MANHATTAN (CN) – A key witness in the case against investors accused of bribing officials of the government of Azerbaijan revealed details of the alleged scheme under questioning Monday. Hans Bodmer, a Swiss attorney, said he carried millions of dollars in suitcases across the globe, toured the Caspian region in one of the defendants’ private jets, and participated in incriminating conversations with them at black-tie parties.
Bodmer identified himself as the defendants’ Swiss lawyer. He pleaded guilty to money laundering conspiracy on Oct. 8, 2004.
The prosecutor showed the gaunt-faced but handsome witness several exhibits of timesheets showing the hours he billed to the defendants; the invoices showed a long travel itinerary that started in Egypt.
Bodmer said he first met the defendant Connecticut investor Frederic Bourke, 42, in Cairo in May 1997. They were seated at the same table for a summit of the World Economic Forum, Bodmer says, and had been invited to the summit by another defendant, Viktor Kozeny.
According to Bodmer, Kozeny said he was involved in the privatization of the Czech Republic when it was still known as Czechoslovakia, and he wanted to discuss how to begin a similar process in Azerbaijan.
As the prosecutor projected Bodmer’s next invoice onto a large screen, the Zurich-based witness said in a halting German accent that his next meeting with the defendants was in Moscow. From there, he traveled on Kozeny’s private jet on a tour of the Caspian region.
Bodmer estimated that Kozeny’s Challenger jet could accommodate 12 people, including two pilots and a stewardess. It took to their next destination, Baku.
At the Azeri capital, Bodmer said, they stayed at the Hyatt, lunched at a “kind of Oriental” restaurant, and visited a “holy place – like a temple,” where he said natural gas came out of the ground and was burning. They visited the Caspian waterfront, from which he said one could see oil drilling “everywhere.”
In the country, Bodmer said he was shown the voucher booklets, each of which contained four coupons for bidding in stocks of Azeri companies slated to be privatized. He found out that the vouchers are freely tradable, distributed to every Azeri citizen, and are often sold for American currency.
Bodmer then corroborated the findings of the indictment: that Kozeny organized the purchasing of the vouchers through his companies, Oily Rock and Minaret.
As the prosecutor projected both companies’ Certificate of Incorporation onto the screen, Bodmer said he helped establish them in tax havens in the British Virgin Islands and set up accounts for them in Jersey.
“Not New Jersey, right?” the prosecutor asked.
No, Bodmer said, he meant the Channel Island between Great Britain and France, whose banks did not ask for names, addresses or passports. Kozeny’s name did not appear in these accounts, Bodmer said.
Kozeny could not open accounts in Azerbaijan because the banks were not set up for foreign investors, Bodmer said.
So Kozeny asked Bodmer and his law firm to hand-deliver large sums of cash from Zurich to Baku in suitcases, Bodmer said. These shipments were referred to in code words, such as the names of wines, mountains or flowers.
“The first time, I was shocked, surprised, as well as my partners,” Bodmer testified. “This was an unusual request. On the other hand, we had tried to open accounts in Azerbaijan without success.”
The first such load he carried was worth $2.5 million, Bodmer estimated; another shipment from his firm loaned by a Russian bank came to $10 million.
In September 1997, Kozeny told Bodmer about what Kozen called the “arrangement:” giving two-thirds of the investment to Azeri government officials without risk or personal commitment, Bodmer said.
Bodmer said he reviewed Swiss criminal code to check the legality of the “arrangement,” but at the time, he says, it was not illegal in Switzerland to bribe foreign government officials – just domestic ones.
(Switzerland closed that loophole in 2001, Bodmer said.)
Bodmer said he attended a black-tie event in Kozeny’s Aspen home toward the end of that year. After his plane landed, he rode to the house in a taxi, whose driver told him the house that lit up “like a Christmas tree” belonged to “some crazy foreigner.” It was called Peak House, and it was the site of a black tie affair that included a performance by Natalie Cole.
After that soiree, Bodmer said, he stayed at Bourke’s Colorado mountain home, where he skied with him, soaked in his Jacuzzi, had snacks and aperitifs.
Bodmer said that the outreach to U.S. investors yielded results toward the beginning of 1998. He said Columbia University and AIG invested $150 million.
Bodmer said he told Bourke the details of Kozeny’s arrangement the next time they retuned to Baku in March 1998.
After receiving permission from Kozeny to reveal the details, Bodmer said he took Bourke on a 15- to 20-minute walk outside the hotel, fearing that the lobby and the rooms may have been bugged. Bodmer testified that at the time he suspected that Bourke already knew about the scheme.