US investor convicted in scheme targeting Azerbaijan state oil firm

A federal jury in Manhattan convicted a US investor on July 10 of trying to bribe senior government officials in Azerbaijan in a scheme to privatize the country’s national oil company in a rigged auction, the US Department of Justice said.

A federal jury in Manhattan convicted a US investor on July 10 of trying to bribe senior government officials in Azerbaijan in a scheme to privatize the country’s national oil company in a rigged auction, the US Department of Justice said.

Frederic A. Bourke Jr. of Greenwich, Conn., conspired with Czech investor Viktor Kozeny and members of their consortium to make a massive profit on the auction using options and vouchers to bid for shares of the State Oil Company of the Azerbaijan Republic (SOCAR), DOJ said.

It said that evidence presenting during the six-week trial showed that the group flew millions of dollars in cash into the country for Oily Rock Ltd., a company which Kozeny allegedly control, to buy the options and vouchers.

Bourke, a neighbor of Kozeny’s in Aspen, Colo., invested about $8 million in Oily Rock for family members and friends as well as on his own behalf, DOJ said. Evidence also showed that he obtained directorships, salary, and stock options with other companies Kozeny allegedly set up and funded, it added.

It said that beginning in August 1997 through the fall of 1998, Bourke and others conspired to pay or cause to be paid millions of dollars in bribes to Azeri government officials. In return, the government officials were to ensure that the Bourke-Cozeny investment consortium would gain, in secret partnership with the Azeri officials, a controlling interest in SOCAR and its substantial oil reserves.

Bourke also arranged for two of the corrupt officials to travel to New York City on different occasions in 1998 to receive medical treatment, for which Oily Rock paid, according to DOJ. Thereafter, in interviews with the Federal Bureau of Investigation in April and May of 2002, Bourke falsely stated that he was not aware that Kozeny had made the alleged payments to the Azeri officials, it said. DOJ indicted the two men in October 2005.

The jury convicted Bourke of conspiracy to violate the US Foreign Corrupt Practices Act and the Travel Act, and of lying to the FBI. It acquitted him of a money laundering charge. At sentencing, which is scheduled for Oct. 13, Bourke faces up to five years in prison and a $250,000 fine for each of the two charges on which he was convicted.

Contact Nick Snow atnicks@pennwell.com

More in Reserves