MANHATTAN (CN) – Omega hedge fund investor Eric Vincent was one of the last witnesses called by the defense in the trial against Frederic Bourke, the Connecticut businessman accused of being part of a conspiracy to bribe Azeri officials to privatize the petroleum-rich former Soviet nation’s oil company.
Bourke denies knowing anything about the scheme of his alleged co-conspirator, Viktor Kozeny, who admitted to the bribes and is now living to the Bahamas, where his alleged business practices are not considered a crime.
Vincent was called for the defense because he claims that Swiss lawyer Hans Bodmer, who testified to telling Bourke about the scheme, never mentioned anything to him about bribing Azeri officials.
During the federal prosecutor’s cross examination, Vincent also testified to the investments AIG and Columbia University made through Omega into the companies pushing Azeri privatization, his reaction to learning about the indictment of his former associates, and his writing a contrite letter to the U.S. Attorney’s Office to avoid prosecution.
Vincent said that he was a lawyer before he started working at the hedge fund in September 1998, when he was asked to replace his predecessor, Clayton Lewis.
In 2003, Lewis was indicted for and later admitted to his role in the bribery conspiracy.
Vincent says his legal background gave him special insight into certain aspects of his job, but his fledgling status in the world of investment made him too trusting in unfamiliar terrain.
He said, for example, that his expertise originally made him concerned when he found out that Omega’s Swiss lawyer Hans Bodmer also was representing Oily Rock and Minaret, the companies in which Omega was investing.
But Vincent said that he felt there was no conflict-of-interest involved because Bodmer only served a “ministerial” function with Omega, setting up its “entities” for investment.
When prosecutor Chernoff asked if those entities were “offshore shelf companies,” Vincent admitted that was true, but he insisted that Omega was chiefly interested in Bodmer because of his familiarity with Azerbaijan.
(Earlier in the trial, Bodmer took the stand as a witness for the federal prosecutor. Having previously pleaded guilty to participating in the bribery scheme, the Swiss attorney recalled shuttling millions of dollars in suitcases on airplanes from Zurich to the Azeri capital of Baku, where he gained firsthand knowledge of the Caspain-bordering country.)
Vincent testified that, when investing though Omega, AIG specifically requested a warranty shielding the company against violations to the Foreign Corrupt Practices Act, which bars bribing foreign officials.
He said, however, that he did not know whether Columbia University, another investor through Omega, wanted similar protection because he did not personally represent that client.
Vincent said that Lewis eventually introduced him by phone to Tom Farrell, another co-conspirator who admitted to the bribes and is awaiting sentencing. When asked about how he understood Farrell’s job, Vincent replied that Farrell was in charge of executing options and vouchers in Socar, Azerbaijan’s oil company.
Prosecutor Harry Chernoff pointed out that this work was “not like on Wall Street,” where someone can buy shares in a company by “pushing a button.” He asked whether Farrell’s job included more intensive work of getting up at night, going into a car, driving to a market and buying vouchers for cash.
The witness corrected Chernoff by saying that Farrell did not always do the transactions himself; sometimes he delegated the labor to subordinates.
When Farrell stepped down from his position, he became “less helpful because he wasn’t around and didn’t want to be involved,” Vincent said.
Still, the two kept emailing each other into January 1999, when the investment started to unravel.
Worried about the security of his Socar options, Vincent mentioned in an email that Farrell “told me once that if they wanted to get our vouchers for any reason, they would be no safer in the Azeri equivalent of Fort Knox” than in a parking lot.
Farrell reassured him in an email that began “im in baku, dude… from what i see i dont think there is any safety problem with your vouchers.” The transmission also mentioned that “it sounds like vk [Viktor Kozeny] is everybody’s favorite punching bag these days.”
Sent on Jan. 19, 1999, Farrell wrote this shortly after Bourke accused Kozeny of fraudulently selling vouchers to American investors at inflated prices, and before then-Azeri President Aliyev wiped out the investment by deciding not to sell Socar.
In 2003, Clayton Lewis, the man Vincent replaced, was indicted under the Foreign Corrupt Practices Act.
In the wake of the proceeding, Omega paid a $500,000 civil penalty, and Vincent volunteered to an FBI investigation.
Chernoff ended his cross-examination by having the witness methodically review and react to a letter that Vincent wrote to the U.S. District Attorney’s office to avoid prosecution.
The prosecutor has a slow and deliberate style of examination that belies his youthful appearance. Throughout the trial, he would stop midway through a line of questioning to review the court reporter’s transcription if he felt he may have missed a witness making a slip-of-the-tongue. He also would press witnesses who denied remembering certain events by asking a long line of follow up questions to help them “refresh” their memories about the dates of certain meetings, a tactic which often frustrated both the witnesses and Judge Schiendlin.
In his most heated exchanges, he never raised his voice, but just stroked his five-o’-clock shadow, arched his eyebrows inward, and at the height of his frustration, subtly turned to face the back of the room to regain his composure.
This style of his prosecution was on full display as he had Vincent review and read aloud every admission of guilt that he made in his letter the DA’s office. more