Post-Soviet States: People, Power, and Assets Oral History Archive
Interviewee: James C. Langdon, Jr. Interviewer: Rebecca Adeline Johnston Date: July 2, 2018 Location: Austin, TX
Abstract
James Calhoun Langdon, Jr. is Partner Emeritus at Akin Gump Strauss Hauer & Feld, LLP. A leading legal specialist in the energy sector, he has represented governments and oil and gas companies in the United States, Latin America, Europe, and numerous countries of the former Soviet Union. His government service has included positions at the U.S. Department of the Treasury, Federal Energy Administration, and the President’s Foreign Intelligence Advisory Board, which he chaired in 2005. He is a co-creator and founding board member of the Robert S. Strauss Center for International Security and Law and an alum of the University of Texas-Austin as well as its School of Law. This interview provides an overview of Mr. Langdon’s experience working in Azerbaijan, Russia, and Kazakhstan throughout the 1990s.
This transcript is lightly edited for clarity and partially redacted. Unedited remarks are available in the embedded audio recording and can be located with the aid of timestamps bracketed in the transcript text. Portions marked as redacted are not available in the audio. Redacted portions may be made available at a later time. Interviewer questions and remarks are presented in bold.
Interview Transcript
Just to get started, why don’t you talk a little bit about how you became interested in the post-Soviet space in general?
I can’t say that I ever had a vision that I would be doing this stuff. My expertise and my experience has all been just in the energy sphere. That meant wherever there was something that was an oil and gas matter, that was of interest to me. I knew nothing about Russia, really, I mean hardly anything. I think at the time we had two guys in our Houston office that had done some international stuff, probably a decent amount, Todd Gremillion and Jack Langlois. They had been in our firm for a very long time and they knew the [BP] guys, kind of.
[BP] had an interest in one or more of the fields in Azerbaijan, the Gunashli [oil]field. I think there was a consortium of companies that were British Gas, [BP]; I can’t remember who else. Agip, maybe; an Italian company. Two or three more. [BP's international guy was Rondo Fehlberg,] he was a friend of Todd’s and Jack’s, from Houston. He’s long since gone from [BP] and became the athletic director at Brigham Young [University] or some place. He’s had an interesting career. He’s a really good guy.
This [BP] fellow had pretty much been living in Baku trying to sort this thing out, and rapidly came to the conclusion that, “Look, we’ll never get a deal done that will meet international standards without SOCAR [State Oil Company of the Azerbaijan Republic]”—the state-owned oil company of Azerbaijan—“having legal representation. We need to get somebody to represent them, and the other international companies will support that.” [BP] called me and said, “What do you think, would you guys, Jack, Todd, would the firm do this?” And I said, “I don’t know why not, let’s try it.” Then the three of us began making these trips to Baku.
Then our ethics people went through a process where they confirmed that it is possible for a lawyer to represent another party and then have the opposing party pay your legal expenses. But you have to maintain a wall; you have to do this; you have to do that. And you can’t submit bills to them that would detail exactly what you’re doing. There was a lot of stuff we had to do. We worked that out and our ethics council signed off on it. So we represented SOCAR with [BP] and, I think, the rest of that consortium paying our legal bills.
We spent a lot of time there, and you didn’t have to be there a long time before that culture began to impact you, and before you began to understand that this was a very interesting historical place. It was the Silk Road. That’s what this was. And it was a very complicated place. The [BP] guy once said, “At [BP], we try to hire people that can do two things at one time, maybe three things at one time. There’s no one in this society that can’t do fifteen things at one time.” These people are smart, bright, and just a cab driver on the street has got to be thinking in three dimensions just to get through his day. And everybody has to live like that. Fifty percent of the heritage of Azerbaijan is out of Iran. It was a fascinating place to watch the way people struggled with their life.
Azerbaijan was run by, for lack of a better term, about six big families, or clans. There was a flower clan. [0:05:00] Azerbaijan grew flowers that they sent all through Europe and every other place, and those people had a monopoly on all that. All the distribution to Europe, to Russia, to everywhere. And then there was an oil clan. And then there were other clans. And they were responsible for paying all the employees in their area. They, in turn, made a lot of money doing all that.
It was pretty interesting to figure out who actually is going to sign these contracts for oil and gas things—some non-elected person that runs a clan that actually controls it? There were tons of legal challenges. And we met with the president from time to time President [Heydar Alirza oglu] Aliyev, and his son, now.1 His son in those days spent a lot of his time gambling in Turkey, and he was a playboy, twenty years old, living the life or whatever. Anyway, when we were in town, they took care of us. And somebody from the president’s entourage would pick us up at the airport, have a guarded escort back into town, some place where we’d stay. That’s how I got interested in all this.
James C. Langdon, Jr., interview by Rebecca Adeline Johnston, July 2, 2018, transcript, Post-Soviet States Oral History 2 Collection, Robert S. Strauss Center for International Security and Law, Austin, TX, available online at: https://www.strausscenter.org/interview/james-langdon You may remember that in those days that the conflict in the Nagorno-Karabakh was going full blast. To even get to Baku you flew to Istanbul, and then you got on some Turkish airway. It’s just a little jump over to Baku, but you couldn’t go over Nagorno-Karabakh. You would have to fly down the length of the Black Sea, six or seven hundred miles, then cross over to the coast of the Caspian [Sea], and then go back up to Baku. What would have been a short flight was three times longer. And then you would land and there were no lights at the airport and everybody on the plane looked like a terrorist. You’re the only person that didn’t. Although, I soon learned to look like a terrorist too. You get off the plane, there were no lights at the airport, there was no BA [British Airways] counter, there was no known Western airline there. And you walk through a darkened terminal and if you didn’t have somebody to pick you up, cab people in the street would pick you up. You just get in somebody’s car.
Those were very, very interesting days. We stayed at some old KGB housing, in an apartment. It was a big three-story apartment that looked out over the Caspian. It was beautiful in one sense, but it was completely dilapidated in another. And it was questionable whether the elevator was ever going to work or not. If you had an earthquake, that whole thing had a good chance of tumbling down. One of the bankers we began working with at some point was there, they were with Credit Suisse [Group AG] I think. I said, “You know, if you just imagine what it was, this place is as beautiful as Paris, it’s like Paris. Paris left to rot for seventy years.” And that was a pretty good description of what it was, at that time. We’re talking the early ‘90s. Today it’s a modern American city. Anyway, that’s how we got started. Every aspect of what you did had the romance and all that stuff.
We were doing all of that about the time that [Robert S.] Strauss was appointed to be ambassador to the Soviet Union. We were already in Baku when that happened, in the last years of the Bush 41 administration. And before he could get there—he’d already had his confirmation hearings and all that, but had not yet left, and then the wall fell.2 Then he had to go back and do it all again because he was now going to be the ambassador to Russia. And then when Strauss left, the first thing he said to us is, “I know you guys are going to try to be selling me by the pound, but do not come over here and try to practice law, okay? I don’t want to have to deal with some congressional investigation because you guys are trying to make money when I’m ambassador.”
We absolutely paid no attention [0:10:00] to that, needless to say. We expanded what we were doing in Baku, ultimately, through the process I just mentioned, and others. When we had the opportunity to represent Lukoil, that was a big deal. So we started that representation. He might have actually been back before we really started representing Lukoil. Bob was so universally highly regarded and respected that we had a huge opportunity by the time he had left that job and gone back. And it was then pretty much during the Clinton administration that we did a lot of work. That’s how I got interested in it.
What would you say were your impressions in Azerbaijan, in Russia, for the potential of the governments and nascent businesses to build a strong Western-style economy, or even democracy, at this point when you were first there in the early ‘90s and that transition period?
James C. Langdon, Jr., interview by Rebecca Adeline Johnston, July 2, 2018, transcript, Post-Soviet States Oral History 3 Collection, Robert S. Strauss Center for International Security and Law, Austin, TX, available online at: https://www.strausscenter.org/interview/james-langdon The pecking order of those with the wherewithal to be something someday would probably have—of Azerbaijan, Kazakhstan, and Russia, Azerbaijan would be at the bottom of the list. I’m not even putting on the scale Turkmenistan and all those kinds of places. But Azerbaijan had immense challenges because of the culture and the way it was run. It was right out of another century. And Kazakhstan had the educated people, smart, bright, and a forward-thinking president at the time—we thought. [Nursultan] Nazarbayev, who really wanted to do this, and wanted to upgrade the healthcare system, wanted to upgrade their social security network, wanted to do all these kinds of things. And while [James Henry] Giffen3 did oil, he was also doing a lot of that other stuff. None of that other stuff really interested me that much because it just wasn’t my thing. I didn’t want to worry about their healthcare system.
It seemed to me that Azerbaijan was going to have a long way to go. We could do some oil work, but as a flourishing democracy, I didn’t see how we got there. Kazakhstan, maybe, if this dedication continued over a number of decades. And Russia for sure. Russia for sure. And the people that we interacted with there were brilliant, smart, bright. The oil culture enabled you to communicate with people, because they knew that you knew that they knew. The Russian engineers and the Russian petroleum people, they knew the stuff they were ordered to do was stupid. But the central planners made these decisions and the oil guys are like—“we had to do what they told us to do. We knew that was never going to work. But they didn’t ask us; they just told us what to do.” That was fascinating in its own right.
But even if you looked at—Pennzoil, for example, used all the old Russian geophysical information. They said it's really good stuff. And the oil guys could interpret it the right way. Just the decisions they made were just stupid decisions. But the technical geophysical work in many respects was better than what we could do. Hundreds of those kinds of stories that led you to understand that these people were not stupid. And then when you saw what the prime minister, [Yegor Timurovich] Gaidar, [was doing]. And he loved Bob; Bob loved him. So we saw him a lot. Among Gaidar’s disciples were Petr [Olegovich] Aven and those guys. And the loans for shares program,4 and all of that. Which today, by Western analysis, is called a criminal enterprise. This is how everybody stole the assets. [0:15:00]
People can make up their own mind about that. But the Gaidar imperative was to get all of these state-controlled assets out of the hands of the government and into the hands of people who could develop it and do that. The loans for shares program is what allowed Lukoil to become the Lukoil association, then Lukoil entity, and then a public company. Yes, a lot of people made a lot of money out of it. The Lukoil executives made tons out of it. But a lot of American executives made tons of money out of their companies, too. I’m not one to judge that. And then the employees all got shares. [Vagit Yusufovich] Alekperov bought them, probably using Lukoil money.
I told you last time, we got into the conundrum of, “What you would do if you were him?” —and had all kinds of storage facilities in Europe and other places. What are you going to with that money? What are you going to give it to? The Soviet Union doesn’t exist anymore; what do you do with it? And I’m sure he put it into Lukoil. And I’m also sure his finances and Lukoil finances for some period of time were roughly the same. He probably used that money to buy those
James C. Langdon, Jr., interview by Rebecca Adeline Johnston, July 2, 2018, transcript, Post-Soviet States Oral History 4 Collection, Robert S. Strauss Center for International Security and Law, Austin, TX, available online at: https://www.strausscenter.org/interview/james-langdon shares, which he owned or his management team owned. I don’t know that for a fact, but that’s what my guess would be.
Later on when they had to do public offerings and stuff like that, they started looking at rules and doing what an American company would do. The U.S. government was kind of interesting during that timeframe. They were—in the intelligence agencies, and others—not in the business, in those days, of judging someone’s decisions five years before, or four years before, or six years before. They were interested in what the trajectory looked like. And if the trajectory looked pretty good, then they were supportive. If the trajectory was going in the wrong direction or was flat, they were a lot more suspect. And there were a lot of trajectories moving in the right direction from a lot of different people during those days.
To dig a little bit into Lukoil—you mentioned last time, too, there were lawsuits against them during the time you were representing them. It sounded like maybe some of that was associated with the loans for shares situation. But in general, what was it like to represent Lukoil and navigate this unprecedented legal environment?
For a lawyer, it was challenging. I looked at it this way, and I mentioned this the last time we were together. If you’re representing Exxon [Mobile Corporation] over there or some other place—of a hundred percent of the things that needed to be done, Exxon could figure out how to do ninety-eight, ninety-seven percent of it. You were only around for the three percent. Representing Lukoil, they didn't have any idea, they didn’t know anybody, they didn’t know how to do anything. So the hundred percent, you could help them on all of those things. It was a rich environment in which to add value, a really rich environment in which to add value.
Fundamentally, that’s what it was like. I remember a board meeting Strauss and I went to one time, and Vagit was kind of overwhelmed with all this stuff. But a smart, bright guy. He says, “Bob, we keep getting sued by these people all over the world for all this stuff. I don’t even know what to do with all these lawsuits.” And Strauss said to him, “We’ll take care of them for you. Don’t worry about it. You know, Vagit, the more lawsuits that you have, the more successful you are. Nobody wants to sue somebody that’s not successful. Exxon’s probably got a thousand lawsuits at any one time. You’re just now aggregating lawsuits, it just tells you how much you’ve grown, how much success.” That’s typical Strauss—how to turn chickenshit into something that was better than that.
Outside of the Lukoil board meeting was a gathering of the Moscow press, because Vagit was supposed to have a press conference following the board meeting and a lot of their questions were going to be about some of these lawsuits. [0:20:00] Vagit said, “Bob, when we go outside, would you tell the press what you just told me?” And Strauss said sure. And we went out, there’s a big press conference, and Vagit says, “I’ve got our board here and our lawyers. This is Mr. Strauss and Mr. Langdon, they’re here from the United States. They represent us in all these matters, and I’ll let the lawyers speak.” They asked, and Bob said the same thing and that was sort of the end of that.
It was a very interesting environment. Alekperov asked me if I could get him together with ConocoPhillips, which I did, and that deal was put together. That took years to put that thing
James C. Langdon, Jr., interview by Rebecca Adeline Johnston, July 2, 2018, transcript, Post-Soviet States Oral History 5 Collection, Robert S. Strauss Center for International Security and Law, Austin, TX, available online at: https://www.strausscenter.org/interview/james-langdon together, a couple years. It mostly worked pretty well. Five years later, it wasn’t giving ConocoPhillips what they really needed. They weren’t getting a lot of new oil and gas reserves out of it. Lukoil couldn’t really deliver those. Anyway, they split, but it was friendly, and Conoco made a lot of money off the Lukoil stock. They bought a lot, four or five billion dollars’ worth of stock, as I recall. I can’t remember how much, but it was a lot.
Anyway, Lukoil gained. And if you went to see Lukoil today, my God, it looks like any other U.S. oil company—the buildings, and the way they go about their business, and their productivity reports, and their financial statements, and the people that run up and down the halls all have coats and ties on, and were all educated someplace fancy, and all have jobs in departments that have leaders. It just looks different from the old days.
You guys were involved with them at the very beginning, right? What did it look like in the beginning and how did you witness that transformation?
At the very, very beginning, yes. Lukoil was compiled out of three old Soviet production associations. Kogalym in Siberia, and that was the K, and then there was an L [Langepas], and then there was a U [Urai]. And Vagit was the head engineer for all of these places, and probably the supervisor for these places. He—not unlike the clans in Azerbaijan—was sort of singularly responsible for keeping all these people employed, and making sure that they had jobs and all that. At the end of the day, after the wall fell, he had no real choice but to keep his entities together. He put them all together and called it LUKoil, L-U-K oil. And it was called “LUKoil concern.” It wasn’t a corporation; it wasn’t an entity. And that’s when we came in the door.
They had one really nasty lawsuit. Somebody was accused of embezzling a bunch of money or something. Our Houston litigators represented them in that matter, and it was a big concern to Vagit, and one way or another we won that lawsuit. It was filed in the United States. After that, we represented them in everything they did. This went on for a decade and we never lost a lawsuit. And I’m not sure we’ve lost one yet. That’s going on nearly thirty years representing them. To watch them evolve—that was a little tiny brick building where they were, two stories, and his management team. The same management team today was there then, almost; they've made a few changes. It’s a team that stayed together for all these years.
Now it’s sort of being replaced, but Vagit still runs it. And he’s just a Russian oil guy, really a solid person. Solid in the sense that—he’s got tons of girlfriends, and a wife, and all that stuff, but other than that, he’s [0:25:00] a normal guy and works all the time. That’s what he does.
We talked last time a bit about how people like Alekperov, and also we mentioned Aven and Mikhail [Maratovich] Fridman, have these reputations as oligarchs who stole everything, basically, from the Russian people, right? But your perspective being that they really don’t get credit for what they tried to do, which was build up the Russian economy from nothing. For Alekperov, what do you think there is that you saw in him that has been missing from the narrative about how these companies evolved?
Right. Somebody that says he stole everything—what I would like to hear from that person who thinks that is, what should he have done? Here’s what Lukoil is today, and what would have
James C. Langdon, Jr., interview by Rebecca Adeline Johnston, July 2, 2018, transcript, Post-Soviet States Oral History 6 Collection, Robert S. Strauss Center for International Security and Law, Austin, TX, available online at: https://www.strausscenter.org/interview/james-langdon been the proper trajectory for a guy in his position the day the wall fell? What should he have done, and what should have happened? If I knew what the “should have been” was, by people that say he stole all this stuff, then I could comment more on that. But I don’t see another path that was viable in any direction, other than just to let it fall into the hands of I don’t know who, and become nothing. He picked it up, put it together, made it Western-looking and Western- oriented, and it’s a big international oil company today.
And did he get rich? Yes, he got real rich. I sort of reject the notion that he stole it. First of all, he didn’t steal it. He may have stolen—he may have taken possession of things that he didn’t exactly own, meaning a storage tank full of oil sitting in Rotterdam, and used that to buy the workers’ shares under loans for shares. But I don’t even know that. But somehow he did [buy the shares], and maybe other bankers helped him do that, I don’t know. But he raised the finances to buy a vast majority of the shares that the workers were distributed through the Aven-created process.5 It wasn’t theft by any standards of an American definition of that. I saw that happen.
In all other facets of—I mean, all the aluminum business, talk about something that was dirty from day one. The brothers that live in London, the Rueben brothers, oh my God.6 I got a little glimpse of that at some point. I said, man, I don’t want anything to do with this stuff. As these things began to happen—others kind of encroached on their territory, too. Aluminum, oil, and the bankers, and people were killed, assassinated. That era, that time frame when, as people began to see the value of these assets not fully secured in the hands of an Alekperov, and not fully secured in somebody else’s hands, that’s when all these targeted assassinations took place, 1996 to 2001, 2000. It was a violent, violent place. I don’t know “who shot John” during that period of time, but people were taking pretty defensive postures. People were being aggressive. A lot of bad stuff happened. And who did that and how it was done, I don’t really know. And I don’t think anybody does.
John? Or—you mean in general.
Yes. Just who shot John, yeah. But that was one of the roughest time frames over there, and it was kind of scary to be there. I didn’t exactly rejoice in the idea of getting in a car with Alekperov and driving across town, although I did. But Lukoil didn’t have much of that. Around the rest of Russia there was a lot of that. There was really a lot of that in lower-echelon businesses. If you were a perfume salesman, you had a good chance that if somebody decided they wanted your business, they were going to take it. A lot of those guys ended up with a lamp cord wrapped around their neck in their hotel room someplace. It was really a nasty time. [0:30:00]
There are concerns about safety and then also about navigating the unclear ethical environment that you could find yourself in. What was that like?
Yes, right. Strauss came back and headed something called a U.S.-Russian Business Council.7 There were infinite U.S.-Russian Business Council meetings in Washington, in Moscow, where hordes of business key people from both sides got together and talked about what was going to advance the ball on the U.S.-Russian relationship, how you need to have a tax regime that did this or did that. I don’t want to call it nation-building stuff, but that stuff was an ongoing
James C. Langdon, Jr., interview by Rebecca Adeline Johnston, July 2, 2018, transcript, Post-Soviet States Oral History 7 Collection, Robert S. Strauss Center for International Security and Law, Austin, TX, available online at: https://www.strausscenter.org/interview/james-langdon dialogue, U.S.-Russia dialogue, that spent a lot of time doing that sort of thing. I think the Clinton administration probably wasn’t as supportive of all this stuff as had been the Bush 41 group.
Aven will tell you that the thing that happened—and of course, he doesn’t have exactly a level- playing-field perspective, because his programs drew a lot of criticism during the Clinton years and weren’t supported as much as they were during the Bush 41 years. He likes to say that Strauss and Baker [James A. Baker, III] were father figures. Petr said, “I was twenty-eight, twenty-nine, thirty years old, and these guys knew everything. They knew the world; they knew stuff. If you had a problem with the IMF [International Monetary Fund] or World Bank, they could help. And they did help. And then they were gone. And then the people we had in the Clinton administration didn’t care about us. It was like having a stepfather when you’re living in a house and you’re seven years old, and then your parents leave, and then you've got to figure out how to take care of yourself. It was a very tough time for us.”
And he said, “We needed a good ten years more to get what we had started in place, and solidified, and all that. We didn’t have those extra seven or eight years.” Toby Gati8 is a good friend of mine who worked in the Clinton administration. She has a different view of that. I don’t know what the right view is, probably some combination of that. But Petr is pretty strong on that point of view. And he went to interview and wrote a compiled book of what a bunch of his peers had to say about that time. But he wanted to go interview Jimmy Baker and asked if I would call him, and I did. And Baker was happy to see him, and they visited about these years as well. It’s complicated.
Did you have any interactions with the Clinton administration that informed your understanding of why they took such a hands-off view/approach?
Not really. And honestly, I didn’t find them to be that hands-off. Every time we had Alekperov in the United States—we wouldn’t go into the NSC [National Security Council], exactly, although often the NSC was in our meetings. We’d be at the State Department. They really wanted to know what was going on in Russia and how Vagit saw things. And he did this routinely when he was in the U.S. and gave them a good perspective of what was going on in Russia and Central Asia that he saw, and what was going on in the energy sector. We would spend an hour and a half or two hours over there every time we did that. And he wasn’t asking for anything. He was just there to inform them. And he would be there for other business that we were doing, but he always wanted to keep a foot in the door of the U.S. government, and he did that. And there was never a time that anybody in the Clinton administration wasn’t willing to see him if we called up.
The picture of him is very different than [0:35:00] not only just the stereotype of a lot of oligarchs, but also from people like you’ve described, who were involved with aluminum and other industries. What were the red flags for you when you met some of those people that you wanted to make sure to not become involved?
That’s an interesting question, really interesting question. You can just smell it. I don’t know what else to tell you. You could see the decency in a person, if it was there, in a short period of
James C. Langdon, Jr., interview by Rebecca Adeline Johnston, July 2, 2018, transcript, Post-Soviet States Oral History 8 Collection, Robert S. Strauss Center for International Security and Law, Austin, TX, available online at: https://www.strausscenter.org/interview/james-langdon time. And you could see the people that didn’t have that. And I met a lot of people in the latter category, lots of them. Other than having a survival instinct that was highly tuned in—you could tell the good guys from the bad guys, pretty much. Fridman had a really bad rap for a long time. And he might have been a pretty tough guy when he was younger, I don’t know. But he was one of the ones that the trajectory analogy was made with by some pretty high-level people on the intelligence side. And if you go back and read some of the early stuff that was said about Fridman, it wasn't very good. It was pretty nasty stuff. I don’t know if it’s true or not, but he lives a very different life today. I don’t know how much of that was true or not true. I don’t know.
Petr never lived that kind of a life because he was not in a rough-and-tumble part of the business. He was in the government when it was really rough, and then came out and joined Mikhail [Fridman] in his business at Alfa [Group Consortium]. But what I do know, that I read and saw a lot about—and we represented Alfa on a handful of things, but we didn’t represent him in the BP [p.l.c.] matter—Alfa and BP, TNK [Tyumen Oil Company]—I mean, Fridman and Aven were pilloried by the U.S. press for stealing the BP assets. And in truth, BP made more money out of TNK than any investment they ever made. And today, Sir John Browne9 serves on Mikhail’s board in his European company. He can’t feel as though his company was stolen by Mikhail or he wouldn’t be on his board, right?
There’s another chapter to all of this, that I represented Carlos Bulgheroni of Bridas [Corporation] for thirty years. He just died. He’s a South American guy. He drilled the most successful wells that have been drilled on the planet, in Turkmenistan. I represented him in those matters. He had an apartment in Moscow, lived in Buenos Aires. I traveled everywhere in the world with Carlos during all these years. This is the long and short of it: Carlos had an arrangement with BP. He had all of his assets in a company called Bridas in Argentina, and he merged his company with a company that he had known for a very, very long time that had been their partner in Argentina, which is Amoco. The concept was that Carlos was going to become Amoco’s international guy, because Amoco was basically a domestic U.S. company, mostly gas, except for South America. They put those two entities together and called it Pan American Energy. And then it wasn’t a year later BP bought Amoco.
Carlos learned to loathe BP, because BP wanted [0:40:00] Carlos to stay in Argentina and just run the Argentina operations, which was not why he merged with Amoco. He merged with Amoco to have an international platform, to go run around and do stuff like he did in Turkmenistan. While BP wouldn’t join with him on any of his international ventures, he then drilled this thing in Turkmenistan and found these huge reserves.
I listened to more than a decade of BP trying to put Carlos in this box of Argentina—which, by the way, was exactly where Mikhail Fridman was, with BP-TNK. BP wanted TNK to stay in Russia, and Mikhail wanted TNK to go around the world. Just like Carlos wanted PAE to go around the world. Just like Alekperov wanted Lukoil to go around the world. No one wanted to be just put in their little hometown box. And there is no question that BP did that, because BP wanted the world for itself. They didn’t want to create companies that competed with them internationally. The truth of that is irrefutable. It is irrefutable.
James C. Langdon, Jr., interview by Rebecca Adeline Johnston, July 2, 2018, transcript, Post-Soviet States Oral History 9 Collection, Robert S. Strauss Center for International Security and Law, Austin, TX, available online at: https://www.strausscenter.org/interview/james-langdon Probably because of my bias from my years with Carlos, I have incredible sympathy for Mikhail’s argument. Never was that written in the U.S. press. Never. And the basis upon which they went into that deal was an understanding that they would be able to do things together around the world. Anyway. But, it made a lot of money. A whole lot of money. And Mikhail took ruthless advantage of the bankruptcy laws, but he was highly motivated to do so. And BP got a lot of money out of it, too. Is this rough and tough and all that? But he’s not a crook, in that regard. But a lot of the financial press was hugely supportive of BP and very tough on Mikhail Fridman.
Were there other stories that you remember at the time being frustrated that you knew the actual reality of the situation, but there was just nothing about it in the press?
Yes. I mentioned the one in Azerbaijan with his head of security. And I’ve never heard what happened to that guy, but I have no doubt that President Aliyev at the time was worried about this guy’s—head of intelligence, his head of whatever he was—security. World black belt champion or something, and his team. And I’m pretty sure that Aliyev had some conversation with the Russians about what he needed to do. That little group of people was terminated. But the world would never know about that. Who the parties were, I have no idea.
That’s on Russia, pretty much. We didn’t talk too much yet about Kazakhstan. How did you get involved with the Kazakh government?
I met [Nurlan] Balgimbayev in Houston or in Washington or something like that. We had a mutual friend. Maybe I went to Boston to meet him, because he had sent me a message that he wanted to get together because he needed lawyers. I went to see him in Boston. This was in the beginning of this Deuss [Johannes “John” Christiaan Martinus Augustinus Maria) Deuss] thing.10 We met at a hotel. I just honestly don’t remember how he got to me. I don’t think I got to him. I think he found me and suggested a meeting. I said, fine, I’d come to Boston and see him, and I did. And then he invited me to come to Kazakhstan, [0:45:00] to Almaty, and I went, and I think that’s the meeting I described where I was at this KGB place and all that.
I was there three or four or five days. And while I was there, I got a call at my hotel from Giffen. He said, “You’re here, and if you have an interest in doing more legal work here in Kazakhstan, we should get together. And by the way, I know your partner, Bob Strauss.” Bob kind of knew him, but just kind of. I met him for lunch or dinner, I can’t remember, and he described what he was doing. That he was counselor to the president, and that he controlled a lot of legal work. Shearman & Sterling [LLP] in New York represented him primarily, a firm where he used to be an associate. They had been doing a lot of oil deals, but there was always room for another law firm, and if you guys wanted to do this, he could be of help. And by the way, Balgimbayev was somebody he knew well and he would help with that.
I said, “Sure, that sounds good. We’d do that.” That’s how I got launched into the Giffen orbit. And then some project came along, and we did that, and submitted our bills to Giffen. And he said that he would look at Western bills on behalf of the Republic [of Kazakhstan] and if they were alright, then they would pay the bills or the Republic would pay them, I don’t know. That was a worry at some point, about who was actually paying the bills. We were representing the
James C. Langdon, Jr., interview by Rebecca Adeline Johnston, July 2, 2018, transcript, Post-Soviet States Oral History 10 Collection, Robert S. Strauss Center for International Security and Law, Austin, TX, available online at: https://www.strausscenter.org/interview/james-langdon Republic, not him. But he said he had to sign off on RK [Republic of Kazakhstan] statements. We’d submit the bills to him, they’d get signed off on. I’m not sure we ever did an audit. But at one point when he was in trouble, we spent a lot of time worrying about—oh my God, whose money was that? Anyway, the statute of limitations is now passed, so I don’t worry about it. That’s how we started in the RK. And it was over the same thing, on that Deuss thing, on what they were going to do about that.
What was it like to try and work out the legal particularities of that contract?
First of all, today, if you look at this, a lawyer needs to have an engagement letter that has all the terms and conditions set. In those days, that wasn’t so much what was done. But it was pretty clear that if he hired us for a matter, we defined what that matter was, and who our client was, and what our billing rates would be. And then we submitted our bills to Giffen on behalf of the Republic of Kazakhstan, where he served in this official capacity for the Republic as counselor to the president and had all his IDs and all of his stuff that showed that that’s what he was. It wasn’t that hard. Shearman & Sterling, a big white-shoe New York law firm, was working side by side with us doing the same sort of thing or working on different matters. And stuff we were asked to do was pretty rudimentary stuff, and that’s what we did.
It’s interesting how you’re working with a lot of other Western law firms, even though they’re representing post-Soviet governments and post-Soviet companies. Not all of the lawyers and law firms made it in this environment, right? What was it like dealing with those lawyers?
Right. We set ourselves up. We had a small office, I guess by this time, in Moscow, or shortly thereafter. And then we had all of our oil and gas lawyers; we had tons of oil and gas lawyers in Houston. If somebody wanted a draft model contract, I didn’t have email in those days, but you’d get back on the phone with the people in Houston and say, “Look, I need a model contract that provides [0:50:00] this, provides that, provides this. Can you guys draft that and then fax it to me at such-and-such hotel in Almaty?” And then I’d have that.
We could produce the work pretty quickly. We didn’t have to have an office there. We outsourced all this stuff to lawyers sitting in Houston, or transaction lawyers in New York, or political stuff in Washington. We could turn stuff around and get a decent work product in someone’s hands pretty quickly. And then we would sit there and talk about it, and negotiate, and go back with the changes, and then have them work on it during the day and send it back the next night. It was a pretty slick system. At a lot of the other law firms, it’d be one lawyer trying to do this all by himself. We never did that.
What do you think the difference is that you guys were able to figure that out and some people just couldn’t? What did you witness in your interactions with other lawyers and watching how they were trying to operate at the same time that you were?
That’s an interesting question. I have a theory about that that I’m not sure I want to say out loud, but it’s not any big deal. A lot of the big Texas firms, even the big New York firms, those lawyers have very, very impressive pedigrees—and I’ll speak now just to the ones that are in
James C. Langdon, Jr., interview by Rebecca Adeline Johnston, July 2, 2018, transcript, Post-Soviet States Oral History 11 Collection, Robert S. Strauss Center for International Security and Law, Austin, TX, available online at: https://www.strausscenter.org/interview/james-langdon Texas—and they came from an era in the ‘50s and ‘60s and ‘70s where it was like one riot, one ranger. If you’re a good lawyer, there isn’t anything you couldn’t take on and do. I can do it, you know what I mean? When we started the office of Akin Gump [Strauss Hauer & Feld LLP] in Washington in 1971 or ’72, we were just a bunch of kids. And all these government agencies had become prolific in terms of regulations. The EPA [U.S. Environmental Protection Agency], all these agencies. The decades prior to that, there’d never been any of that stuff. Not near the volume.
There was a famous Vinson & Elkins [LLP] tax lawyer by the name of Marvin Collie and he was Lyndon Johnson’s tax lawyer. Marvin allegedly very much enjoyed being called to Washington to go see what Lyndon’s legal problems were so he could assist Lyndon on whatever they would be. And he really never wanted a Washington office for Vinson & Elkins, because that would take away from what he’s doing. He didn’t need it.
So a lot of the Texas law firms were awfully slow in establishing a Washington office. Even for these vast amounts of regulations and all this stuff [began], and then the Federal Energy Administration came along and had even more. Akin Gump, we didn’t know enough not to do that. And Strauss wanted us to have that, because he didn’t want to do the work. That was what he did. So we put this office together—and I’m getting to the answer to your question in a second—but the biggest contributor we had to our success was the fact that we had an open playing field to do this by ourselves.
I would go to Houston and meet with oil companies and this happened dozens of times: “Jim, our general counsel, our lawyers are Vinson & Elkins,” or “our lawyers are Baker Botts [LLP],” or “our lawyers are Fulbright & Jaworski [LLP]. So I just want you to know that, but they don’t have anybody that does this stuff up there and we need some help. Could you help us? And would you mind that our lawyers are Vinson & Elkins?” “No, I don’t mind. Most of our clients have various firms to represent.” We got a tremendous amount of this business doing that sort of thing. And then I had other lawyers do it. There was never this one riot, one ranger attitude that we had that was endemic to our culture. Strauss was the opposite of that. Strauss could produce business, but he didn’t want to do it. “You guys do it. [0:55:00] I’ll help you with this.”
Russia [and] Central Asia was the absolute perfect storm for this. I didn’t go over there with the idea that I was going to do this work. I had [Michael] Waller and [Robert] Langer and thirty guys I didn’t even know sitting in Houston cranking out oil and gas agreements. We could do this stuff in sort of real time. That’s one answer. I don’t know how accurate it might be with the facts, but I think it certainly contributed to our ability to be able to span these distances and times pretty effectively.
As the decade went on in the ‘90s and you’re putting together these pretty successful deals, pretty unprecedented in a lot of ways, were there deals that you were trying to put through that, as you went along, fell apart, or it became clear were not viable?
Yes. I can’t remember a lot of them, but yes. Every deal we worked on wasn’t successful. They fell apart for a lot of reasons. I don’t remember much that we did for Lukoil that they hadn’t thought through enough so that when they came to you, you were being asked to assist in putting
James C. Langdon, Jr., interview by Rebecca Adeline Johnston, July 2, 2018, transcript, Post-Soviet States Oral History 12 Collection, Robert S. Strauss Center for International Security and Law, Austin, TX, available online at: https://www.strausscenter.org/interview/james-langdon it together. And a lot of it was litigation, too. We did a decent amount. We got a lawyer in our Houston office by the name of Mike [Michael] Swan, who’s now retired, did a lot of the Lukoil litigation. At some point in this time, we had established a good-sized Moscow office and were attracting local business from other people. A lot of that business that we were formerly exporting pretty much stayed in Moscow and got done by lawyers that we had there, smart young lawyers, Russian lawyers that we hired. But there was always a part of our business that our clients—Russian—did not want to have a Moscow-based lawyer doing this legal work. Didn’t want that information in the Moscow community, and asked that we get lawyers in the U.S. to do the work. Lukoil was never like that. Lukoil just wanted to do a service and did not care, so we sourced a lot of the Lukoil work right there in Moscow.
We talked a while back about how there’s this moral imperative on top of the security concerns for helping the post-Soviet space transform into a place where there’s a strong economy and some system of viable governance, and how you saw that as a project very important for the United States at large to undertake. Were you involved in any efforts, or what was your experience, trying to spread that message while you were there to get other parties involved, and to not just have it be this space that is open to exploitation by whoever? And also, especially maybe in the early years with the Bush government, when it’s just starting out.
What I saw fundamentally—and it started with our law firm—these people we hired, they had gone to law school in Moscow and they were the equivalent of any lawyers we hired anywhere. They were as good as the ones we got from Harvard, or Yale, or any other place. They were smart, bright people. And you rarely encountered a Russian business person, or a young Russian that wasn't—everything about them was right. They were good, strong people. They wanted to be successful. They were married or they had families, and they just wanted to work and have a life. I used to ask Strauss, “Bob, these people are something, they’re un-fricking-believable. And how does this country continue to get in its own way?” This was about the time that Strauss was famously quoted as, “If I had a hundred grand I would invest all of it in Moscow, I’d invest it all in Russia. And if I had ten million dollars, I’d still just invest a hundred grand.”11 It was like it was a great opportunity, was what he was trying to say. [1:00:00]
But one day he said, “The big hope for Russia is that the guys you’re talking about, these twenty- eight-, twenty-nine-, thirty-year-olds. In ten years they’re going to be forty and forty-five, and in twenty years they’re going to be fifty-five. That’s the great hope. This generation, they’re smart, they’re bright, they’ve got all this stuff.” And what that failed to account for was how their political system could overwhelm all these good intentions. The people are fundamentally bright, smart, attractive people. Their political system just sucks, and it seemingly gets worse. But we Americans, we put them all in the same box.
I sort of just assumed, at some point, that the goodness of these people would permeate their society in time. And that there’s no question that the kinds of things that people are working on will come to fruition and Russia will be a country of great wealth. They've got all the natural resources in the world, and they've got all the human capital in the world. And at this time, every investment bank in the world had big offices there. Law firms from all over the country were there. It wasn’t an exploitation thing at all. You saw this economy for what it could become and
James C. Langdon, Jr., interview by Rebecca Adeline Johnston, July 2, 2018, transcript, Post-Soviet States Oral History 13 Collection, Robert S. Strauss Center for International Security and Law, Austin, TX, available online at: https://www.strausscenter.org/interview/james-langdon what, in large part, it was becoming. I think the [Mikhail Borisovich] Khordorkovsky trial was sort of the beginning of the end of that era. And look, Lukoil is always important to Putin because they employed so many people. They employed all of Siberia, right? And half the oil— Lukoil almost had a hundred thousand employees, or more than that. Politically, that was important. But Vagit couldn’t be out of the country for very long because if Putin needed him, he needed to run right over there or risk being replaced.
I don’t know where it all went wrong. And yes, in the early days of the Bush Administration, they clearly wanted to establish a good, strong relationship with Russia and send up a kind of signal—I carried some of those signals—that they wanted to normalize their relationship in a good and positive way. That went fairly well, but nothing concrete happened.
Could you tell at the time that there was something concrete that needed to happen that didn’t?
If that had been my job, I might have been able to do a better job at that. But I was occupied every day with getting stuff for clients done, what we were trying to achieve. I didn’t really have my eye on the big ball of the nature of our relationship, and what was happening and wasn't going [unclear]. There was a time we represented—I may have mentioned this—VimpelCom. VimpelCom—it's had its problems. Fridman was on that board; Fridman was a part owner of VimpelCom. Augie Fabela started the company, this guy out of Chicago. It’s a big telecommunications company. And at some point, the Russian head of the tax [authority] goes after VimpelCom for eight hundred million dollars in tax payments that VimpelCom owed and hadn’t paid.
There’s no way in the world VimpelCom could pay that kind of money and no way in the world it could have amassed that kind of a tax liability. [REDACTED] When you see those games being played, how do you ever get these things out of the market? Because they torch a society, they just torch it. [REDACTED] And you see those symptoms in a lot of Russian people. They adapt to what they have to adapt to to [1:05:00] be able to get through—they don’t have an inner drive to demonstrate outrage or disapproval. They just quietly conform. And that’s sort of a disheartening thing to see, because you know them well enough to know that they actually know. Or they convince themselves that they don’t know, I don’t know. Interesting aspect of human nature, human character.
Is that something that your view developed on as you worked in Russia over time?
It’s a view that I came to have largely in retrospect. I’m not sure I saw it at the time.
Do you think that if you had that view when you went in, then your sense for the prospects for everything would have changed? And been different?
Maybe. It’s not a characteristic that you see in Americans very often, right?
I don’t know.
James C. Langdon, Jr., interview by Rebecca Adeline Johnston, July 2, 2018, transcript, Post-Soviet States Oral History 14 Collection, Robert S. Strauss Center for International Security and Law, Austin, TX, available online at: https://www.strausscenter.org/interview/james-langdon I don’t think I see it very often in Americans. Right now in the political discourse, if you don’t like Trump, I don’t know anybody that shies away from saying it, right? I think we take for granted a lot of what it means to be an American, and what our freedom really allows us to do. And while Russia may have had all these Western signs of progress, and banking, and law, and whatever, and building businesses, there’s a dark part of that world that can be triggered at any time. And no matter all these advances you make in these other areas, that dark piece still sits and can be awakened at any time by the wrong guy or the right guy. I don’t know that I ever saw that for—absent sort of a retrospective view—when I’m thinking about, how do people let this happen?
I had a dinner one night with Carlos Bulgheroni and [Yevgeny Maksimovich] Primakov, who was then the number two guy, prime minister [of] Russia. We met near his house at some restaurant and we were talking about politics and all this stuff, and the need for the Russians to raise money in various areas. I said, “Why do you have Gazprom own all these pipes? They own your entire natural gas delivery system. They don’t need to do that. They could privatize that, and then regulate it, and they could put that capital to much greater use than what they’re doing right now. And by the way, the way they control their pipelines reduces the value of your oil and gas assets all over the country because the higher the price to carry this stuff, the less reserves you have. Because you reach the economic potential of what the field can produce depending upon being able to get it to market at a reasonable price. And if the pipeline rates are too high, you just reduced your reserves by ten or twenty or thirty or forty or fifty percent.” So I said, “It’s a really crappy way to try to earn a return.”
He understood everything I was saying. And he said, “Here’s the difference in your society and ours. You have institutions, regulatory institutions, that have the credibility and the institutional stability to be able to do those kinds of things. Here, our institutions aren’t stable enough to do that. The only thing that we can do to ensure that you get through the day is to own it and control it. We’re locked into this system because we don’t have sophisticated institutions to run our country’s business.” [1:10:00] Which I think explains a lot. Because when you don’t have an institution running it, then you've got a person doing it or a group of people, and it’s always going to be more volatile and subject to abuse. I wasn’t that smart, though, when I was there.
[END OF INTERVIEW]
1 At the time of this interview, the president of Azerbaijan was Aliyev’s son, Ilham Heydar oglu Aliyev. 2 References throughout this interview to the wall falling are meant broadly to refer to the collapse of Soviet Union on December 26, 1991. 3 Giffen is a former American businessman longtime counselor to the president of Kazakhstan, widely known for his trial and eventual acquittal in the Kazakhgate bribery case. 4 "Loans for shares" was one of the most controversial of the Yeltsin government's privatization programs. For two opposing views from recent academic debate on loans for shares, see Daniel Treisman (2010) "Loans for Shares" Revisited, Post-Soviet Affairs, 26:3, 207-227, DOI: 10.2747/1060-586X.26.3.207 and Chapter 5 in Carol Scott Leonard & David Pitt-Watson (2013) Privatization and Transition in Russia in the Early 1990s. Routledge, DOI: 10.4324/9780203766828 5 Refers to the 1993 voucher privatization program. 6 British businessmen David and Simon Reuben. 7 Non-profit trade association founded in 1993. 8 Assistant Secretary of State for Intelligence and Research from 1993-1997. James C. Langdon, Jr., interview by Rebecca Adeline Johnston, July 2, 2018, transcript, Post-Soviet States Oral History 15 Collection, Robert S. Strauss Center for International Security and Law, Austin, TX, available online at: https://www.strausscenter.org/interview/james-langdon
9 British businessman and former chief of BP. 10 Refers to the Deuss's role in negotiations over the Caspian Pipeline Consortium. 11 Paraphrase.
James C. Langdon, Jr., interview by Rebecca Adeline Johnston, July 2, 2018, transcript, Post-Soviet States Oral History 16 Collection, Robert S. Strauss Center for International Security and Law, Austin, TX, available online at: https://www.strausscenter.org/interview/james-langdon