Cash Flowed to Clinton Foundation Amid Russian Uranium Deal
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.
Graphic
Donations to the Clinton Foundation, and a Russian Uranium Takeover
Uranium investors gave millions to the Clinton
Foundation while Secretary of State Hillary Rodham Clinton’s office was
involved in approving a Russian bid for mining assets in Kazakhstan and
the United States.
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.
Among the Donors to the Clinton Foundation
Frank Giustra
$31.3 million and a pledge for $100 million more
He built a company that later merged with Uranium One.
Ian Telfer
$2.35 million
Mining investor who was chairman of Uranium One when an arm of the Russian government, Rosatom, acquired it.
Paul Reynolds
$1 million to $5 million
Adviser on 2007 UrAsia-Uranium One merger. Later helped raise $260 million for the company.
Frank Holmes
$250,000 to $500,000
Chief Executive of U.S. Global Investors Inc., which held $4.7 million in Uranium One shares in the first quarter of 2011.
Neil Woodyer
$50,000 to $100,000
Adviser to Uranium One. Founded Endeavour Mining with Mr. Giustra.
GMP Securities Ltd.
Donating portion of profits
Worked on debt issue that raised $260 million for Uranium One.
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.
Correction: April 23, 2015
An earlier version of this article misstated, in one instance, the surname of a fellow at the Hoover Institution. He is Peter Schweizer, not Schweitzer.
An earlier version also incorrectly described the Clinton Foundation’s agreement with the Obama administration regarding foreign-government donations while Hillary Rodham Clinton was secretary of state. Under the agreement, the foundation would not accept new donations from foreign governments, though it could seek State Department waivers in specific cases. It was not barred from accepting all foreign-government donations.
An earlier version of this article misstated, in one instance, the surname of a fellow at the Hoover Institution. He is Peter Schweizer, not Schweitzer.
An earlier version also incorrectly described the Clinton Foundation’s agreement with the Obama administration regarding foreign-government donations while Hillary Rodham Clinton was secretary of state. Under the agreement, the foundation would not accept new donations from foreign governments, though it could seek State Department waivers in specific cases. It was not barred from accepting all foreign-government donations.
Correction: April 30, 2015
An article on Friday about contributions to the Clinton Foundation from people associated with a Canadian uranium-mining company described incorrectly the foundation’s agreement with the Obama administration regarding foreign-government donations while Hillary Clinton was secretary of state. Under the agreement, the foundation would not accept new donations from foreign governments, though it could seek State Department waivers in specific cases. The foundation was not barred from accepting all foreign-government donations.
An article on Friday about contributions to the Clinton Foundation from people associated with a Canadian uranium-mining company described incorrectly the foundation’s agreement with the Obama administration regarding foreign-government donations while Hillary Clinton was secretary of state. Under the agreement, the foundation would not accept new donations from foreign governments, though it could seek State Department waivers in specific cases. The foundation was not barred from accepting all foreign-government donations.
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