Lawfuel.com – US Legal Announcements –
PREET BHARARA, the United States Attorney for the
Southern District of New York, and MYTHILI RAMAN, the Principal
Deputy Assistant Attorney General for the Criminal Division of
the United States Department of Justice, announced that FREDERIC
A. BOURKE, JR., was sentenced today to one year and one day in
prison. BOURKE had been found guilty, following a six-week jury
trial in Manhattan federal court, of conspiracy to violate the
Foreign Corrupt Practices Act (“FCPA”) and related prohibitions,
and of making false statements to the FBI. The FCPA makes it a
crime to pay or offer to pay foreign government officials in
order to obtain or retain business. In addition to the prison
term, United States District Judge SHIRA A. SCHEINDLIN, who
imposed the sentence, fined BOURKE $1 million.
As established by the evidence at the trial:
BOURKE participated in a scheme to bribe senior
government officials in Azerbaijan with several hundred million
dollars in shares of stock, cash, and other gifts, to ensure that
those officials would privatize the State Oil Company of the
Azerbaijan Republic (“SOCAR”) in a rigged auction that only
BOURKE, fugitive Czech investor VIKTOR KOZENY (who is charged in
a related case), and members of their investment consortium could
win, to their massive profit. KOZENY is under indictment in the
Southern District of New York for his alleged role in the scheme.
Under the privatization program, citizens of Azerbaijan
could use free government-issued vouchers to bid for shares of
state-owned industries that were to be privatized. Privatization
vouchers were bearer instruments that were freely tradable, and
they typically were bought and sold using United States currency.
Foreigners could also participate in Azerbaijan’s privatization
program and own vouchers, but only if they purchased a
government-issued “option” for each voucher they held. The
vouchers and options were largely purchased with millions of
dollars of cash flown into Azerbaijan on private planes, and were
intended to be exercised by Oily Rock Ltd., a company KOZENY
allegedly controlled. BOURKE, a friend and neighbor of KOZENY’s
in Aspen, Colorado, invested approximately $8 million in Oily
Rock, on behalf of himself and family members and friends.
BOURKE also obtained directorships, salary, and stock options
with related companies that KOZENY allegedly set up and funded.
The takeover of SOCAR, however, could only take place
if the president of Azerbaijan issued a decree directing SOCAR’s
privatization. Beginning in August 1997 through Fall 1998,
BOURKE and others conspired to pay or cause to be paid millions
of dollars worth of bribes to Azeri government officials to
ensure that their investment consortium would gain, in secret
partnership with the Azeri officials, a controlling interest in
SOCAR and its substantial oil reserves. For example, in August
1997, KOZENY allegedly agreed to transfer to corrupt Azeri
officials two-thirds of the vouchers and options Oily Rock
purchased, and to give them two-thirds of all of the profits
arising from his investment consortium’s participation in SOCAR’s
privatization. In June 1998, BOURKE knew that KOZENY allegedly
arranged for Oily Rock to increase its authorized share capital
from $150 million to $450 million so that the additional $300
million worth of Oily Rock shares could be transferred to one or
more of the Azeri officials as a further bribe payment. BOURKE
also arranged for two of the corrupt officials to receive medical
treatment in New York City on different occasions in 1998, for
which Oily Rock paid. Thereafter, in interviews with the FBI in
April and May of 2002, BOURKE falsely stated that he was not
aware that KOZENY allegedly had made payments to the Azeri
Officials.
BOURKE, 63, resides in Greenwich, Connecticut.
The charges against KOZENY remain merely accusations,
and he remains presumed innocent unless and until proven guilty.
Mr. BHARARA praised the investigative work of the FBI
and thanked the Department of Justice’s Criminal Division.
The prosecution and the related case pending against
KOZENY are being handled jointly by the United States Attorney’s
Office for the Southern District of New York and the Fraud
Section of the United States Department of Justice’s Criminal
Division. Assistant United States Attorneys HARRY A. CHERNOFF
and IRIS LAN, Fraud Section Deputy Chief MARK F. MENDELSOHN, and
Fraud Section Assistant Chief ROBERTSON PARK are in charge of the
prosecution.
09-369 ###
