Mercator Corporation, FCPA Violation, New York 2023

Grimy Times has learned that the Mercator Corporation, a merchant bank with offices in New York, has pleaded guilty to one count of making an unlawful payment to a senior government official of the Republic of Kazakhstan, in violation of the Foreign Corrupt Practices Act (FCPA).

The plea was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Preet Bharara for the Southern District of New York. James H. Giffen, 69, of Mamaroneck, N.Y., and Mercator’s chairman, also pleaded guilty to one count of failing to disclose control of a Swiss bank account on his income tax return.

According to court documents, Mercator advised Kazakhstan in connection with various transactions related to the sale of portions of Kazakhstan’s oil and gas wealth. Three senior officials in the government of Kazakhstan had the power to substantially influence whether Mercator obtained and retained lucrative business, as well as the authority to pay Mercator substantial success fees if certain oil transactions closed, as well as to decide whether or not those transactions would close.

As part of the plea agreement, Mercator was ordered to pay a fine of up to $4 million, the greater of $2 million or twice the gross gain or loss resulting from the offense. Giffen faces a maximum sentence of one year in prison and a fine of up to $25,000.

The case was prosecuted by Assistant U.S. Attorneys Anirudh Bansal and Lee Renzin of the U.S. Attorney’s Office for the Southern District of New York and Trial Attorney James M. Koukios of the Criminal Division’s Fraud Section.

U.S. District Judge William H. Pauley III accepted the pleas. The Criminal Division’s Office of International Affairs provided assistance in this case. The matter was investigated by the FBI.

The United States brought a separate, related civil forfeiture action in U.S. District Court in Manhattan against approximately $84 million on deposit in Switzerland. The funds were traceable to unlawful payments to senior Kazakh officials in connection with oil and gas transactions arranged by Mercator for Kazakhstan. According to a 2007 agreement between the United States, Switzerland and Kazakhstan, the funds are being used by a non-governmental organization in Kazakhstan, independent of the Kazakh Government, to benefit underprivileged Kazakh children.

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