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AZERBAIJAN - Feb. 15 - US Claimants Join Socar-Fraud Lawsuit.

Wall Street investment firm Pharos Finance and Columbia University in New York have joined a London civil suit against Czech promoter Viktor Kozeni accused of fraud in a $450m deal to acquire control of state-owned oil company Socar. The new complaints bring the total sought from Kozeni and two of his companies to $180m in London High Court. They add new names to the list of prominent American individuals and institutions involved in an ill-fated effort to buy control over Socar. Among the investors in the touted privatisation deal were George Mitchell, the former Senate majority leader, and Frederick Bourke, chairman of Dooney & Bourke, the handbag company. Neither has joined the suit. An investment fund set up on behalf of Columbia University filed papers in London High Court contending that Kozeni, 37, defrauded the university of $15m by inflating the price of "options" required to bid on properties that were to be sold to the private sector by the Baku government. Similar claims were filed by Pharos Finance, which said it had losses of $24m. Both Columbia and Pharos were among investors brought into the deal through Omega Advisers Inc., a New York investment management firm. A trial is scheduled to begin next autumn.

Kozeni's lawyers have said he did nothing wrong and that he lost millions of dollars of his own money because Baku has not sold Socar. The first suit stemming from the deal was filed in December 1999 in London by Marlwood Commercial Inc., a subsidiary of the diversified insurance company American International Group, which sought $15m. Two months later, Omega Advisers filed a suit in London, saying it was defrauded of $126m. Columbia University and Pharos Finance joined the Omega suit, bringing total claims in that action to $165m. Columbia University was brought to the investment by Clayton Lewis, a financial adviser at Omega. Lewis met with members of the university's board of trustees, and Columbia invested $15m. Lewis later left Omega and became the managing principal of Pharos Capital and its subsidiary, Pharos Finance. A similar suit was filed by investors against Kozeni in federal court in Denver, Colorado. The judge there has halted action until a judgement is reached in London, but he said last June that investors had a "substantial likelihood" of proving a fraud case against Kozeni. In his defence, Kozeni contends he paid money from investors to Baku officials to ensure the group would get an inside track when Socar was sold. Baku officials disputed his claim, and lawyers connected with the investors said evidence showed that Kozeni spent millions of dollars on houses in London; Aspen, Colorado; and a private island in the Bahamas.
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Publication:APS Diplomat Recorder
Article Type:Brief Article
Geographic Code:1USA
Date:Feb 17, 2001
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