Clinton Cash (6 page)

The uranium deal that was sealed in 2005 during Bill Clinton’s visit to Kazakhstan and then fortified by the 2007 Kazakh-approved merger would soon morph into a third transaction intersecting with some of Hillary’s most consequential and difficult national security decisions as secretary of state. And as we will see, there is no evidence that she disclosed to US government ethics officials, the White House, or her cabinet colleagues the apparent conflicts of interest at play as she steered US nuclear policy.

In the final years of the Bush administration, relations with Moscow had cooled. The Russian incursion into neighboring Georgia, Bush’s plans to erect a missile-defense shield, and Russian pressures on Ukraine had heightened tensions between the two nuclear powers.
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What President Barack Obama and Hillary Clinton had in mind was a “reset.” At Foggy Bottom, Hillary offered the Kremlin a chance to clean the slate and begin anew.
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Moscow was all in favor of a reset and viewed it as an opportunity to develop more trade and investment opportunities with the West.
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And in spite of her pointed comments about Putin’s soul, Hillary’s appointment as secretary of state was generally praised in Moscow. Authorities saw her as offering a “balanced view of US relations with the Russian Federation.”
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She was “by far not the worst” outcome for Moscow, said one official, noting that there were advisers around Obama who were “very critical of our country.”
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Not a ringing endorsement perhaps, but Hillary was someone the Russians believed they could work with.

At the heart of the reset was what
Newsweek
called “a bevy of potential business deals.”
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These included deals involving oil and natural gas, which are the backbone of the Russian economy.
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But not far behind were Kremlin ambitions to expand its share of the world nuclear market. Uranium, civilian nuclear power plants, and the technical services that supported them were
considered a huge growth industry for Moscow.
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In 2006 the Kremlin had approved plans “to spend $10 billion to increase Russia’s annual uranium production by 600 percent.”
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Putin considered the nuclear energy sector “a priority branch for the country, which makes Russia a great power.”
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Russia not only wanted to build nuclear plants around the world, it also wanted to control a large chunk of the global uranium market.
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But an important side note to the Russian reset was how it involved a collection of foreign investors who had poured vast sums of money into the Clinton Foundation and who continued to sponsor lucrative speeches for Bill. Those investors stood to gain enormously from the decisions Hillary made as secretary of state.

The Russian State Atomic Nuclear Agency (Rosatom) handles all things nuclear in Russia. Unlike the US Department of Energy or the Nuclear Regulatory Commission, Rosatom is not just deeply imbedded with civilian nuclear power but actually controls the Russian nuclear arsenal.
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Longtime Rosatom head Sergei Kiriyenko is a tall, lanky technocrat who served in the Komsomol, the Soviet Youth League, during the Soviet era. He went on to become energy minister and then prime minister of Russia while Bill Clinton was president of the United States. (Indeed, when Russian president Boris Yeltsin made Kiriyenko prime minister in 1998, it brought “instant endorsements” from the Clinton administration.)
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He and his agency operate in a special way in Russia, without any independent supervision from the Russian parliament. Rosatom “is subject only to the decision-making of the Kremlin,” as one nuclear scholar at UC Berkeley puts it. “Unlike the oil and gas industries, the nuclear sector is under the direct supervision of the state.”
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Rosatom not only built the controversial Bushehr nuclear reactors in Iran, it also supplies them with uranium.
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Rosatom also operates in North Korea, Venezuela, and Myanmar.
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As the
agency makes clear in its annual report, it places a primacy on protecting information “constituting state secrets.”

During her tenure as secretary of state, Hillary Clinton and senior aides received numerous diplomatic cables discussing Moscow’s nuclear ambitions. In October 2009, for example, she received a cable exposing Rosatom’s plan to leverage Ukraine into a long-range supply contract with the Russian state nuclear fuel company, and its efforts to create “zones of pressure” on Eastern European governments.
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In December 2009 the US ambassador to Kazakhstan sent a classified cable to Washington laying out Russian efforts to exert control over Kazakh uranium markets.
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The cable noted that Rosatom sought to control this market as part of a broader initiative to reestablish itself as a world power. The memo also stated that Russian military intelligence, the GRU, was involved in these nuclear ambitions.
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Even before that cable was sent, there were signs of Russian moves on the uranium market. In June 2009 Rosatom bought a stake in Uranium One. It was not a controlling stake, only 17 percent, but the Russians were just getting started.
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Uranium One was an inviting target. Production was booming, jumping from 2 million pounds of uranium in 2007 to 7.4 million in 2010. But Uranium One was also aggressively buying uranium assets in the United States. By 2010 the Canadian company had “61 ongoing or planned projects on some 293,000 acres in Wyoming.”
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The firm also owned ten thousand acres of uranium claims in Utah, as well as holdings in Texas and South Dakota.
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In sum, Uranium One was projected to control up to half of US uranium output by 2015.

In December 2009 Rosatom chief Kiriyenko appeared before the Presidium, a selection of Russian government officials. He laid out an aggressive plan to acquire uranium assets outside of Russia. “An
opportunity has opened up to buy foreign assets that are profitable and, for now, not very expensive,” he said. “With this program of buying uranium deposits, we can guarantee this to any customers of ours.” Then prime minister Putin announced at the meeting that the Russian government would allocate the money for the transactions to Rosatom’s equity capital.
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The Kremlin’s move came at a sensitive time. Hillary Clinton was directing negotiations for the 123 Agreement with the Russian government concerning civilian nuclear energy. The 123 Agreement is a nuclear nonproliferation treaty whose name derives from the fact that it falls under Section 123 of the US Atomic Energy Act. It requires that the United States have a 123 Agreement negotiated and in place to make nuclear cooperation possible with foreign countries. In short, as the US State Department put it, the 123 Agreement with Russia would “support commercial interests by allowing U.S. and Russian firms to team up more easily in joint ventures.”

The pact had previously been negotiated by the Bush administration, but when Russian forces went into Georgia in 2008, the administration withdrew a request that Congress approve it. The Obama-Clinton reset meant that the agreement was back on and (along with input from the US Department of Energy) that Hillary was in charge. Congress would eventually approve the 123 Agreement in January 2011.

In March 2010 Hillary was in Moscow for a meeting with Putin. Putin had set in motion the purchase of a controlling stake in Uranium One by Rosatom only a few months earlier. During a meeting on March 19, Hillary and Putin discussed a wide variety of issues related to trade. He expressed displeasure with US trade policy, presumably because Russian companies were affected by US sanctions. Whether the Uranium One deal was discussed is not known.

The primary purpose of Hillary’s trip was to increase pressure on Iran. Instead, Putin promised Moscow’s assistance with the completion of a civil nuclear power station by the summer. Hillary blasted the move, saying it “would be premature to go forward with any project at this time, because we want to send an unequivocal message to the Iranians.”
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As part of its reset with Moscow, the Obama administration wanted to make progress on the New START nuclear talks and sought commercial opportunities in areas like civilian nuclear power. On that front, Hillary was optimistic. “If we continue to work together, we can move beyond the problems to greater opportunities.”

In May 2010 the Obama administration submitted the proposed text of the US-Russian Civilian Nuclear Cooperation Agreement to Congress. Weeks later, Rosatom announced it was seeking to buy majority control (52 percent) of Uranium One. To some observers in the uranium market, it all made sense. “It was no accident that Rosatom’s choice fell to Uranium One,” wrote one paper, given the uranium assets it held.
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Several multimillion-dollar Clinton Foundation donors were at the center of the deal. As we saw in the previous chapter, one of these, Ian Telfer, was chairman of Uranium One. A longtime mining investor and associate of Frank Giustra, Telfer made his fortune as a gold investor and has served as the chairman of the World Gold Council.

The Clinton Foundation also failed to disclose major contributions from entities controlled by those involved in the Uranium One deal. Thus, beginning in 2009, the company’s chairman, Telfer, quietly started funneling what would become $2.35 million to the Clinton Foundation through a Canadian entity he controlled called the Fernwood Foundation.
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According to records released by the Clinton Foundation, Telfer had personally
contributed $100,001 to $250,000 to the Clinton Foundation in 2007. But according to Canadian tax records, Telfer’s Fernwood Foundation donated more than $2 million to the Clinton Foundation while Hillary was secretary of state. The Clinton Foundation’s public disclosures don’t list Fernwood as a donor.
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In 2009 Fernwood contributed $1 million to the Clinton Giustra Sustainable Growth Initiative (CGSCI).
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In 2010 its donation was $250,000. In 2011 it gave another $600,000 and in 2012 the amount was $500,000.
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According to Canadian tax records, nearly all of the funds CGSCI collects are transferred directly to the Clinton Foundation in New York.
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In other words, it operates as a pass-through.

The fact that these donations are not listed in Clinton Foundation public disclosures violates the Clinton Foundation’s memorandum of understanding with the Obama White House described in chapter 1, and contradicts Hillary’s correspondence with the Senate Foreign Relations Committee. It also raises questions about what other undisclosed multimillion-dollar donations from foreign entities could have been channeled to the Clinton Foundation.

The Russian uranium deal involved other major Clinton Foundation donors. Two men listed as “financial advisors” for Uranium One and the Russia deal, Robert Disbrow and Paul Reynolds, were also multimillion-dollar contributors.
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Another important shareholder in Uranium One was US Global Investor Funds, whose CEO was Frank Holmes.
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Holmes was not only a major contributor to the foundation, he was also the chairman of Giustra’s Endeavour Mining Capital Corp. Holmes describes himself as “an advisor to the William J. Clinton Foundation on sustainable development in countries with resource-based economies.”
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The managing director for global affairs at Endeavour Financial during this deal was Eric Nonacs, who simultaneously served
as “senior advisor” to the Clinton Foundation. Nonacs, before taking the job, had been a foreign policy adviser to Bill during his post-presidential years.
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As part of the merger with Uranium One, key shareholders, including Telfer and Giustra, were required to hold their shares for at least six months.
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(Dzhakishev believes that Giustra made $300 million in the deal.)
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Giustra’s firm, Endeavour Financial, continued to act as a financial adviser to Uranium One. In July 2008, for example, they arranged credit for the firm as part of a deal involving several Canadian investment banks.
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In early 2008, according to Rosatom executive Vadim Zhivov, negotiations had already begun between Rosatom and Uranium One to buy a stake in the company.
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Was Giustra an investor in Uranium One via US Global Investor Funds? He did not return repeated calls asking for comment. It is unclear whether by 2010 Giustra was still directly involved in the deal, as he often conducts deals through shell companies.
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For shareholders of Uranium One, the Russian government acquisition would mean huge payouts. In addition to giving every shareholder a special one-dollar-per-share dividend, Moscow had big plans for Uranium One.
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According to corporate records, Telfer alone had shares and options amounting to more than 1.6 million shares.
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“We would like just to use Uranium One as the global platform for future growth and all the future acquisitions and all M&A activity,” said Zhivov, who directed the transaction for Rosatom.
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Moscow wanted Uranium One Inc. “to be transformed into a global growth platform.”
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This had to sound lucrative to Canadian investors, though Zhivov admitted there was a “hard road ahead” to prove that “a Russian state-owned company can . . . play by the rules of the modern developed world.”
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