Connecticut, entrepreneur who
launched startups in the home-building, accessory and biotechnology
industries, denied knowing of the bribes. His lawyers said Kozeny stole
more than $180 million from Bourke and other investors including the
hedge fund Omega Advisors Inc. and the insurer American International
Group. A Bourke investment vehicle put up $8 million in the deal.

Azerbaijan, a former Soviet Republic on the Caspian Sea, never sold
Socar, wiping out the investment. Kozeny, who also has been charged,
is a fugitive living in the Bahamas. He admits bribing Azeri leaders,
denies stealing from his investors and claims they knew their money
was being used as payoffs. He says the FCPA doesn’t apply to him.

Trial witnesses told of plane flights into Azerbaijan with millions of
dollars stuffed into suitcases, of shakedowns in government offices,
and of dealings with Chechen mobsters who provided protection to
Kozeny’s operation. Kozeny said his investors might control about
half of the Azeri economy if they captured Socar. Others believed
their investment might grow tenfold, witnesses said. The jury of
seven women and five men began deliberating July 8 after hearing
testimony since early June. Jury foreman David Murphy, 52, said the
panel believed Bourke learned of the bribes after investing and then
should have gotten out. By then Kozeny was known as the "Pirate of
Prague" for allegedly stealing money from investors in his native
Czech Republic. "It was Kozeny, it was Azerbaijan, it was a foreign
country," Murphy, an electrician, said in an interview after the
verdict. "We thought he knew and definitely could have known. He’s
an investor. It’s his job to know." The government’s case centered
on two witnesses, former Kozeny aide Thomas Farrell and ex-Kozeny
lawyer Hans Bodmer, both of whom testified that they told Bourke of
the payments. The two have pleaded guilty and are cooperating with
prosecutors in bids for leniency. Prosecutors also offered evidence
that Bourke "consciously avoided" learning about the bribes by not
asking questions about them. Jurors were allowed to convict if they
found Bourke knew or took steps to avoid learning of the payments.

The defense sought to poke holes in Farrell’s and Bodmer’s accounts
and said Bourke believed Azeri leaders had lawfully paid for their
stake in the company Kozeny formed to buy Socar. Juror Barbara
Robertson said jurors rejected a central defense claim that Bourke
wasn’t in Azerbaijan when Farrell and Bodmer said they told him of
the bribes. "The judge’s instruction was clear," she said. "If you
think the substance is right and the dates are wrong, it doesn’t
matter." Bourke, who was once married to a member of the Ford
family, didn’t testify. Among his witnesses was his friend Mitchell,
the ex-senator, whom Bourke brought into the deal as a $200,000
investor. Mitchell told jurors he was unaware of the bribes even
after meeting with Aliyev. Mitchell, 75, is a special U.S. Middle
East envoy. He was a Democratic senator from Maine in the 1980s.

Besides the president, intended bribe recipients included current
President Ilham Aliyev and two officials overseeing the sale of state
property in 1998, prosecutors said. Along with Farrell and Bodmer, a
former Omega executive has pleaded guilty. Benjamin Brafman, Kozeny’s
lawyer, said the verdict "does not affect Mr. Kozeny, who has always
maintained that the FCPA does not apply to him because he is not a
citizen" of the U.S. The U.S. says it’s appealing a Bahamian court’s
refusal to extradite him. "The jury had decided that Mr. Bourke lied
and bribed," Kozeny said in an e-mailed statement. He said Bourke
deserved a "minimal" sentence. "In our Judeo-Christian culture,
we base our life on forgiveness," Kozeny said, Bloomberg reported.