POLITICS
04/11/2016 12:38 pm ET Updated Apr 13, 2016

Top Washington Lawyer Cleared Unaoil In Anti-Corruption Report

A few years later, Kevin Abikoff was providing legal advice to the shady company.

A prominent Washington lawyer who wrote a report finding no significant concerns of corrupt practices at Unaoil, the company now at the center of a massive bribery scandal, later provided legal services to Unaoil itself, according to internal emails obtained by The Huffington Post and Fairfax Media.

Kevin Abikoff, a partner in the corporate law firm Hughes Hubbard & Reed who lectures around the world on anti-corruption enforcement, declared Unaoil to be generally compliant with bribery laws in a 2007 report for KBR, which had hired him to investigate Unaoil's past work with the U.S. engineering and construction giant in Azerbaijan and Kazakhstan. Abikoff and Cyrus Ahsani, Unaoil’s CEO, stayed in touch in the years after Abikoff gave Unaoil the all-clear. They made efforts to meet in person to catch up as they traveled through Paris and Dubai, shared news about the birth of their children, and eventually worked together. In 2011, Abikoff sent an engagement letter to Unaoil's CEO, outlining an agreement in which his law firm would provide anti-corruption legal advice to Unaoil.

It's not uncommon for lawyers at major law firms to represent companies they once investigated. There’s no evidence that Abikoff watered down his 51-page report for KBR to favor a current or possible future client, or that his subsequent work with Unaoil posed a conflict of interest. But the episode highlights how a savvy company like KBR can go through a formal process of attempting to detect corruption and still miss actual instances of wrongdoing.

Instead, Abikoff’s findings helped KBR and Unaoil continue their lucrative partnership. The due diligence report also gave Unaoil, a Monaco-based middleman, credibility with other companies looking to win energy contracts with oil-rich governments.

Internal emails suggest that Abikoff's 2007 investigation into Unaoil was, at best, incomplete. Internal Unaoil’s internal emails obtained by HuffPost and Fairfax Media showed Unaoil paying government officials millions of dollars to win business around the world. Some of these emails have Unaoil and KBR employees corresponding in coded language as early as 2005 to discuss Unaoil bribing public officials in Kazakhstan.

Part of the problem may have been the Hughes Hubbard report’s reliance on Unaoil to disclose information about its own business practices. Due diligence and political risk experts, whom HuffPost briefed on the report, suggested that a lack of independent and local on-the-ground sources might have hindered the law firm’s ability to verify the information Unaoil provided.

Interviewing employees from the company being investigated is valuable, but has its limits, said Richard Bistrong, CEO of the Front-Line Anti-Bribery consulting group. Bistrong previously spent 14 months in federal prison for violating the Foreign Corrupt Practices Act, a U.S. anti-bribery law, and also covertly cooperated with international law enforcement.

“Certainly, for people who are engaged in wrongdoing, including myself, when I was asked questions at the time of my conduct, during an internal investigation, I was not entirely forthright, mostly due to my own fear of criminal liability. This shows the value and the peril of interviewing people in due diligence who might actually be engaged or know of wrongdoing,” Bistrong said. "Very often, a robust due diligence process will include retaining a third party due diligence in-country provider that will go ahead and do an analysis in-country," he added.

“In high-risk markets such as Azerbaijan and Kazakhstan, it is often prudent to hire a specialist business intelligence/investigative firm to complement and supplement interviews which a law firm may have undertaken,” echoed Steven Fox, CEO and founder of Veracity Worldwide, a New York-based group that conducts due diligence investigations. An investigator with a deep source network and in-country experience can get “candid assessments of a potential agent’s reputation and record for probity,” Fox added.

Hard to gauge on the phone but this guy seems reasonable and is no fool. Unaoil executive Peter Willimont, in a private email referring to Kevin Abikoff

KBR had used Unaoil's services for years. But by 2006, the U.S. Department of Justice was investigating KBR for an unrelated bribery scheme in Nigeria that would eventually cost the company hundreds of millions of dollars in fines.

In the face of the DOJ investigation, the energy services giant revamped its formal oversight of business partners. KBR, which at the time owed Unaoil approximately $2 million, informed the company that it would be bringing in an outside law firm -- Hughes Hubbard -- to conduct a due diligence inquiry into Unaoil’s past work with KBR.

Unaoil's inner circle -- which included company founder Ata Ahsani and his sons Cyrus, Saman and Sassan -- were initially anxious about that arrangement. KBR was already behind on payments, and Unaoil top brass worried in emails that the company had hired Abikoff to lay the groundwork for legal action against Unaoil.

But Unaoil’s higher-ups soon warmed to the anti-corruption lawyer, praising him after initial phone calls as “a reasonable guy” whose due diligence could end up helping them get their money.

“Hard to gauge on the phone but this guy seems reasonable and is no fool – I believe this was said of Himmler at one stage of his life?” Unaoil marketing director Peter Willimont wrote to the company's top executives in January 2007, making an apparently joking reference to Nazi official Heinrich Himmler.

Over the next several months, Abikoff and his team interviewed dozens of officials from Unaoil, KBR and the U.S. embassies in Azerbaijan and Kazakhstan to evaluate Unaoil’s work for KBR in those two countries. He visited Unaoil's offices in Monaco, although it is not clear from the July 2007 report how many of the other interviews were conducted in person. In addition, the team reviewed Unaoil’s tax and registration certifications, credit reports, a bank reference letter, some personnel records, and selected contract paperwork, communications, and payment records between Unaoil and KBR.

Abikoff found that some of Unaoil’s payment practices could use improvement: "While the current arrangements may not have been entered into in a fashion that creates inherent FCPA concerns because of their execution, the arrangements also cannot be supported by logic or good FCPA practices,” he wrote, referring to the Foreign Corrupt Practices Act.

Noting Unaoil's willingness to restructure these practices, Abikoff concluded, “no significant FCPA concerns appear to be raised as a result of the earlier arrangement.”

We should frame this. Ata Ahsani, referring to an email highlighting the value of the KBR report

Abikoff declined to comment to HuffPost on his work with either KBR or Unaoil, saying he was restricted from doing so by attorney-client privilege and confidentiality obligations.

The due diligence report produced for KBR was marked “Privileged and Confidential,” but the Ahsanis obtained a copy from a contact at Petrofac, a British oil and gas company that partnered with KBR and had received the report in an email.

“Please make very very sure that [a KBR executive] does not find out that I have forwarded this to you,” the Petrofac employee wrote to Cyrus Ahsani in August 2007. “Try to get your own copy directly from him to cover your tracks.”

The report was good news for the Ahsanis. A respected U.S. lawyer with an expertise in international corruption law had essentially cleared Unaoil as a responsible business partner. KBR and Unaoil moved forward on efforts to obtain a multimillion-dollar contract in Kazakhstan. Perhaps as important, other companies looking to do business with Unaoil later referenced Abikoff’s findings as an indication of Unaoil’s reliability.

In October 2007, when the German turbomachinery company MAN Turbo asked for a reference, Unaoil referred the potential client to KBR, which offered a glowing recommendation. The MAN Turbo executive wrote back to KBR that he viewed Unaoil’s ability to pass KBR’s due diligence process as “clear evidence of their high level of good standing.”

When the conversation was forwarded to the Ahsanis, Ata Ahsani wrote to his sons Cyrus and Saman, "We should frame this."

Soon after, Cyrus Ahsani sent his contact at KBR a gift box from the upscale London store Fortnum & Mason and an invitation to visit him and his wife in the South of France.

Cyrus Ahsani also reached out to Abikoff shortly after the completion of the KBR report and suggested they might work together in the future. “It would be a pleasure to meet up with you anytime you are in Europe and to discuss potential synergies now that we have successfully completed the KBR due diligence,” Ahsani wrote in a November 2007 email.

The two men kept in touch over the next several years. Abikoff sent Ahsani enforcement updates related to the Foreign Corrupt Practices Act. In 2008, he offered to introduce the Unaoil executive to his contacts at Alstom, a French rail company. Although Ahsani expressed enthusiasm about the meeting, the email correspondence does not indicate whether it ever materialized. (In 2014, Alstom would agree to pay $772 million after pleading guilty to bribery charges -- the second-highest settlement in U.S. anti-corruption enforcement history.)

The first time Hughes Hubbard formally worked with Unaoil was in 2011. The engagement letter between the two does not indicate why Unaoil hired the law firm, but the internal emails provide some possible clues. 

Media outlets reported on June 22, 2011, that an Italian oil company, Eni, was coming under investigation for alleged bribery related to contracts in Iraq and Kuwait. The leaked emails show that Unaoil had paid off Eni employees for inside information about contracts in Iraq. Two days after those media reports, Unaoil executives received an email from one of their business partners, alerting them that they would likely be questioned in the probe. Emails show that Abikoff and Ahsani spoke by phone that weekend. On the following Monday, Abikoff emailed Ahsani the engagement letter to formalize a working relationship between Unaoil and his law firm. The emails show Abikoff's colleagues at Hughes Hubbard discussing plans with Ahsani to fly to Europe later that week.

Abikoff and Hughes Hubbard were hired to advise Unaoil on anti-corruption best practices. On at least one occasion, the lawyer also aimed to warn off those who, falsely, according to Unaoil, accused the company of wrongdoing. In 2014, he composed a stern three-page draft letter to the legal team at Rolls-Royce, urging that employees of the British manufacturer of engines and power systems -- which has also worked with Unaoil -- “cease and desist” from making what he termed “inflammatory and slanderous comments.” It is not clear if that letter was ever sent. 

Rolls-Royce is now cooperating with investigators from the U.K.'s Serious Fraud Office, the company told HuffPost and Fairfax Media. The company declined to say whether that cooperation extends to its work with Unaoil. Earlier this month, Monaco police raided Unaoil's offices and the homes of its directors. The Serious Fraud Office, which is now looking at Unaoil alongside the Australian, U.S. and Iraqi governments, had suggested the raid.  

CORRECTION: The Rolls-Royce company now cooperating with fraud investigators produces engines and power systems, not automobiles.

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