Cash Flowed to Clinton
Foundation Amid Russian Uranium Deal
A Uranium One
sign that points to a 35,000-acre ranch owned by John Christensen, near the
town of Gillette, Wyo. Uranium One has the mining rights to Mr. Christensen’s
property. Matthew Staver for The New
York Times By JO BECKER
and MIKE McINTIRE, April
23, 2015
The headline on
the website Pravda trumpeted President Vladimir V. Putin’s latest coup, its
nationalistic fervor recalling an era when its precursor served as the official
mouthpiece of the Kremlin: “Russian Nuclear Energy Conquers the World.”
The article, in
January 2013, detailed how the Russian atomic energy agency, Rosatom, had taken
over a Canadian company with uranium-mining stakes stretching from Central Asia
to the American West. The deal made Rosatom one of the world’s largest uranium
producers and brought Mr. Putin closer to his goal of controlling much of the
global uranium supply chain.
But the untold
story behind that story is one that involves not just the Russian president,
but also a former American president and a woman who would like to be the next
one.
At the heart of
the tale are several men, leaders of the Canadian mining industry, who have
been major donors to the charitable endeavors of former President Bill
Clinton and his
family. Members of that group built, financed and eventually sold off to the
Russians a company that would become known as Uranium One.
Beyond mines in
Kazakhstan that are among the most lucrative in the world, the sale gave the
Russians control of one-fifth of all uranium production capacity in the United
States. Since uranium is considered a strategic asset, with implications for
national security, the deal had to be approved by a committee composed of
representatives from a number of United States government agencies. Among the
agencies that eventually signed off was the State Department, then headed by
Mr. Clinton’s wife, Hillary Rodham Clinton.
As the Russians
gradually assumed control of Uranium One in three separate transactions from
2009 to 2013, Canadian records show, a flow of cash made its way to the Clinton
Foundation. Uranium One’s chairman used his family foundation to make four donations
totaling $2.35 million. Those contributions were not publicly disclosed by the
Clintons, despite an agreement Mrs. Clinton had struck with the Obama White
House to publicly identify all donors. Other people with ties to the company
made donations as well.
And shortly
after the Russians announced their intention to acquire a majority stake in
Uranium One, Mr. Clinton received $500,000 for a Moscow speech from a Russian
investment bank with links to the Kremlin that was promoting Uranium One stock.
At the time,
both Rosatom and the United States government made promises intended to ease
concerns about ceding control of the company’s assets to the Russians. Those
promises have been repeatedly broken, records show.
The New York
Times’s examination of the Uranium One deal is based on dozens of interviews,
as well as a review of public records and securities filings in Canada, Russia and the United States. Some of the connections between
Uranium One and the Clinton Foundation were unearthed by Peter Schweizer, a
former fellow at the right-leaning Hoover Institution and author of the
forthcoming book “Clinton Cash.” Mr. Schweizer provided a preview of material in the book
to The Times, which scrutinized his information and built upon it with its own
reporting.
Whether the
donations played any role in the approval of the uranium deal is unknown. But
the episode underscores the special ethical challenges presented by the Clinton
Foundation, headed by a former president who relied heavily on foreign cash to
accumulate $250 million in assets even as his wife helped steer American
foreign policy as secretary of state, presiding over decisions with the
potential to benefit the foundation’s donors.
In a statement,
Brian Fallon, a spokesman for Mrs. Clinton’s presidential campaign, said no one
“has ever produced a shred of evidence supporting the theory that Hillary
Clinton ever took action as secretary of state to support the interests of
donors to the Clinton Foundation.” He emphasized that multiple United States
agencies, as well as the Canadian government, had signed off on the deal and
that, in general, such matters were handled at a level below the secretary. “To
suggest the State Department, under then-Secretary Clinton, exerted undue
influence in the U.S. government’s review of the sale of Uranium One is utterly
baseless,” he added.
American
political campaigns are barred from accepting foreign donations. But foreigners
may give to foundations in the United States. In the days since Mrs.
Clinton announced her candidacy for president, the Clinton Foundation has announced
changes meant to quell longstanding concerns about potential conflicts of
interest in such donations; it has limited donations from foreign governments,
with many, like Russia’s, barred from giving to all but its health care
initiatives. That policy stops short of a more stringent agreement between Mrs.
Clinton and the Obama administration that was in effect while she was secretary
of state.
Either way, the
Uranium One deal highlights the limits of such prohibitions. The foundation
will continue to accept contributions from foreign sources whose interests,
like Uranium One’s, may overlap with those of foreign governments, some of
which may be at odds with the United States.
When the
Uranium One deal was approved, the geopolitical backdrop was far different from
today’s. The Obama administration was seeking to “reset” strained relations
with Russia. The deal was strategically important to Mr. Putin, who shortly
after the Americans gave their blessing sat down for a staged interview with
Rosatom’s chief executive, Sergei Kiriyenko. “Few could have imagined in the
past that we would own 20 percent of U.S. reserves,” Mr. Kiriyenko told Mr.
Putin.
Now, after
Russia’s annexation of Crimea and aggression in Ukraine, the Moscow-Washington
relationship is devolving toward Cold War levels, a point several experts made
in evaluating a deal so beneficial to Mr. Putin, a man known to use energy
resources to project power around the world.
“Should we be
concerned? Absolutely,” said Michael McFaul, who served under Mrs. Clinton as
the American ambassador to Russia but said he had been unaware of the Uranium
One deal until asked about it. “Do we want Putin to have a monopoly on this? Of
course we don’t. We don’t want to be dependent on Putin for anything in this
climate.”
A Seat at the Table
The path to a
Russian acquisition of American uranium deposits began in 2005 in Kazakhstan,
where the Canadian mining financier Frank Giustra orchestrated his first big
uranium deal, with Mr. Clinton at his side.
The two men had
flown aboard Mr. Giustra’s private jet to Almaty, Kazakhstan, where they dined
with the authoritarian president, Nursultan A. Nazarbayev. Mr. Clinton handed
the Kazakh president a propaganda coup when he expressed support for Mr.
Nazarbayev’s bid to head an international elections monitoring group, undercutting
American foreign policy and criticism of Kazakhstan’s poor human rights record
by, among others, his wife, then a senator.
Within days of
the visit, Mr. Giustra’s fledgling company, UrAsia Energy Ltd., signed a
preliminary deal giving it stakes in three uranium mines controlled by the
state-run uranium agency Kazatomprom.
If the Kazakh
deal was a major victory, UrAsia did not wait long before resuming the hunt. In
2007, it merged with Uranium One, a South African company with assets in Africa
and Australia, in what was described as a $3.5 billion transaction. The new
company, which kept the Uranium One name, was controlled by UrAsia investors
including Ian Telfer, a Canadian who became chairman. Through a spokeswoman,
Mr. Giustra, whose personal stake in the deal was estimated at about $45
million, said he sold his stake in 2007.
Soon, Uranium
One began to snap up companies with assets in the United States. In April 2007,
it announced the purchase of a uranium mill in Utah and more than 38,000 acres
of uranium exploration properties in four Western states, followed quickly by
the acquisition of the Energy Metals Corporation and its uranium holdings in
Wyoming, Texas and Utah. That deal made clear that Uranium One was intent on
becoming “a powerhouse in the United States uranium sector with the potential
to become the domestic supplier of choice for U.S. utilities,” the company
declared.
Still, the
company’s story was hardly front-page news in the United States — until early
2008, in the midst of Mrs. Clinton’s failed presidential campaign, when The Times
published an article revealing the 2005 trip’s link to Mr. Giustra’s Kazakhstan
mining deal. It also reported that several months later, Mr. Giustra had donated
$31.3 million to Mr.
Clinton’s foundation.
(In a statement
issued after this article appeared online, Mr. Giustra said he was “extremely
proud” of his charitable work with Mr. Clinton, and he urged the media to focus
on poverty, health care and “the real challenges of the world.”)
Though the 2008
article quoted the former head of Kazatomprom, Moukhtar Dzhakishev, as saying
that the deal required government approval and was discussed at a dinner with
the president, Mr. Giustra insisted that it was a private transaction, with no
need for Mr. Clinton’s influence with Kazakh officials. He described his
relationship with Mr. Clinton as motivated solely by a shared interest in
philanthropy.
As if to
underscore the point, five months later Mr. Giustra held a fund-raiser for the
Clinton Giustra Sustainable Growth Initiative, a project aimed at fostering
progressive environmental and labor practices in the natural resources
industry, to which he had pledged $100 million. The star-studded gala, at a
conference center in Toronto, featured performances by Elton John and Shakira
and celebrities like Tom Cruise, John Travolta and Robin Williams encouraging
contributions from the many so-called F.O.F.s — Friends of Frank — in
attendance, among them Mr. Telfer. In all, the evening generated $16 million in
pledges, according to an article in The Globe and Mail.
“None of this
would have been possible if Frank Giustra didn’t have a remarkable combination
of caring and modesty, of vision and energy and iron determination,” Mr.
Clinton told those gathered, adding: “I love this guy, and you should, too.” But
what had been a string of successes was about to hit a speed bump.
Arrest and Progress
By June 2009, a
little over a year after the star-studded evening in Toronto, Uranium One’s
stock was in free-fall, down 40 percent. Mr. Dzhakishev, the head of
Kazatomprom, had just been arrested on charges that he illegally sold uranium
deposits to foreign companies, including at least some of those won by Mr.
Giustra’s UrAsia and now owned by Uranium One.
Publicly, the
company tried to reassure shareholders. Its chief executive, Jean Nortier,
issued a confident statement calling the situation a “complete
misunderstanding.” He also contradicted Mr. Giustra’s contention that the
uranium deal had not required government blessing. “When you do a transaction
in Kazakhstan, you need the government’s approval,” he said, adding that UrAsia
had indeed received that approval.
But privately,
Uranium One officials were worried they could lose their joint mining ventures.
American diplomatic cables made public by WikiLeaks also reflect concerns that
Mr. Dzhakishev’s arrest was part of a Russian power play for control of Kazakh
uranium assets.
At the time,
Russia was already eying a stake in Uranium One, Rosatom company documents
show. Rosatom officials say they were seeking to acquire mines around the world
because Russia lacks sufficient domestic reserves to meet its own industry
needs.
It was against
this backdrop that the Vancouver-based Uranium One pressed the American Embassy
in Kazakhstan, as well as Canadian diplomats, to take up its cause with Kazakh
officials, according to the American cables.
“We want more
than a statement to the press,” Paul Clarke, a Uranium One executive vice
president, told the embassy’s energy officer on June 10, the officer reported
in a cable. “That is simply chitchat.” What the company needed, Mr. Clarke
said, was official written confirmation that the licenses were valid.
The American
Embassy ultimately reported to the secretary of state, Mrs. Clinton. Though the
Clarke cable was copied to her, it was given wide circulation, and it is
unclear if she would have read it; the Clinton campaign did not address
questions about the cable. What is clear is that the embassy acted, with the
cables showing that the energy officer met with Kazakh officials to discuss the
issue on June 10 and 11.
Three days
later, a wholly owned subsidiary of Rosatom completed a deal for 17 percent of
Uranium One. And within a year, the Russian government substantially upped the
ante, with a generous offer to shareholders that would give it a 51 percent
controlling stake. But first, Uranium One had to get the American government to
sign off on the deal.
The Power to Say No
When a company
controlled by the Chinese government sought a 51 percent stake in a tiny Nevada
gold mining operation in 2009, it set off a secretive review process in
Washington, where officials raised concerns primarily about the mine’s
proximity to a military installation, but also about the potential for minerals
at the site, including uranium, to come under Chinese control. The officials
killed the deal.
Such is the
power of the Committee on Foreign Investment in the United States. The
committee comprises some of the most powerful members of the cabinet, including
the attorney general, the secretaries of the Treasury, Defense, Homeland
Security, Commerce and Energy, and the secretary of state. They are charged
with reviewing any deal that could result in foreign control of an American
business or asset deemed important to national security.
The national
security issue at stake in the Uranium One deal was not primarily about nuclear
weapons proliferation;
the United States and Russia had for years cooperated on that front, with
Russia sending enriched fuel from decommissioned warheads to be used in
American nuclear power plants in return for raw uranium.
Instead, it
concerned American dependence on foreign uranium sources. While the United
States gets one-fifth of its electrical power from nuclear plants, it produces
only around 20 percent of the uranium it needs, and most plants have only 18 to
36 months of reserves, according to Marin Katusa, author of “The Colder War:
How the Global Energy Trade Slipped From America’s Grasp.”
“The Russians
are easily winning the uranium war, and nobody’s talking about it,” said Mr.
Katusa, who explores the implications of the Uranium One deal in his book.
“It’s not just a domestic issue but a foreign policy issue, too.”
When ARMZ, an
arm of Rosatom, took its first 17 percent stake in Uranium One in 2009, the two
parties signed an agreement, found in securities filings, to seek the foreign
investment committee’s review. But it was the 2010 deal, giving the Russians a
controlling 51 percent stake, that set off alarm bells. Four members of the
House of Representatives signed a letter expressing concern. Two more began
pushing legislation to kill the deal.
Senator John
Barrasso, a Republican from Wyoming, where Uranium One’s largest American
operation was, wrote to President Obama, saying the deal “would give the
Russian government control over a sizable portion of America’s uranium
production capacity.”
“Equally
alarming,” Mr. Barrasso added, “this sale gives ARMZ a significant stake in
uranium mines in Kazakhstan.”
Uranium One’s
shareholders were also alarmed, and were “afraid of Rosatom as a Russian state
giant,” Sergei Novikov, a company spokesman, recalled in an interview. He said
Rosatom’s chief, Mr. Kiriyenko, sought to reassure Uranium One investors,
promising that Rosatom would not break up the company and would keep the same
management, including Mr. Telfer, the chairman. Another Rosatom official said
publicly that it did not intend to increase its investment beyond 51 percent,
and that it envisioned keeping Uranium One a public company
American
nuclear officials, too, seemed eager to assuage fears. The Nuclear Regulatory
Commission wrote to Mr. Barrasso assuring him that American uranium would be
preserved for domestic use, regardless of who owned it.
“In order to
export uranium from the United States, Uranium One Inc. or ARMZ would need to
apply for and obtain a specific NRC license authorizing the export of uranium
for use as reactor fuel,” the letter said.
Still, the
ultimate authority to approve or reject the Russian acquisition rested with the
cabinet officials on the foreign investment committee, including Mrs. Clinton —
whose husband was collecting millions in donations from people associated with
Uranium One.
Undisclosed Donations
Before Mrs.
Clinton could assume her post as secretary of state, the White House demanded
that she sign a memorandum of understanding placing limits on the activities of
her husband’s foundation. To avoid the perception of conflicts of interest,
beyond the ban on foreign government donations, the foundation was required to
publicly disclose all contributors.
To judge from
those disclosures — which list the contributions in ranges rather than precise
amounts — the only Uranium One official to give to the Clinton Foundation was
Mr. Telfer, the chairman, and the amount was relatively small: no more than
$250,000, and that was in 2007, before talk of a Rosatom deal began
percolating.
But a review of
tax records in Canada, where Mr. Telfer has a family charity called the
Fernwood Foundation, shows that he donated millions of dollars more, during and
after the critical time when the foreign investment committee was reviewing his
deal with the Russians. With the Russians offering a special dividend,
shareholders like Mr. Telfer stood to profit.
His donations
through the Fernwood Foundation included $1 million reported in 2009, the year
his company appealed to the American Embassy to help it keep its mines in
Kazakhstan; $250,000 in 2010, the year the Russians sought majority control; as
well as $600,000 in 2011 and $500,000 in 2012. Mr. Telfer said that his
donations had nothing to do with his business dealings, and that he had never
discussed Uranium One with Mr. or Mrs. Clinton. He said he had given the money
because he wanted to support Mr. Giustra’s charitable endeavors with Mr.
Clinton. “Frank and I have been friends and business partners for almost 20
years,” he said.
The Clinton
campaign left it to the foundation to reply to questions about the Fernwood
donations; the foundation did not provide a response.
Mr. Telfer’s
undisclosed donations came in addition to between $1.3 million and $5.6 million
in contributions, which were reported, from a constellation of people with ties
to Uranium One or UrAsia, the company that originally acquired Uranium One’s
most valuable asset: the Kazakh mines. Without those assets, the Russians would
have had no interest in the deal: “It wasn’t the goal to buy the Wyoming mines.
The goal was to acquire the Kazakh assets, which are very good,” Mr. Novikov,
the Rosatom spokesman, said in an interview.
Amid this
influx of Uranium One-connected money, Mr. Clinton was invited to speak in
Moscow in June 2010, the same month Rosatom struck its deal for a majority
stake in Uranium One.
The $500,000
fee — among Mr. Clinton’s highest — was paid by Renaissance Capital, a Russian
investment bank with ties to the Kremlin that has invited world leaders,
including Tony Blair, the former British prime minister, to speak at its
investor conferences.
Renaissance
Capital analysts talked up Uranium One’s stock, assigning it a “buy” rating and
saying in a July 2010 research report that it was “the best play” in the
uranium markets. In addition, Renaissance Capital turned up that same year as a
major donor, along with Mr. Giustra and several companies linked to Uranium One
or UrAsia, to a small medical charity in Colorado run by a friend of Mr.
Giustra’s. In a newsletter to supporters, the friend credited Mr. Giustra with
helping get donations from “businesses around the world.”
Renaissance
Capital would not comment on the genesis of Mr. Clinton’s speech to an audience
that included leading Russian officials, or on whether it was connected to the
Rosatom deal. According to a Russian government news service, Mr. Putin
personally thanked Mr. Clinton for speaking.
A person with
knowledge of the Clinton Foundation’s fund-raising operation, who requested
anonymity to speak candidly about it, said that for many people, the hope is
that money will in fact buy influence: “Why do you think they are doing it —
because they love them?” But whether it actually does is another question. And
in this case, there were broader geopolitical pressures that likely came into
play as the United States considered whether to approve the Rosatom-Uranium One
deal.
Diplomatic Considerations
If doing
business with Rosatom was good for those in the Uranium One deal, engaging with
Russia was also a priority of the incoming Obama administration, which was
hoping for a new era of cooperation as Mr. Putin relinquished the presidency —
if only for a term — to Dmitri A. Medvedev.
“The assumption
was we could engage Russia to further core U.S. national security interests,”
said Mr. McFaul, the former ambassador.
It started out
well. The two countries made progress on nuclear proliferation issues, and
expanded use of Russian territory to resupply American forces in Afghanistan.
Keeping Iran from obtaining a nuclear weapon was among the United States’ top
priorities, and in June 2010 Russia signed off on a United Nations resolution
imposing tough new sanctions on that country.
Two months
later, the deal giving ARMZ a controlling stake in Uranium One was submitted to
the Committee on Foreign Investment in the United States for review. Because of
the secrecy surrounding the process, it is hard to know whether the
participants weighed the desire to improve bilateral relations against the
potential risks of allowing the Russian government control over the biggest
uranium producer in the United States. The deal was ultimately approved in
October, following what two people involved in securing the approval said had
been a relatively smooth process.
Not all of the
committee’s decisions are personally debated by the agency heads themselves; in
less controversial cases, deputy or assistant secretaries may sign off. But
experts and former committee members say Russia’s interest in Uranium One and
its American uranium reserves seemed to warrant attention at the highest
levels.
“This deal had
generated press, it had captured the attention of Congress and it was
strategically important,” said Richard Russell, who served on the committee
during the George W. Bush administration. “When I was there invariably any one
of those conditions would cause this to get pushed way up the chain, and here
you had all three.”
And Mrs.
Clinton brought a reputation for hawkishness to the process; as a senator, she
was a vocal critic of the committee’s approval of a deal that would have
transferred the management of major American seaports to a company based in the
United Arab Emirates, and as a presidential candidate she had advocated
legislation to strengthen the process.
The Clinton
campaign spokesman, Mr. Fallon, said that in general, these matters did not
rise to the secretary’s level. He would not comment on whether Mrs. Clinton had
been briefed on the matter, but he gave The Times a statement from the former
assistant secretary assigned to the foreign investment committee at the time,
Jose Fernandez. While not addressing the specifics of the Uranium One deal, Mr.
Fernandez said, “Mrs. Clinton never intervened with me on any C.F.I.U.S.
matter.”
Mr. Fallon also
noted that if any agency had raised national security concerns about the
Uranium One deal, it could have taken them directly to the president.
Anne-Marie
Slaughter, the State Department’s director of policy planning at the time, said
she was unaware of the transaction — or the extent to which it made Russia a
dominant uranium supplier. But speaking generally, she urged caution in
evaluating its wisdom in hindsight.
“Russia was not
a country we took lightly at the time or thought was cuddly,” she said. “But it
wasn’t the adversary it is today.”
That renewed
adversarial relationship has raised concerns about European dependency on
Russian energy resources, including nuclear fuel. The unease reaches beyond
diplomatic circles. In Wyoming, where Uranium One equipment is scattered across
his 35,000-acre ranch, John Christensen is frustrated that repeated changes in
corporate ownership over the years led to French, South African, Canadian and,
finally, Russian control over mining rights on his property.
“I hate to see
a foreign government own mining rights here in the United States,” he said. “I
don’t think that should happen.”
Mr.
Christensen, 65, noted that despite assurances by the Nuclear Regulatory
Commission that uranium could not leave the country without Uranium One or ARMZ
obtaining an export license — which they do not have — yellowcake from his
property was routinely packed into drums and trucked off to a processing plant
in Canada.
Asked about
that, the commission confirmed that Uranium One has, in fact, shipped
yellowcake to Canada even though it does not have an export license. Instead,
the transport company doing the shipping, RSB Logistic Services, has the
license. A commission spokesman said that “to the best of our knowledge” most
of the uranium sent to Canada for processing was returned for use in the United
States. A Uranium One spokeswoman, Donna Wichers, said 25 percent had gone to
Western Europe and Japan. At the moment, with the uranium market in a downturn,
nothing is being shipped from the Wyoming mines.
The “no export”
assurance given at the time of the Rosatom deal is not the only one that turned
out to be less than it seemed. Despite pledges to the contrary, Uranium One was
delisted from the Toronto Stock Exchange and taken private. As of 2013,
Rosatom’s subsidiary, ARMZ, owned 100 percent of it.
Andrew E.
Kramer contributed reporting. Sarah Cohen contributed research.
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