Beyond Valdez, Part 1: Exxon-Mobil's Kazakh Spill of Corruption

The spike in oil prices in the United States since the advent of the Iraq War has many worried over the gasoline prices that may reach new heights during the summer. Exxon-Mobil however has continously posted extreme profits during the much watched oil flux dominanting the last couple of years. According to BBC, the much publicized story of Exxon tripling its profits $9.9 billion despite the occurence of natural disasters, shaky relationships with Venezuela and the war in Iraq.

Exxon hasn't had the best reputation with much of the public resulting from the massive Exxon-Valdez oil spill. But with such shaky future in oil and not the best of reputations how does Exxon-Mobil generate such a huge profit? The beginning of Exxon's reputation doesn't just end with the Valdez oil spill... Moreover other situations have arisen as well, particulary the Caspian Pipeline Consortium:

The Caspian Pipeline Consortium (CPC) is a $2.6 billion project consisting of a 935-mile crude oil pipeline that runs from the Tengiz oil field in Kazakhstan to the Russian Black Sea port of Novorossiysk. Construction on the CPC pipeline began in 1999. It is a key East-West pipeline that will carry oil from the Caspian Sea region to international markets.

The CPC project is the largest, single United States investment in Russia. U.S. companies, including ChevronTexaco and ExxonMobil, have contributed nearly one-half of the $2.6 billion investment

As much as the oil pipeline sounds like a great idea, but it has been plagued by many fits of corruption. Exxon-Mobil according to Forbes, was desperate to get into the oil fields of Kazakhstan that they resorted to bribery in order to entice officials of the Kazakhstan government through a "fixer" named Jim Giffen:

The complaint, filed by the United States attorney in Manhattan, also charges Mr. Giffen with transferring $20.5 million in 1997 to a Swiss account whose beneficiaries included a "senior Kazakh official" and "his heirs."

and the heir:

The complaint does not identify the senior official, but legal documents from Swiss authorities, who first uncovered the bank transfers, allege that the account's beneficiary was Kazakhstan's president, Nursultan A. Nazarbayev.

Who is Giffen?:

First, they had to win approval from Jim Giffen, a New York investment banker who became an official in Kazakhstan's government and held sway over its energy deals.

According to the same report, Kazakhstan would be one of the top producers of oil in the world by 2015 which heightened the interests of oil corporations to invest in Kazakhstan. Further on:

``You couldn't go to a Kazakh minister, particularly if you were an American company, without going through Giffen,'' says Ed Chow, who managed external affairs at Chevron Overseas Petroleum Ltd., a unit of San Ramon, California-based Chevron Corp.

And of course, there is more:

The alleged bribes, according to the indictment unsealed Wednesday, were in connection with six separate oil transactions involving Mobil Oil, Amoco, Texaco and Phillips Petroleum and the sale of oil and gas rights in Kazakhstan. And those aren't the worst of it. He also has been charged with violating the Foreign Corrupt Practices Act, committing mail and wire fraud, money laundering and conspiracy. Giffen, who had the title of "counselor to the president" of Kazakhstan, "made unlawful payments of $22 million from Mobil to secret Swiss bank accounts," according to the U.S. Attorney's office for the Southern District of New York.

Amongst the corrupted, Giffen had allegedly supplied a vast array of luxury items to the Kazakh family:

Part of the fees paid by U.S. oil companies were allegedly used by Giffen to purchase an array of luxury items, including millions of dollars in jewelry; fur coats for President Nazarbaev’s wife, Sara, and a daughter, costing nearly $30,000; $45,000 for tuition at an exclusive Swiss high school; and tuition at George Washington University in the U.S. capital for Nazarbaev’s daughter Aliya. Giffen also allegedly bought an $80,000 Donzi speedboat for Balgimbaev to present to Nazarbaev and two American snowmobiles for Nazarbaev and his wife.

What's the point? The point is that although much of the current administration is continously being harrassed by the public on the war in Iraq and the price of oil, how is the government supposed to do anything when it comes down to the oil companies pretty much altering and setting forth foreign policy? Kazakhstan itself isn't exactly the purest of nations and has its own record of human rights violations:

Kazakhstan’s vast energy wealth has made it an important geostrategic partner for many countries and institutions and raised the political stakes inside the country significantly. As a consequence, in recent years the government undermined freedoms to shield itself from public scrutiny and political rivals, and to protect its substantial control over the hydrocarbon sector.

Sounds familiar? In any case linking corruption to American companies puts the entire United States at risk as it reflects the practices of the entire country especially with the price of oil and the Iraq War. By allowing such practices, or turning a blind eye to fuel our thirst for oil... we fuel regimes that ultimately supress their own people.

Since when do oil corps. run our foreign policy?