AIG Executive and Two Others Charged in Azerbaijani Bribery Scheme

Strategic Insights -

Three men, including David Pinkerton, an executive at American International Group Inc., were charged with offering hundreds of millions of dollars in bribes to top officials in Azerbaijan to secure favorable treatment in oil deals. According to the indictment, Viktor Kozeny, Frederic Bourke Jr., and Pinkerton attempted to buy off senior Azerbaijan officials to gain control of a state oil company. The scheme involved promising hundreds of millions of dollars in bribes and paying tens of millions of dollars in the scheme that ran from August 1997 until about 1999.

Key Takeaways:

  • Viktor Kozeny, an Irish citizen of Czech background, was the president and chairman of Oily Rock Group Ltd. and Minaret Group Ltd. when he and the two other men attempted to buy off senior Azerbaijan officials.
  • Frederic Bourke Jr., 59, of Greenwich, Conn., was an investor with Kozeny and an American citizen.
  • David Pinkerton, 44, of Bernardsville, was an executive at AIG and managing director of AIG Global Investment Corp. He was on administrative leave at AIG until the charges are resolved.
  • The indictment said hundreds of millions of dollars in bribes were promised and tens of millions of dollars were paid in the scheme that ran from August 1997 until about 1999.
  • Azerbaijan began privatizing some of its state-owned enterprises in the 1990s, and Kozeny attempted to buy a state oil company using planeloads of cash from Switzerland.
  • AIG said the investment in question was brought to AIG Global Investment Group by a New York investment fund that put together a group investing $180 million.
  • AIG invested about $15 million in the transaction in 1998, and no assets of AIG clients were invested in the transaction.
  • The complaint said Kozeny lived in the Bahamas and Bourke and Pinkerton surrendered to the FBI in New York.

Statistics:

  • Hundreds of millions of dollars in bribes were promised in the scheme.
  • Tens of millions of dollars were paid in the scheme.
  • $180 million was invested by a New York investment fund.
  • $15 million was invested by AIG in 1998.
  • 20 years in prison is the maximum sentence for the charge of money laundering.
  • The scheme ran from August 1997 until about 1999.

Sources:

  • U.S. Attorney Michael J. Garcia.
  • The Associated Press.
  • American International Group Inc.
  • The indictment by federal prosecutors.
  • "Kozeny Arrested in Bahamas" (unspecified news source, no date).