Some of the guests might now wish they’d never met Kozeny. At the bash and after, the 35-year-old Czech native with an Irish passport and a Harvard degree met with several new acquaintances and spoke to them about a potential fortune to be made in post-Soviet Azerbaijan. Now, nearly two years and $450 million later, Kozeny’s plan to take advantage of Azeri privatization schemes has turned sour. NEWSWEEK has learned that some investors, including Wall Street hedge-fund guru Leon Cooperman, have consulted lawyers and detectives to see if they can prove misrepresentation and perhaps recoup their presumed losses–by seizing Kozeny’s Aspen chalet, for instance.
This is a cautionary tale about the new gilded age of global economics. Kozeny dangled the prospect of quick riches from “privatization vouchers” offered by the Azerbaijan government–papers that could be bought cheap and used later to claim a piece of the country’s prime assets as it privatized state industries. The best property that Kozeny indicated was up for grabs was Socar, the vast, state-owned oil company. For the record, several of Kozeny’s investors say they haven’t given up hope. But their vouchers expire next June, and so far the Azeris haven’t offered to privatize any of the companies to which the Americans were attracted. Several American investors, including some who say they checked Kozeny out extensively before giving him their money, fear they’ve been duped.
Few of them are accustomed to losing. Out-of-luck investors include real estate magnate Richard Friedman, who owns the Martha’s Vineyard estate where the Clintons vacation, and former Senate majority leader George Mitchell. The senator even attended the gala opening of Kozeny’s Minaret Group in Baku last year. Mitchell declined to comment on the matter to NEWSWEEK, but other attendees said Mitchell looked a tad embarrassed when none of Azerbaijan’s senior leaders, on whom the Minaret venture relied, showed up.
Business people familiar with Kozeny’s history aren’t surprised. Kozeny earned his swashbuckling nickname in the Czech Republic during the early 1990s: he was fined for financial irregularities after earning $200 million while many of his backers–including the 800,000 mostly small investors–were furious over their depleted investments. (Kozeny’s controversial Czech windfall came from–you guessed it–privatization vouchers.) Kozeny gained further notoriety in 1997 after he spent $21,000 on a business dinner with two colleagues in London’s posh Mayfair district. (Kozeny complained that a $9,000 bottle of La Romanee-Conti was “too young” and gave it to the kitchen staff.) In Baku, he established a similarly high profile, cruising the streets in an armored jeep with personal bodyguards and spending freely.
Kozeny himself denies wrongdoing. He told the London Sunday Times that he stands to lose more on the Azerbaijan investment than anyone. “They are all big boys,” he said of his investors. “They knew it was going to be a risky endeavor from the start. I told them I was happy to take them along but I’m not going to be their psychiatrist as well.” It’s probably safe to say they’re not going to ask him.
