“A Vienna, Austria, court has ruled that Victoria Nuland (right), the US Assistant Secretary of State for European and Eurasian Affairs, attempted to pressure the President of Ukraine, Victor Yanukovich (left), into accepting Ukrainian association with the European Union (EU) by threatening Ukrainian oligarch Dmitry Firtash with arrest, extradition to the US, and imprisonment on allegations of bribery several years ago in India.

The details were exposed for the first time in public in a proceeding in the Landesgerichtsstrasse Regional Court last Thursday (April 30, 2015). Austrian judge Christoph Bauer was presiding on the application by the US Government for the extradition of Firtash. The transcript of the proceeding has not yet been issued publicly, nor the official text of the judge’s ruling from the bench.

Judge Bauer rejected extradition, ruling there had been improper political interference by the US Government in the Firtash case. This is a violation, according to Bauer’s judgement, of Article 4, section 3 of the US-Austria Extradition Treaty of 1998. “Extradition shall not be granted,” the proviso declares, “if the executive authority of the Requested State determines that the request was politically motivated.” Read the treaty in full here.

A New York Times reporter, David Herszenhorn (below, left), tweeted during the proceedings against Firtash (right, centre), and then published a report of what was translated for him from the German.

The newspaper version: “Mr. Firtash’s lawyers asserted that an initial request by the United States for his arrest, on Oct. 30, 2013, was directly tied to a trip to Ukraine by an assistant secretary of state, Victoria Nuland, in which she sought to prevent Mr. Yanukovych from backing out of a promise to sign sweeping political and trade agreements with Europe. Ms. Nuland left Washington on the day the arrest request was submitted to Austria. The request was rescinded four days later, said a lawyer, Christian Hausmaninger, after Ms. Nuland came to believe she had received assurances from Mr. Yanukovych that he would sign the accords. From that point, nothing happened in the Indian bribery case, Mr. Hausmaninger [defence lawyer for Firtash] said, until Feb. 26, 2014 — four days after Mr. Yanukovych was ousted after months of street protests. The arrest request was renewed then, and the Austrian authorities detained Mr. Firtash two weeks later, the same day the new Ukrainian prime minister, Arseniy P. Yatsenyuk, was visiting President Obama at the White House.”

A different record of what was said in court can be read in Herszenhorn’s twitter feed for April 30, 2015; there were 87 separate tweets. This record reveals that Judge Bauer heard evidence that the US Government had shown political favour for Yulia Tymoshenko to replace President Victor Yanukovich; intervened to block the Firtash-supported candidacy of Vitaly Klitschko as Ukrainian president after Yanukovich’s ouster on February 22, 2014; and sought reallocation of Firtash’s assets in the gas and titanium sectors. For more on the US interest in Ukrainian titanium, read this. For the file on the US decision not to prosecute Tymoshenko for corruption, making and receiving bribes, click this.

Herszenhorn hints that the Austrian government intervened administratively to swing the outcome of the case against the US. “At least 4 lawyers arguing for #Firtash in Vienna court, more in gallery or not here. Only 1 Austria govt lawyer in support US extradition.”

The US State Department has yet to respond. “We are disappointed with the court’s ruling” Justice Department spokesman Peter Carr said in an e-mailed statement to US newspapers. On the telephone to a London outlet on Friday, Carr claimed the Justice Department has “filed an appeal”.

The timeline for the US charges against Firtash was first reported here. The allegations claim bribery commenced in April 2006. Transactions identified in the published indictment are dated between April 2006 and July 2010. The Chicago grand jury investigation is dated January 2012. The official indictment, according to the Austrian documents, was not dated until June 2013. The US request to the Austrian government for the arrest of Firtash on the extradition warrant was dated October 30, 2013, then withdrawn on November 4, 2013. It was re-issued on February 27, 2014. The Austrian arrest took place on March 12, 2014.

(Credit: Paul J. Richards/AFP/Getty Images)

The US Government officials in charge of this process included Eric Holder (right), who was US Attorney-General from February 3, 2009 until April 27, 2015; Hillary Clinton, Secretary of State from January 21, 2009, until February 1, 2013; and Nuland, Assistant Secretary of State from September 18, 2013. In that same month, September 2013, there was a change of director at the Federal Bureau of Investigation (FBI) – Robert Mueller was replaced on September 4, 2013, by James Comey.

The FBI Chicago office conducted the investigation. At the start, the agent in charge in Chicago was Robert Grant, who was in his position from 2004 until September 2012. Grant was replaced by Cory Nelson on November 2, 2012, but he lasted only seven months until July of 2013. His temporary substitute was Robert Shields until Robert Holley took over on November 12, 2013.

The US District Attorney in charge of the Firtash grand jury was Patrick Fitzgerald (below, left), but he resigned in June of 2012. He was then succeeded temporarily by a deputy until Zachary Fardon (right) took office on October 23, 2013.

The State Department announced Nuland’s visit to Kiev for November 3 and 4, 2013. According to the US Embassy in Kiev, in a transcript of Nuland’s statement on November 4, Nuland had “a very good and very long meeting with the President.” She claimed in addition: “The President made clear in that meeting that Ukraine has made its choice and its choice is for Europe. The United States supports Ukraine’s right to choose, and we are committed to supporting Ukraine as it works to meet the remaining few requirements for an Association Agreement with the European Union and the trade benefits that come with it. We also took the opportunity tonight to congratulate Ukraine on all of the work it has already done to meet the conditions that the European Union has set forth — literally dozens of pieces of legislation. I delivered a letter this evening from Secretary Kerry to the President.”

In the wake of the revelations in the Austrian court proceeding a record of part of what Nuland and Yanukovich discussed has surfaced. Tape-recordings of Nuland’s confidential remarks in Kiev have surfaced in the past and can be read here. The following content cannot be corroborated, and its accuracy should be treated with caution:

NULAND: Mr President, we will have Firtash arrested unless you agree to sign the [EU] Association Agreement.

YANUKOVICH: Okay, I’ll sign.

In the background, a telephone rings. Audible footsteps, mumbling, as Yanukovich excuses himself to take the call. In his absence, Nuland whispers to Ambassador Geoffrey Pyatt.

NULAND: We got the guy by the [f…… b….], huh?

PYATT: Way to go, Toria!

(Separate telephone tape, in Russian)

YANUKOVICH: You’re off the hook, Dima. The АМЕРИКАНКА fell for it.

FIRTASH: МОЛОДЕЦ! Mr President.”

According to Herszenhorn’s twitter feed, “True or not #Firtash lawyers have strung together a fascinating narrative of his legal travails rising/falling based on US State Dept goals.” (John Helmer, 5/02/2015)  (Archive)

(Republished with permission)

Bill Clinton and Hillary Clinton, the former and wannabe presidents of the US, say they have accepted more than $13 million from Ukrainian pipemaker Victor Pinchuk since 2006. But Pinchuk says he’s given the Clinton Foundation only $7.6 million.

It won’t help to employ accountants to ask where the missing $5.4 million was originally trousered, if not the Pinchuk Foundation, then which branch of Pinchuk’s business. That’s because the Clinton Foundation’s auditors – an Arkansas firm called BKD – have turned up this much money in revenues, and also in expenditures, which the Foundation’s annual report inexplicably fails to report and regularly understates. The Pinchuk Foundation also refuses to answer questions about discrepancies in its annual accounts, whose auditors are reported by Pinchuk’s organization to be Ernst & Young. Their signature is reproduced in the Pinchuk Foundation annual reports, although no copy of their financial reports and notes has been published.

The question of the missing money is a criminal case in Moscow for Russian prosecutors. This is because they are investigating how and where Pinchuk trousered the sum of Rb6.5 billion ($186 million) from his Russian auto insurance company, Rossiya Insurance Open Shareholding Company. The insurer’s licence was canceled last October 23 by the Russian Central Bank’s insurance inspectorate. At the time, the liabilities of Rossiya were reported to be Rb2.3 billion ($72 million). Over the previous twelve months, Rossiya had defaulted on Rb4.5 billion ($141 million) in claims.

Victor Pinchuk (l) and Hillary Clinton (Credit: public domain)

In the Moscow Arbitrazh Court hearing on Rossiya last month, the bankruptcy trustee Yevgeny Zhelnin charged that Pinchuk (left) had been using fraudulent reinsurance and other schemes to empty Rossiya’s treasury of its income from premiums, along with its reserves for payment of claims. The allegation against Rossiya and its proprietor is fraud on a grand scale. And that’s where the problem starts for Hillary Clinton (right), her husband, and daughter: have they been on the receiving end of a money-laundering operation in which the proceeds from Rossiya became the income of Pinchuk’s foundation, and were then spent on the Clinton Foundation?

Pinchuk first acquired a 25% blocking stake in Rossiya through his EastOne holding company in 2007. In 2009 he bought another 25% plus one share to become the controlling shareholder, and by the end of that year, he had taken 100% of Rossiya.

In a single-page summary of its annual balance sheets, purportedly endorsed by Ernst & Young, the Pinchuk Foundation reveals that 2007 was a bonanza year. The money box started with a cash balance of just $63,947. It then filled up with what Ernst & Young calls “contributions and charitable donations” totaling $15.7 million. The Foundation refuses to clarify the source of its donations.

The balance-sheet claims the foundation spent $1.1 million on Pinchuk’s lobbying group for Ukrainian membership of the European Union, called Yalta European Strategy. Another half a million dollars went to a Washington, DC, lobbyist called Anders Aslund at the Peterson Institute for International Economics, and another $250,000 to the Brookings Institution, also a Washington think-tank lobbying for Pinchuk’s causes in the Ukraine.

The Clintons claim to have collected $132.5 million in 2007, but they won’t say how much was from Pinchuk. Pinchuk won’t say if he gave them a penny that year. Pinchuk’s accountants don’t start revealing their spending on the Clintons until 2009 when the Pinchuk organization reports that $4 million was despatched and received. In the meantime, the motor and third-party liability insurance premiums rolled into Rossiya in Moscow – and the philanthropy was booming at the Pinchuk Foundation in Kiev. According to Ernst & Young, Pinchuk’s donations in 2008 jumped 68% to $26.3 million.

In 2009, as EastOne took over Rossiya entirely, the Russian economy was in trade-induced recession, car sales dropped, along with premium revenues at Rossiya. Pinchuk’s generosity dropped to $13.8 million, according to the foundation balance-sheet. Aslund’s stipend was cut by half to $100,000 for the year.

Annus horribilis it might have been for philanthropy, but Pinchuk’s foundation paid itself $1.5 million in “administrative expenses” in 2009 – up from $1.4 million in 2008, and four times the $307,265 which running the show cost in 2007. Bill Clinton was paid to speak in January 2009 at what Pinchuk called his Davos Philanthropic Roundtable.

Bill Clinton and Victor Pinchuk (Credit: public domain)

In 2010, Pinchuk said he gave $1.1 million to the Clinton Foundation; Clinton claims the amount was between $5 million and $10 million. In 2012, the Pinchuk Foundation says it gave $1 million; according to the Clinton Foundation that year the amount donated was between $5 and $10 million.

The Clinton Foundation’s problems of accounting for its money are legion. Although it has been taking in about a quarter of a billion dollars per annum, it overspent its income in 2007 by $11.1 million; in 2008 the overspend was $13.8 million. In 2013 BBB, the American philanthropy watchdog, warned public donors that the Clinton operation failed to meet the required standard for public accountability and independent supervision; make that avoidance of conflict of interest, since most of the foundation’s staff have also been involved in the presidential campaigning of Mrs. Clinton.

The foundation claims to operate a New York City headquarters at 1271 Avenue of the Americas, according to the website; 55 West 125th Street, according to the telephone answering machine. Its press department is headed by Valerie Alexander, who ran the press operation for Mrs Clinton’s abortive presidential campaign in 2007; the organization identifies her deputy as Betsy Feuerstein. Neither answers the telephone; both refuse to answer email requests for clarification of the $13 million in receipts from Pinchuk. On February 12, a New York newspaper claimed the total was “roughly $13.1 million”, but failed to cite a source. The reporter, who did not check Pinchuk’s financial reports and court claim records, refused to answer questions. The newspaper reported a statement in support of Pinchuk by Aslund and the Peterson Institute without identification of more than a million dollars Pinchuk has paid the two of them.

A cryptic note in the Pinchuk Foundation report for 2010 concedes that from “2009; all funding [for Clinton] was transferred through the accounts of the Foundation.” Open this link and go to page 61. That implies there was an agreement between Pinchuk and the Clintons, their foundations, and their lawyers that whatever conduit he had been using to pay them should appear from then on to be a channel between the two charities.” (Read more: John Helmer, 2/17/2014)

(Republished in part, with permission)

“Ukrainian government and commercial interests are lobbying the US Government to support a stealth sanction against VSMPO-AVISMA, the Russian supplier of titanium to Boeing and other US aerospace companies. Instead of VSMPO, the Ukrainians are seeking US government financing for the establishment of new high-grade titanium production lines at Zaporizhye Titanium and Magnesium Combine (ZTMC), and expansion of Ukrainian titanium exports to the US.

U.S. Department of Commerce (Credit: public domain)

This week, a confidential message from the US Department of Commerce revealed that “in recent meetings with U.S. Department of Commerce officials, the GOU [Government of Ukraine] expressed that it would like to have U.S. companies involved in the development of the titanium resources in Ukraine. The Commerce Department is, of course, very interested in encouraging the involvement of all U.S. companies in all relevant sectors given such an opportunity, and we are inviting input from industry regarding this topic.”

(…) The US Department of Justice indictment of Dmitry Firtash for alleged bribery in the titanium trade, unsealed at the time of his arrest in Vienna on March 12, 2014, followed by moves announced last week by the Kiev government to strip Firtash of his Ukrainian titanium production assets, are a coincidence, according to US sources.

The investment required to replace Firtash and substitute Ukrainian titanium sponge for VSMPO in the US market has been estimated at more than $110 million for new metal production facilities and up to $2.5 billion for expansion of both downstream production and upstream titanium mining in Ukraine. The asset confiscation plan initiated by US prosecutors against Firtash has been estimated to total $500 million. The value of VSMPO’s direct exports to the US in 2013 was $380.2 million, 24% of its sales revenue for the year.

With this much at stake in forcing the Russians out of the titanium market, industry and government sources in the US have been leaking to the local press that they suspect Boeing and other US consumers of Russian titanium of anticipating the US-Ukrainian scheme by secretly accelerating deliveries to the US and stockpiling the Russian metal there.

(…) On September 15, the Kremlin advisor for economic policy, Victor Belousov, warned publicly that if the US and EU kept escalating sanctions aimed at damaging the Russian economy, a counter-sanction order might follow from Moscow to halt deliveries of titanium to the US and Europe.

There has been no official acknowledgement or press report that while this war of words was going on, the Ukrainian government was making a concerted effort to win US commitments for their scheme for an alternative flow of Ukrainian titanium to the US. The effort has been confirmed by sources in Washington and Kiev.

Independent industry sources in the UK say they have not heard of the Ukrainian scheme. They also doubt its feasibility. An October 2013 study by Philip Dewhurst and Pedro Palma of the Roskill Consulting Group suggests that at present Ukraine lacks the production capacity to increase output of titanium sponge or substitute for Russian titanium in the US market. After three past years of rising production worldwide, they also noted that there is now a surplus of titanium in relation to demand, and little incentive for investors to pay to build new Ukrainian production lines.

Dewhurst of Roskill says: “I can’t imagine the US has any great interest in Ukrainian sponge production. There are several [other] reliable sources of high grade sponge. Current Ukrainian sponge is regarded as too low grade for aerospace use and little unwrought titanium (1,359 tonnes in 2013 – 7.7% of the total) is imported into the USA.”

ZTMC, the sole Ukrainian producer of sponge, is located in the Zaporozhye region of eastern Ukraine. Since December 2012 ZTMC (below left) has been controlled by Firtash (centre), who won a privatization administered by the former President Victor Yanukovich (right). Here’s the company’s announcement. The company website reports that as part of his privatization agreement with Yanukovich, Firtash promised to invest in building 40,000 tonnes of additional sponge capacity. By the time of Yanukovich’s downfall, and Firtash’s arrest in March, he had not made good on the promise.

The US indictment alleges that Firtash and five accomplices conspired to bribe Indian state and federal government officials to agree to a mining and refining venture in Andhra Pradesh state. The alleged corruption began in April 2006. In February 2007 Boeing signed a memorandum of understanding with Firtash to buy the titanium from the Indian project; Boeing was to be the biggest of the off-takers in what Firtash estimated to be $500 million in annual sales. Altogether, US prosecutors claim that $18.6 million in bribes were paid, starting in April of 2006 and concluding four years later, in July of 2010.

It took the American investigators another two years before a grand jury issued its charges, based in part on what Boeing admitted about its part in the Firtash plan. That was in January 2012. In the Justice Department press release of April 2, 2014, it is claimed that the federal court in Chicago took eighteen months before issuing a secret indictment in June 2013. Another ten months were to pass before the indictment was unsealed, and the US prosecutors asked their Austrian counterparts to pick Firtash up on an extradition warrant. The Justice Department press release quotes the FBI agent in charge of the Firtash case as saying: “This case is another example of the FBI’s willingness to aggressively investigate corrupt conduct around the globe.” The evidence of the paperwork reveals that even if the FBI agents had been aggressive, there had been an unusual delay in pursuing Firtash.

The acting assistant attorney-general on the case in Washington, David O’Neil, claimed: “the charges against six foreign nationals announced today send the unmistakable message that we will root out and attack foreign bribery and bring to justice those who improperly influence foreign officials, wherever we find them.” Wherever wasn’t the word for it, for the Ukraine had been off limits while Yanukovich was in power. London, where Firtash met British intelligence and Foreign Office officials on February 24, after Yanukovich had been deposed, was also off limits for the US agents.

The American aggressiveness on the subject of titanium has found its echo in Ukraine. In mid-July, Igor Kolomoisky, the governor of Dniepropetrovsk, began a public campaign for the government in Kiev to renationalize Firtash’s assets, including ZTMC. Kolomoisky alleged that the privatization process had been rigged illegally and that members of Yanukovich’s family had been hidden beneficiaries.

Last week, the Ministry of Economy in Kiev launched a legal process to recover control of two mining complexes, Irshansky in Zhitomyr region and Volnogorskiy in Dniepropetrovsk. Without their ore concentrates to refine, Ukrainian industry sources say it is only a matter of time before ZTMC stops operating, or else Firtash’s control is removed. “The government has started to build a new titanium vertical,” reported a Ukrainian publication last Sunday.

Ukrainian officials had discussed the plan of renationalization of Firtash’s titanium mine and refining assets in advance. The European Union trade office and the Office of Materials Industries at the Commerce Department in Washington then sent U.S. titanium industry executives a note, saying the Ukrainian Government had “terminated the lease contract for two titanium mining and enrichment plants in the Zhytomyr and Dnipropetrovsk regions of Ukraine. They are now state-owned mining assets. In recent meetings with U.S. Department of Commerce officials, the GOU expressed that it would like to have U.S. companies involved in the development of the titanium resources in Ukraine. The Commerce Department is, of course, very interested in encouraging the involvement of all U.S. companies in all relevant sectors given such an opportunity, and we are inviting input from industry regarding this topic.” (Read more: John Helmer, 9/17/2014)  (Archive)

(Republished in part with permission)

Igor Kolomoisky (Credit: public domain)

“The Ukrainian revolution has been very bad for business in the country. But for Igor Kolomoisky’s Privatbank there has been compensation of almost a billion dollars in state funds: publicly, rival Ukrainian commercial banks call that favouritism; privately, Ukrainian business as usual.

Privatbank is Ukraine’s largest commercial bank. Since the replacement of the Ukrainian Government in February, and the start of the International Monetary Fund’s (IMF) financial aid programme in April, Privatbank has been the largest beneficiary of what the IMF and the Ukrainian Ministry of Finance are calling Emergency Liquidity Assistance (ELA) to the country’s banks. Published measurements of Privatbank’s share of ELA range from 36% to more than 40% of the additional financing which has flowed out of Ukrainian state funds into the commercial banks. Just how much Kolomoisky benefits, along with related companies to which Privatbank lends much of its loan book, is one of the control operations being performed this week, as the IMF’s Ukraine mission starts its first inspection since the IMF transferred $3.2 billion to the National Bank of Ukraine on May 7.

This is the first tranche of the $17.1 billion committed to Kiev by the IMF. The next tranche of $1.4 billion, according to the IMF’s published schedule, is due to be paid on July 25. The complete inspection and payment schedule looks like this:

The IMF mission leader in Kiev this week is Nikolay Gueorguiev. Two weeks ago, he indicated that he will be discussing with his counterparts at the National Bank of Ukraine (NBU) and the Ministry of Finance what reports the IMF expects to gather by next month on stress testing of the condition of Privatbank and the fourteen other major domestic banks, which are the IMF’s priority targets. The technical criteria, selection of independent auditors, and the deadlines for reporting stress test results Gueorguiev says he is hoping to finalize in Kiev by the weekend. For Gueorguiev’s remarks, read this.

According to Gerry Rice (right), the spokesman for the IMF’s managing director, Christine Lagarde (left), there’s no telling how much of the IMF payments will be transferred to the Ukrainian banks. “Those funds,” said Rice, “are not assigned to specific budget line items, but the package ensures, or tries to ensure that the government can stabilize the public finances, and remain current on all its payment obligations…On the question of the disbursement, as you probably know, our disbursements are made for budget support, and then we review the budget support on a fairly rigorous basis and assessment in the context of the reviews of the program. In this case, as you know, it’s bimonthly reviews, so at that time we will be looking at how expenditures are being used, and how the budgetary support indicators are being tracked, the budget deficit indicators and so on.”

In its package of agreements and technical understandings with the Ukrainian government, the IMF defined the bank bailout programme ELA as “ an emergency liquidity assistance (ELA) facility that lends at a high penalty rate against nonstandard collateral (corporate and household loans) at a 65–75 percent haircut.” — page 8. To keep tabs, the IMF is requiring the central bank (NBU) to “provide the IMF, on a two weekly basis, with daily data on the total financing (including refinancing) issued by the NBU to commercial banks, broken down by types of instrument, original maturity of the financing, interest rate as well as transactions to absorb liquidity from the banking system.”

The IMF has also ordered the Ministry of Finance to “provide, no later than 15 days after the end of each month, monthly data on the budgetary costs associated with the recapitalization of banks and SOEs. This cost includes the upfront impact on the cash deficit of the general government of the recapitalization of banks and SOEs as well as the costs associated with the payment of interests.”

Because the technical terminology used by the IMF, NBU, Finance Ministry, and the English-language markets can be imprecise and slip from one balance-sheet line item to another in translation, the NBU was asked to confirm what volume of NBU financing for the Ukrainian commercial banks has been provided for February, March, April, May, and the first two weeks of June? Also, what value has been received by Privatbank and its associates?

The National Bank of Ukraine (Credit: Wikipedia)

The NBU issued a wordy answer. “In accordance with Article 7 of the Law of Ukraine ‘On the National Bank of Ukraine’, the National Bank of Ukraine acts as lender of last resort for banks and arranges a refinancing system to support liquidity in the event of unforeseen factors that may affect the activities of the bank, and if they have exhausted other options, refinancing. At present, the policy of the National Bank of Ukraine is aimed at ensuring transparency and equal conditions of access to refinancing instruments for the various banks”.

On the other hand, the NBU said it refuses to disclose what liquidity assistance it has been paying to Privatbank because “information on banks or customers, collected during banking supervision, is a bank secret.”

Because the IMF rule requires it, the Finance Ministry was asked what its record-keeping shows of how the ELA cash is being spent. The ministry responded that it’s up to the NBU to answer.

The headquarters of Privatbank, Dnipro, Ukraine in 2010. (Credit: Wikipedia)

Public reporting by the NBU for the January-May period indicates that a total of UAH 104.8 billion (about $8 billion) in public funds, including part of the May payment from the IMF, has been given to the Ukrainian banks under ELA to support their liquidity. The handouts started to accelerate when Stepan Kubiv was appointed by the new government to be governor of the NBU on February 24. Before he arrived, the NBU had been spending an average of UAH15.4 billion on ELA per month. After Kubiv took over, the average monthly outlay jumped to UAH 24.7 billion; that’s a growth rate of 62%. Kubiv’s career record in doing things like that before, and what IMF officials knew of it, can be followed in this report of June 6.

(…) An international bank source has applied what he believes to be standard stress tests to Privatbank’s published 2013 accounts. He calculates that in 2015 “Privatbank would fall below capital adequacy levels which markets and regulators consider necessary. In 2016 it would be insolvent.” These forecasts, the source said, are warranted by the bank’s “large exposures to other entities of its owners. It has significant industry concentrations in Oil & Gas and Steel, likely due to the bank’s owners’ interests in these industries. Both factors have historically been associated with high levels of losses in stressed conditions.”

The source also concludes that because of Privatbank’s importance in the Ukrainian bank sector, the “risks of contagion and the direct effects to the Ukrainian economy from one of its largest lenders collapsing, it is likely that public assistance of Privatbank would be required in a stress.” (Read much more: John Helmer, 6/24/2014)

(Credit: John Helmer)

“When Igor Kolomoisky (lead image, centre) financed anti-Russian units operating with the Ukrainian Army in the Ukrainian civil war, he was a staunch ally of Petro Poroshenko’s government in Kiev and the Obama Administration’s chief Ukraine policymakers, Secretary of State Hillary Clinton (left) and her Assistant Secretary for European Affairs, Victoria Nuland (right).

They in turn dominated the voting on the board of directors of the International Monetary Fund (IMF), led by managing director Christine Lagarde. Following the US regime change which installed Poroshenko’s regime in the spring of 2014, the IMF voted massive loans for the Ukraine to replace the Russian financing on which the regime of Victor Yanukovich had depended.  More than a third of the fresh IMF money was paid out by the National Bank of Ukraine (NBU), the state’s central bank, into PrivatBank controlled by Kolomoisky and his partner, Gennady Bogolyubov.

At the time, investigations of Kolomoisky’s business and banking practices, and the special relationship he cultivated with the NBU, reported he was stealing the money through a pyramid of front companies lending each other the IMF cash which was not intended to be repaid. Clinton, Nuland, Lagarde and the IMF staff and board of directors ignored the evidence, as they continued to top up Kolomoisky’s pyramid. Criminal investigations by the US Department of Justice and the Federal Bureau of Investigation (FBI) were also reported at the time; they were neutralized by their superiors.

A new Delaware state court filing a month ago, triggering new US media reports, appears to signal a shift in US Government policy towards Kolomoisky. Or else, as some Ukrainian policy experts believe, it is a move by US officials to put pressure on the new Ukrainian President, Volodymyr Zelensky, whom Kolomoisky supported in his successful election campaign to replace Poroshenko.

In the new court papers, front company names and the count and value of US transactions between them,  which PrivatBank has dug out of its own bank records,  is published for the first time. But the scheme itself is not new. It was fully exposed in 2014-2015 in this archive.  Nor is it news, as subsequent US media reports claim, that the FBI is investigating Kolomoisky and his US associates for criminal racketeering. The FBI investigation was first reported here.

(Credit: Steve Bell, August 28, 2014)

What is missing is an explanation of why it has taken so long for the PrivatBank case against Kolomoisky to surface in the US courts and in the US press. Also missing is a list of the accomplices and co-conspirators in the scheme. These include officials of the IMF,  the US and Canadian Governments who knowingly directed billions of dollars into the NBU,  from which, as they knew full well at the time, the money went out to Kolomoisky’s PrivatBank, the largest single Ukrainian recipient of the international cash. At the top of the list of accomplices, immediately subordinate to Clinton, Nuland and Lagarde, are David Lipton, the US deputy managing director  at the IMF, and the head of the IMF in Ukraine until 2017, Jerome Vacher.

The plaintiff in the Delaware Court of Chancery is PrivatBank; it is represented by the Quinn Emanuel law firm of New York and Washington, DC.

In addition to Kolomoisky and Gennady Bogolyubov, his business partner and co-shareholder in the bank, three other individuals are named as defendants – Mordechai Korf, Chaim Schochet, and Uriel Laber. They are based in the US where they have run the US trading, production, management and investment companies which Privat now alleges were on the receiving end of the embezzlement from the bank and the onward money-laundering chain.

The story of Kolomoisky, Korf and Schochet was first reported in April 2015 here.

Left to right: Mordechai Korf; Chaim Schochet, Korf’s brother-in-law; and Uriel Laber.  Because Korf, Schochet and Laber all live in Miami, the local newspaper has investigated some of their other schemes; here’s an investigation of the environmental damage of their manganese mine in Georgia. A catch-up investigation was reported by the Kyiv Post in May 2019.

The central allegation of the new court case is: “From at least 2006 through December 2016, the UBOs  [Ultimate Beneficial Owners – Kolomoisky, Bogolyubov] were the majority and controlling stockholders of PrivatBank, one of Ukraine’s largest privately-held commercial banks. During that time period, the UBOs used PrivatBank as their own personal piggy bank—ultimately stealing billions of dollars from PrivatBank and using United States entities to launder hundreds of millions of dollars’ worth of PrivatBank’s misappropriated loan proceeds into the United States to enrich themselves and their co-conspirators.”

Gennady Bogolyubov (l) and Igor Kolomoisky (Credit: public domain)

The racket – called the Optima schemes in the court papers after the names of several of the Delaware-registered companies used as fronts for moving the money into US assets – was this: “Through the Optima Schemes, the UBOs [Kolomoisky and Bogolyubov] exploited their positions of power and trust at PrivatBank to cause PrivatBank to issue hundreds of millions of dollars’ worth of illegitimate, inadequately-secured loans to corporate entities also owned and/or controlled by the UBOs and/or their affiliates (the “Optima Scheme Loans”). To facilitate and fraudulently conceal the Optima Schemes from discovery, the UBOs created and utilized a secretive business unit within PrivatBank’s operations (the “Shadow Bank”) to fund the fraudulent loans and launder those loan proceeds through a sophisticated money laundering process.”

“The stated purpose for each loan involved in the Optima Schemes was typically for financing the activities of the ostensible corporate borrower. The Optima Scheme Loans, however, were sham arrangements and the proceeds were not in fact used for that purpose. Instead, sometimes within minutes of being disbursed, the loan proceeds were cycled through dozens of UBO-controlled or affiliated bank accounts at PrivatBank’s Cyprus branch (“PrivatBank Cyprus”) before being disbursed to one of multiple Delaware limited liability companies or corporations (or other United States-based entities), all of which were [controlled by the UBOs].”

“In effect, the UBOs utilized a Ponzi-type scheme: old loans issued by PrivatBank would be ‘repaid’ (along with the accrued interest) with new loans issued by PrivatBank, and those new loans issued by PrivatBank would then be repaid with a new round of loans. The UBOs and their co-conspirators continuously carried out this process to conceal their frauds. Thus, proceeds from new PrivatBank loans were used to give the appearance that the initial PrivatBank loans (along with the accrued interest) were repaid by the borrower when in fact there was no actual repayment.”

“The proceeds from the new PrivatBank Ukraine loans were then laundered through various accounts at PrivatBank Cyprus to disguise the origin of the funds (i.e., a new loan from PrivatBank), and then used to purport to pay down the initial loans plus accrued interest. On paper, this appeared to be a repayment, but in reality, it was a sham and fraud, as PrivatBank was repaying itself and increasing its outstanding liabilities in the process. This process was carried out over and over again, over a period of many years, giving the appearance that PrivatBank’s corporate loan book was performing when, in fact, new loans were being continually issued to new UBO-controlled parties to ‘pay down’ the prior, existing loans. As a result, the size of the ‘hole’ in PrivatBank’s corporate loan book grew and grew, with each iteration of a loan plus interest being ‘repaid’ through the issuance of a new loan, which accrued interest itself before being ‘repaid’ through the issuance of yet a further new loan.

(…) Most of the fresh evidence presented in Privatbank’s court papers has been gathered from Cyprus. There, according to the bank’s case, 41 front companies were used to move money. “Even though the Laundering Entities had billions of dollars moving in and out of their accounts, in reality, the entities had no business, assets, operations, or employees and were shell entities deployed for money laundering purposes.”

When the money was moved to the US,  it was then spent on real estate – four commercial buildings in Cleveland, Ohio;  two in Dallas, Texas;  one in Harvard, Illinois – together with six ferro-alloy and steel production and trading companies operating in several US states.  The court papers report the value of the real estate at acquisition at just over $287.5 million; the value of the metals companies, $468.7 million.

In addition, there were miscellaneous financial transfers with no clear end-purpose or investment target. “Based on information analyzed to date, Defendants laundered approximately $622.8 million worth of fraudulently obtained loan proceeds into the Optima Conspirators, including $188.1 million to Optima Group, $162.3 million to Optima Ventures, $153.7 million to Optima Acquisitions, $103 million to Optima International, $9 million to Warren Steel Holdings, and $6.7 million to Felman Trading. PrivatBank received no consideration in exchange for these transfers and the loans associated with the transfers were not repaid in full.”

Grand total, $1,379 million.

(…) Lawyers for the defendants are not commenting on the Delaware allegations. It can be anticipated that Kolomoisky will argue the Privatbank loans weren’t shams, and that they were repaid to the bank.  Kolomoisky has already won counter claims against PrivatBank in courts in London and Kyiv; he is now negotiating with the Kiev government to recover a 25% stake in the bank. “We have always said that we are open to negotiations. We believe that we are the injured party, that we have been robbed,” Kolomoisky has told Reuters. “Kolomoisky calculates he is due a 25 percent stake in the bank because of the capital he had put into it. Give us then our 25 percent and keep 75, we will have a joint-stock company. There will be a 25 percent participation and 75 percent by the state, as one of the options.”

Reuters also reports the Ukrainian central bank and the IMF believe Privat “was used as a vehicle for fraud and money-laundering while Kolomoisky owned it, and said the government was forced to inject $5.6 billion of taxpayers’ money into the lender to shore up its finances.” For more detail, click to read this.

The work on the transactions detailed in the Delaware court papers was commissioned by PrivatBank and the NBU from Kroll, a due diligence firm as well known for white-washing the affairs of its clients as for investigating fraud. Kroll’s report was then leaked to Graham Stack. In his report, published on April 19, Stack concludes: “The money was moved through a PrivatBank subsidiary in Cyprus. The arrangement helped hide the fact that cash was disappearing because the National Bank of Ukraine treated the Cyprus branch of PrivatBank the same as it would domestic branches. This designation meant officials never detected that cash transferred to Cyprus was leaving Ukraine. Meanwhile, Cypriot regulators either failed to detect that the various bank transfers totalling $5.5 billion were backed by bogus contracts, or didn’t take the necessary action to stop them.”

The IMF’s staff head for Ukraine, Nikolai Gueorguiev,  claimed that in March 2015 he had ordered “a new wave of  bank diagnostics” to monitor related-party lending, liquidity and capital adequacy at PrivatBank; he was dissembling.

Graham Stack (Credit: public domain)

Stack (right) also reports Kolomoisky’s response to the Delaware case: “‘I categorically deny the allegations made by the National Bank of Ukraine,’ Kolomoisky said, adding that regulators had all the access they needed to monitor his bank’s activities. He painted the authorities’ nationalization of his lending business as an asset grab. ‘Management of the [Ukrainian central bank] had as its main purpose not the support of the country’s largest bank, but its nationalization and the expropriation of the assets provided as security, together with the persecution and pressuring of the former shareholders,’ Kolomoisky said.”

Stack is an independent researcher and reporter of Ukrainian business and politics. Anders Aslund is an employee of Victor Pinchuk, a Ukrainian oligarch with bank, media and steel interests who has long been a rival of Kolomoisky’s. Aslund, a former Swedish government official, has worked for US think-tanks funded by Pinchuk. Aslund is now at the Atlantic Council in Washington, DC. The council lists Pinchuk’s foundation as having giving it up to $500,000 in financing for research, including Aslund’s pay.  The US State Department, the British Foreign Office, and George Soros’s foundations are also listed as large donors.

[Anders] Aslund (left) reported on the charges on June 4. Aslund claims to be reading about the stealing scheme for the first time. “The money trail is surprisingly simple. To begin with, the ultimate beneficiary owners collect retail deposits in Ukraine by offering good conditions and service. The money then flows to their subsidiary, PrivatBank Cyprus. In Cyprus, they benefit from the services of two local law firms. Untypically, the ultimate beneficiary owners did not take the precaution to establish multiple layers of shell companies in Cyprus, the British Virgin Islands, and Cayman Islands, as is common among Russians with seriously dirty money. Instead, they operated with three US individuals in Miami, who helped them to set up a large number of anonymous LLCs in the United States, mainly in Delaware, but also in Florida, New Jersey, and Oregon.”

Aslund expresses surprise that among Kolomoisy’s investments there were US ferro-alloy and steel plants and traders. “More remarkable is that Kolomoisky and Bogolyubov, according to the suit, purchased several ferroalloy companies in the United States, Felman Production Inc., in West Virginia; Felman Trading Inc. and Georgian Manganese, LLC; Warren Steel Holdings in Warren, Ohio; Steel Rolling Holdings Inc., Gibraltar, Michigan; CC Metals and Alloys, LLC, in Kentucky; Michigan Seamless Tubes, Michigan. These appear to be medium-sized companies in small places. Real people worked in these enterprises. Why didn’t anybody raise questions about the dubious owners?” (Read much more: John Helmer, 6/30/2019)  (Archive)

(Republished in part, with permission)

“Victor Pinchuk, the Ukrainian oligarch who took sides for the European Union (EU) against Russia, is running out of money, company officials admitted last week in a confidential briefing.

Pinchuk has been forced to provide his company with $20 million in emergency cash to stave off insolvency, but bondholders and banks owed more than $1 billion have not been paid. Although company officials admit that Interpipe, their pipemaking business in Dniepropetrovsk, has not been attacked directly by the fighting in Donbass, they say they are now cut off from supplies of scrap steel for smelters, electricity, and coal from Lugansk and Donetsk. As a result, Pinchuk is now planning to lay off at least 3,000 workers – one-fifth of his Dniepropetrovsk workforce. A brewing worker rebellion and bankruptcy action by unpaid bondholders are part of what one Interipe executive calls Pinchuk’s “fundamental risk”.

The timing of the disclosures could not be worse for Pinchuk, or for Dniepropetrovsk — until now the bastion of Igor Kolomoisky, Pinchuk’s commercial rival and governor of the region. Pinchuk was the target in the US last week as US newspapers opened investigations into the flow of money Pinchuk has directed to the Clinton Foundation, and to lobbying for commercial and political favours from Hillary Clinton and State Department officials directing the Kiev administration.

(…) In the US Pinchuk has employed a lobbyist named Douglas Schoen (below) since 2011 at $40,000 per month. The cash comes from both his Pinchuk Foundation, based in Kiev, and EastOne, his asset holding operating in London, Kiev, and Cyprus. Schoen, who is based in New York, is a pollster for the Democratic Party in the US and for US Government agencies abroad. He is also a booster for the Hillary Clinton presidential campaign; that’s what the Rupert Murdoch media call a “political analyst”.

Schoen’s latest filing for Pinchuk with the Foreign Agents Registration Act (FARA) unit of the US Department of Justice reveals that during the last six months of 2014, Schoen’s monthly stipend remained undiminished at $40,000.

However, compared to the FARA filings in 2011 and 2012, Schoen now claims his efforts are “philanthropic work”, with “no payments attributable to lobbying work this period”. To the question: “During this 6 month reporting period, did you prepare, disseminate or cause to be disseminated any informational materials?” Schoen ticked the No box.

In fact, the promotional materials were written or delivered at lectures and in the press by Steven Pifer, a former US ambassador to Ukraine (below, left), and Anders Aslund (right), a propaganda specialist. Their stipends Pinchuk pays at the Washington think-tanks, Brookings Institution and the Peterson Institute for International Economics (PIIE). In acknowledgement, Pinchuk is listed as a member of the “international advisory council” at Brookings, and a board director at PIIE. For more details, read this.

When Schoen last admitted to the Justice Department that he was lobbying on Pinchuk’s tab, he revealed that he was focusing on Hillary Clinton and State Department officials, Melanne Verveer and Tom Melia. Schoen reported to the Justice Department that he had asked Clinton to meet and endorse Areny Yatseniuk, now the Ukrainian prime minister, and to back other schemes for “the democratization and free and fair elections in the Ukraine. “

Melia is deputy assistant secretary at the State Department, responsible for Ukraine at the Bureau of Democracy, Human Rights, and Labour. Both Melia (left) and his superior, Victoria Nuland (right), were active in preparing Yatseniuk’s takeover of power in Kiev on February 22, 2014. Pinchuk hosted the last outing together of Aslund, Pifer, Melia and Schoen at the Kiev session of the Yalta European Strategy (YES), another Pinchuk philanthropy, in Kiev last September.

What the distinction between lobbying and philanthropy means is that Pifer and Aslund do the lobbying for Pinchuk, and he puts money in their pockets through the think-tanks. Then Schoen reports to the Justice Department that he is receiving $40,000 per month from Pinchuk for doing nothing reportable at all.

Thomas Weihe

Last week, when three Washington Post reporters were investigating money Pinchuk had given the Clinton Foundation, they missed the $6 million difference between what Pinchuk said he had given, and the smaller number the Clinton Foundation said it had received. The Post investigation also failed to detect that the origin of the Pinchuk funds may have been a Russian insurance company fraud. Read more.

The Post reporters, who didn’t open the FARA files of lobbyist and philanthropist Schoen, reported that Interpipe had “has faced formal complaints in the United States for unfair trade practices. Spokesmen for the Clintons and Pinchuk waved away any suggestion of a conflict between the donor’s regulatory concerns and the charitable contributions to the foundation. ‘No assistance with any business issues has now or ever been sought from the Clinton Foundation or its principals,’ said Thomas Weihe (right), a spokesman for the Kiev-based Pinchuk Foundation. He said Pinchuk supported the Clinton effort because of the foundation’s record and the ‘unique capacity of its principals to promote the modernization of Ukraine.’”

(Read more: John Helmer, 2/20/2015)   (Archive)

(Reposted in part, with permission)

Andrej Babis (Credit: public domain)

“Andrej Babis is one of the wealthiest men in eastern Europe — if you bite bread, read a newspaper, fill your car with fuel, or put fertilizer on your window box in Prague, chances are you owe Babis money. He is also Deputy Prime Minister of the Czech Republic, Finance Minister, and candidate to become the next Czech President.

When Babis announced on Friday in Washington that he is planning to sue the US foreign policy establishment for libel, he wasn’t bluffing. His aim is to stop the US State Department, American officers at NATO headquarters in Brussels, and the war party in Kiev from attacking him as a Kremlin stooge.

The rise of Babis is also the takeoff of another albatross which is about to hang itself around the neck of candidate to become President of the US, Hillary Clinton. For it’s her campaign booster and pollster, Douglas Schoen and his old firm Penn Schoen Berland (PSB), which claim credit for inventing Babis’s political party, Akce Nespokojených Občanů (Action of Dissatisfied Citizens) – the acronym ANO also means “yes” in Czech – and putting Babis in power. From non-existence in 2011, ANO took 19% of the votes in the Czech lower house election of 2013, a close second behind the ruling Social-Democratic Party; 17% in the Czech senate election of last October. According to the American pollster, PSB’s Czech-educated executive, Alexander Braun is the winner of several US awards for his Czech political campaigns. He also claims credit, along with Schoen, for advising “notable clients…includ[ing] Tony Blair and Hillary Clinton, as well as presidents in Mexico, Ukraine, and Philippines.”

With the ANO vote running at close to 20%, and Babis’s voter approval rating at better than 60%, he and his appointees in the Czech Government control the ministries of finance, defence, justice, transport, environment, and regional development. Try buying, lighting, and stubbing out a cigarette between Karlovy Vary in the west, on the German border, and Ostrava in the east, near Poland, and you need ANO’s permission.

Czech Republic

If it is American strategy to prevent Germany or Russia, or the two of them together, from ruling who can drop their butts in Eastern Europe, then the rise of the potentate of Prague is either a good thing, or a bad thing. For the time being, it’s an uncertain, so a dangerous thing.

When “Dragoon Ride”, a convoy of 120 armoured cars from the US Army and the North Atlantic Treaty Organization (NATO), tried to rally Czech support for American rule of Ukraine and war against Russia last month, it was the ANO ministries which refused to allow them to drive through Prague, diverting them instead to a military base on the outskirts.

Caption: “US soldiers from the 3rd Squadron of 2nd Cavalry Regiment are preparing to leave the Vyskov Area near the Brno, Czech republic, 29 March 2015. The soldiers finished their 3-month-long training in Poland and now they spend three days in Czech republic.” (Source: http://www.demotix.com)

The US Army called “Dragoon Ride” a “highly visible demonstration of U.S, commitment to its NATO allies and demonstrating NATO’s ability to move military forces freely across allied borders in close cooperation.” On March 29 the Stars and Stripes reported that “the convoy unleashed fierce debate among the Czech people and politicians. On Saturday, thousands of people gathered in Prague, the capital, to demonstrate support for and opposition to the convoy and American foreign policy.” The Ukrainian regime media called that “the opening of another Russian front in the Czech Republic”, and the Czech Republic “Russia’s outpost in central Europe.” In Kiev Babis’s ANO was called the “Führerpartei”.

The Ukrainian allegations were published on March 29. On April 13 a US-supported think-tank in London calling itself the Henry Jackson Society published a report on Babis entitled “Now the Czechs have an oligarch problem, too”. The author was Andrew Foxall (right), who heads the Jackson group’s Russia Studies Centre. Foxall has been an academic in Belfast. For several days he has had a problem. When readers tried to open his report on Babis, the link was blocked by what was described as a “fatal error”. The think-tank now says “that was a technical problem with our website.” It can now be read here.

The Jackson think-tank reports patrons representing the US Council on Foreign Relations; the US National Endowment on Democracy; General Jack Sheehan (below left), a former US NATO commander and now lobbyist for the Bechtel construction company; former Pentagon official, Richard Perle (centre); and Robert Kagan (right) a foreign policy advisor to several secretaries of state. Kagan is the husband of Victoria Nuland, the State Department official currently in charge of eastern Europe and the Ukraine war.

On Friday (April 17) Babis was in Washington for the annual spring meeting of finance ministers at the International Monetary Fund (IMF), announcing there that the Jackson Society’s allegations are “a pack of lies and dirty tricks…What a coincidence that it was published [on April 10] two days before I arrived [in the United States].”

Babis directed his public attack against Foreign Policy, which published Foxall’s report in the US. The magazine was owned by the Carnegie Endowment for International Peace until 2008, when it was bought by the Washington Post. When the Post was sold in 2013 to Jeffrey Bezos, the Amazon.com owner, Foreign Policy was one of the small properties in the deal. It calls itself “A Trusted Advisor for Global Leaders When the Stakes are Highest.”

David Rothkopf (right), the editor of Foreign Policy, is an apparatchik from Bill Clinton’s administration. He also owns a company called Garten Rothkopf, which he describes as “an international advisory company specializing in global political risk, energy, resource, technology and emerging markets issues based in Washington, D.C.” According to the company, it specializes in “focus on political realities that uncovers the likely – though often unintended – consequences of government action”.

Rothkopf is a booster of the Hillary Clinton campaign. Two years ago he claimed in print “there are few certainties in American politics. But you can write it down: If Hillary Clinton wants to be the next nominee of the Democratic Party to be president, the job is hers.” Rothkopf also claims Clinton “has been the most successful U.S. secretary of state in two decades.”

(…) In New York the Clinton Foundation identifies few donors from the Czech Republic. One is Ladislav Drab (below, right), the chief executive of American Power Supply and Czeska Energie (CE Group), traders in imported natural gas, LNG, and electricity for the Czech market. Drab’s donation to the Clintons is listed in the $100,000 to $250,000 range. Drab received this souvenir from Bill Clinton:

Drab and Clinton at an energy summit conference at the Prague Castle, May 2012 Source: http://www.gscep.cz/cs/aktuality

Another in the Clinton roster of donors is Braun’s firm Penn Schoen & Berland (PSB), which is recorded as making a donation of $50,000 to $100,000. If Braun was fronting for Babis or another of Braun’s clients, he isn’t saying. There is no record at the US Justice Department’s foreign agents’ registry that Braun or PSB represent either Babis or a Czech government entity or business. If Braun has been billing Babis for advice on which US Government officials to meet, he isn’t obliged to register as a foreign agent. If he picks up the telephone to arrange a meeting, the law requires him to register.

The Washington Post, Wall Street Journal and Newsweek have all been reporting in recent days on the foreign business and government lobbying of Hillary Clinton accompanied by large donations to the Clinton Foundation. For more on the $13 million in donations which Ukrainian oligarch Victor Pinchuk has made to the Clinton Foundation, on the advice of lobbyist Schoen from PSB, click. This week Newsweek is reporting that while Pinchuk was giving money to the Clintons, Hillary Clinton as Secretary of State overlooked his breaches of US and European Union sanctions against trading with Iran.

Schapiro and others from the Clinton entourage are now pressing Babis and the ANO to reverse Czech policy, and revive earlier US and NATO plans to establish missile batteries and other military deployments on Czech territory. An American source in Prague says: “Babis doesn’t work for the Americans, but he doesn’t like Zeman. Clearly he is out to become president himself. He is likely to succeed. ” (Read more: John Helmer, 4/20/2015)  (Archive)

(Republished in part with permission.)

“Officials of the International Monetary Fund (IMF) are in flight from evidence of negligence, incompetence, and corruption in their management of billions of dollars in loans for Ukraine.

Nikolai Gueorguiev, head of the Ukraine team at IMF headquarters in Washington, DC, and Jerome Vacher, the IMF representative in Kiev, refuse to respond to questions on their role in the offshore diversion of IMF loan money through Privatbank and Credit Dnepr Bank, banks owned by Ukrainian oligarchs Igor Kolomoisky and Victor Pinchuk. The Fund’s Managing Director Christine Lagarde (lead image, front) and her spokesman, Gerry Rice (rear), are covering up evidence of conflicts of interest and multiple violations of the IMF Staff Code of Conduct which have been occurring in the Ukraine loan programme. Simonetta Nardin, head of the Fund’s media relations, refuses to explain her apparent violations of the Code, or respond to evidence that she fabricated elements of her career resume.

On Tuesday a spokesman at the US Department of Justice in Washington confirmed that an investigation is under way of the role played by US clearing banks in the movement of IMF funds through the Privatbank group and companies connected with Kolomoisky. Speaking for the Asset Forefeiture and Money Laundering Section, Peter Carr declined to give more details.

In recent indictments presented to US courts, Justice Department officials have defined the crime of money laundering as the transmission or transfer of money through “a place in the United States to or through a place outside the United States” with the “intent to promote the carrying on of specified unlawful activity”; with knowledge that the transfer of funds represents “the proceeds of some unlawful activity”; and with the intention to “conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of unspecified unlawful activity”.

The role of US system banks, such as Citibank, Bank of America, and JPMorgan Chase, in clearing US dollar transactions has been the basis of selective Justice Department prosecutions of Russian and pro-Russian Ukrainian companies and individuals since the toppling of President Victor Yanukovich in Kiev in February 2014. In contrast, Ukrainian allies of the US in that operation, including Yulia Tymoshenko (below, left), Kolomoisky (centre), and Pinchuk (right), have not been pursued on court evidence of their involvement in corruption and money-laundering.

Washington’s selectivity and political favouritism was condemned by an Austrian court in May when a US extradition request for Dmitry Firtash on corruption charges was rejected. Justice Department lawyers are now attempting a retrial of their allegations in an appeals court in Vienna.

For the Justice Department to acknowledge this week that it is investigating Kolomoisky is unusual. Kolomoisky himself was last recorded as visiting the US in April; follow that story here. He is based in Geneva, where a Swiss Government investigation of his qualification for renewal of a residency permit continues without end.

For the US to acknowledge opening an investigation of IMF lending to Ukraine is unprecedented. The IMF resumed its loan disbursements to Ukraine in March. This was after a hiatus of six months from October of 2014 when the Stand-By Arrangement (SBA) agreed the previous April was suspended as Fund officials attempted to convince the board that the Kiev government was capable of repaying its debts and meeting its loan conditions. When the Fund launched the SBA on April 30, 2014, it had claimed: “A strong and comprehensive structural reform package is critical to reduce corruption…to build capacity to more effectively conduct enforcement of anti-money laundering and anti-corruption legislation.”

The IMF reports that in 2014 it gave $2.2 billion to the National Bank of Ukraine (NBU) before the suspension. Another $5.4 billion in IMF cash was paid to Kiev for what is called “budget support”. That also included warfighting in eastern Ukraine.

When the IMF board agreed to restart lending with a new arrangement called the Extended Fund Facility (EFF), the American deputy managing director of the Fund, David Lipton, claimed: “Restoring a sound banking system is key for economic recovery. To this end, the strategy to strengthen banks through recapitalization, reduction of related-party lending, and resolution of impaired assets should be implemented decisively.” Using the future tense Lipton (below, left) was acknowledging that next to nothing had been done to reform the Ukrainian banks in fifteen months.

Gueorguiev (right), an ex-official of the Bulgarian government, has claimed he is in charge of the independent auditing and supervision of the Ukrainian banks; for the record of his admissions in June 2014, click. Since then Gueorguiev refuses to answer questions.

In the new staff report for which he and Jerome Vacher, the IMF resident representative in Kiev, are responsible, issued a month ago, they admitted the condition of the Ukrainian banks is parlous. “Outstanding NBU loans are still elevated for a number of domestic banks. At end-June, the aggregate liquidity ratio among the 35 largest banks was 15.2 percent, although seven of these domestic privately-owned banks had liquidity ratios below 5 percent.” Privat and Credit Dnepr, the Kolomoisky and Pinchuk pocket banks, aren’t identified.

(…) The new staff report claims it has been decided to continue making “provision related loans in full and transfer them into a specialized unit inside the bank in case it is needed to ensure medium-term financial viability of any resolved SIB. [And] inject public funds in the SIBs only after shareholders have been completely diluted and non-deposit unsecured creditors are bailed in.” This looks like the IMF has decided to oust Kolomoisky from control of Privatbank. It may be advance warning for him to empty the bank’s pockets into his own before the dilution and other conditions take effect. That would make Gueorguiev and his IMF colleagues complicit in the money laundering schemes the Justice Department is investigating – if evidence turns up that they knew, or ought to have known, of transfer schemes intended to defraud the bank, its collateral shareholder NBU and lender IMF, by hiding the cash offshore under Kolomoisky’s personal control.

Jerome Vacher

(…) Vacher (right), the Fund’s resident representative in Kiev, may be of greater interest to US investigators because he appears to have been exchanging valuable favours with Pinchuk. Questioned about his trip to Venice in May to attend a Pinchuk art show and political rally, Vacher is admitting through the Fund’s press office that he wasn’t on official duty at the time. But did he stay on board Pinchuk’s motor yacht Oneness, which port logs show to have been in Venice between May 4 and May 8? Vacher and his superiors in Washington are withholding their answer. For more details of Vacher’s relationship with Pinchuk, read this. For the impact of the IMF loan programme on Credit Dnepr Bank, click here.

Reporting to Managing Director Lagarde as chief spokesmen for the Fund’s Ukraine operations are Rice, a British national, and Simonetta Nardin, an Italian. She claims to have been a journalist in Italy before joining the IMF in 1997. In a forum sponsored by the US Government’s National Endowment for Democracy, the Czech Foreign Ministry, the European Commission, and a Taiwan government office in Prague, she also claimed her role is “to make the IMF responsible and accountable for what it does.” (Read more: John Helmer, 9/03/2015)    (Archive)

(Republished in part, with permission)

“A claim is being widely reported in the US media which supported Hillary Clinton for president that President-elect Donald Trump paid for at least two ladies to urinate on the bed in the presidential suite of the Ritz Carlton Hotel of Moscow. A former British Secret Intelligence Service (MI6) agent named Christopher Steele has reported the episode in a memorandum dated June 20, 2016, because he was paid by a US client to do it;  and also because he was paid to speculate that the Russian Security Service (FSB) filmed it, and has been blackmailing Trump ever since.

Trump has responded that Steele is a “failed spy”. That is not an impetuous tweet. It’s the assessment of both US and British intelligence agencies, including MI6, for which Steele worked undercover in Moscow between 1994 and 1996. His cover was blown; he was evacuated; and as British intelligence sources report this week, Steele has been unable to enter Russia for a decade. “No Russian with official links and knowledge would risk communicating with Steele for fear of being detected by Russian counter-intelligence,” said an intelligence source in London, Said another: “I met [Steele] a couple of times and thought that for a relatively undistinguished man who never made very senior rank he was a smug, arrogant s.o.b.  So I don’t work with him. The description of his being the top expert on Russia in MI6 is bollocks. ”

The story of the Obama-Trump bed, according to Steele, comes from 2013. Another story, the one of the Putin bed on which Italian Prime Minister Silvio Berlusconi had sex with a prostitute in Rome, dates from 2009.  The true part has been verified with a tape the lady made of Berlusconi boasting about the source of the bed as he exercised himself on it. Dmitry Peskov, spokesman for Putin then and now, says the Trump-Obama bed story is “a complete fake. It’s total nonsense.” But about the Putin-Berlusconi bed, he said at the time: “We reject this information. I am not in a position to explain.” In short, that bedtime story may be true.

The Steele dossier contains 35 pages, commencing on June 20, 2016,   and ending on December 13, 2016. The published form can be read here.  It comprises 17 reports. But the file numbering from 2016/ 080 to 2016/166 implies there were 86 such reports altogether, so only one in five has become public. What was in the remaining 67 reports is unknown. Unknown,  too,  is whether it’s possible that over six months Steele was producing reports on Russia at the rate of 11 per month,  3 per week, one every two days.

A London newspaper claims Steele was paid £200,000 for his job. The newspaper also claims that a friend of Steele “who does not want to be named, says he sold them in installments at $15,000 (£12,300) a time every three weeks to anti-Trump Republicans looking for dirt on the tycoon in the run-up to the presidential nomination.”  This means there were no other reports in the series; the numbering was intended to mislead. That’s not all.

The Guardian newspaper, the Financial Times and US newspapers claim the dossier has been circulating “for months and acquired a kind of legendary status among journalists, lawmakers, and intelligence officials who have seen them”, according to one reporter. According to Financial Times reporter Courtney Weaver (right), she “investigated some of the allegations contained in the report but was unable to confirm them.”   She has published them,  nonetheless.  For more on Weaver’s record for veracity in Moscow, read this.

A source at a London due diligence firm which is larger and better known than Steele’s Orbis Business Intelligence Ltd. says “standard due diligence means getting to the truth. It’s confidential to the client, and not leaked. There are also black jobs, white jobs, and red jobs. Black means the client wants you to dig up dirt on the target, and make it look credible for publishing in the press.  White means the client wants you to clear him of the wrongdoing which he’s being accused of in the media or the marketplace; it’s also leaked to the press. A red job is where the client pays the due diligence firm to hire a journalist to find out what he knows and what he’s likely to publish, in order to bribe or stop him.  The Steele dossier on Trump is an obvious black job. Too obvious.”

Steele’s career in Russian intelligence at MI6 had hit the rocks in 2006, and never recovered. That was the year in which the Russian Security Service (FSB) publicly exposed an MI6 operation in Moscow. Russian informants recruited by the British were passed messages and money and dropped their information in containers fabricated to look like fake rocks in a public park.   Steele was on the MI6 desk in London when the operation was blown. Although the FSB announcement was denied in London at the time, the British prime ministry confirmed its veracity in 2012. Read more on Steele’s fake rock operation here, and the attempt by the Financial Times to cover it up by blaming Putin for fabricating the story.

The wet bed story, as Steele reported it to his client who then leaked it to the media, looks like this:

The bedroom, the bed and a piece of 19^th century soft porn on the wall look like this:

(Credit: Ritz Carlton)

The June 20, 2016, memo, which started the wet bed story, reports seven sources, identified as Source A through G. No other report in the dossier has as many sources; some of the original seven reappear in the series. Look carefully to detect what the Clinton media have missed.

Source D isn’t Russian at all. He is American;  Steele reports him as a “close associate of Trump who organized and managed his trips to Moscow”.  D claims to have been “present”; there is a bedside armchair in the Ritz Carlton photograph, so “present” is possible.

Source E’s identity has been blacked out in the first memo, but he is identified elsewhere in the series as another American – a “Russian émigré figure close to… Trump’s campaign team” – not to Trump himself.  Within the space of a paragraph, however, he turns into an “émigré associate of Trump”.  Several memos and weeks later, on August 10, this source has become “the ethnic Russian associate of Trump”.

The others reported by Steele to have been in on the wet bed story include Source F, “a female staffer at the hotel when Trump stayed there”. From the dossier it appears she told her story to an American who was an “ethnic Russian operative” of the company run by Source E, the émigré.  So Source F isn’t a direct or independent source at all. If this is beginning to bewilder you, it should. The only sources for the wet bed story turn out to be Americans, not Russians at all.” (Read more: John Helmer, 1/18/2017)  (Archive)

(Republished in part with permission)

(Credit: John Helmer)

“Never in the field of American conflict with Russia has so much wool pulled over the eyes been owed to so few sheep.  That was during the losing presidential campaign of Hillary Clinton. Now, in the investigations of President Donald Trump and his family, it’s a case of so many sheep producing so little wool.

The case of the $13 million paid to the Clinton family by the Ukrainian oligarch Victor Pinchuk, in exchange for personal favours and escalation of the war against Russia, was reported in detail throughout 2014. Click to read the opener,  and more.

Early this month there has been fresh investigation of Pinchuk’s money links with the Clintons, owing to the start of Ukrainian government inquiries into the theft of billions of dollars of International Monetary Fund (IMF) loans to Ukraine – money then transferred to  Ukrainian commercial banks including Pinchuk’s Credit Dnepr bank,  and then loaned to offshore entities controlled by Pinchuk but apparently not repaid.  Theft of the IMF money was first reported here in connection with Igor Kolomoisky’s operation of Privat Bank.

Credit Dnepr’s [Pinchuk] takings were reported here. Also on the receiving end was the IMF’s Kiev representative, Jerome Vacher. For the reporting of his relationship with Pinchuk, read this. Vacher was recently replaced in Kiev. He and the IMF management decline to explain why.

Last week, in an investigation of Pinchuk, Credit Dnepr, and the Clintons, a group known as CyberBerkut published what it says were emails hacked from the files of Pinchuk operative, Thomas Weihe. He is currently listed as head of the Pinchuk Foundation board and chief executive.  Read the emails here.

Foundation business — left: Weihe with Pinchuk; right: Pinchuk with Chelsea Clinton. (Credit: John Helmer)

The BBC’s Ukrainian service reports that CyberBerkut is a “staunchly anti-Western group which takes its name from the riot police used against protesters during the unrest in Kiev that led to the ousting of President Viktor Yanukovych. The group’s declared goal is thwarting Ukraine’s military plans and thus stopping the “genocide” that it accuses Kiev of unleashing at America’s behest. Its motto is ‘We won’t forgive or forget’, and its rhetoric closely resembles that of Russian state media.”

The Wikipedia entry for CyberBerkut calls it “a modern organized group of pro-Russian hacktivists”, with a long list of cyber operations starting in March 2014. For details, read.  On July 13, Wikileaks tweeted the CyberBerkut report but qualified its conclusions, calling them “alleged”.

Russian press pick-up has yet to reach the mainstream Moscow media,  or the English-language outlets run by Dmitry Peskov, the Kremlin press head.  If it did, they might correct factual errors in the CyberBerkut report, such as the linking of Pinchuk to the Ukrainian Delta Bank. Before its collapse in March 2015, Delta was owned by Nikolai Lagun.  Graham Stack’s investigation of Lagun’s looting of Delta Bank reveals plenty of crime, but no trace of Pinchuk.

The first Russian publication of the CyberBerkut report is on the Novorussian website, Colonel Cassad;   this is no more than a re-publication of the original text.

This is how CyberBerkut charts the relationship between the Pinchuk outlays and Clinton receipts:

CLICK TO ENLARGE

The evidence of the movement of IMF money through Credit Dnepr into the offshores, and from Pinchuk pockets into Clinton pockets,  has yet to be corroborated. What is revealed for the first time are emails between Clinton and Pinchuk operatives during the second half of 2014. These confirm the investigations, reported here three years ago, of what Pinchuk was doing to promote his steel-pipe trade with the US and his anti-Russian agenda, with the Clintons and the Obama Administration. At the same time, Pinchuk was using the demonstration of support he was procuring from them in order to boost his political power in Kiev and financial favour from the National Bank of Ukraine.

Read the emails, commencing in July of 2014:

Douglas Schoen, Pinchuk’s lobbyist in the US, does not respond to queries. Nor does Weihe, the Pinchuk Foundation apparatchik. They have made no statement challenging the authenticity of these emails. Nor have the Clinton Foundation officials who sent or received the emails, and who have been working to manage Clinton’s relationship with Pinchuk and satisfy his requests.

The three Clinton operatives, who remain at work at the foundation, are Amitabh Desai (pictured below, left), Robert Harrison (centre), and Craig Minassian (right).

Desai, according to the Clinton website, “has been with the Clinton Foundation for more than 10 years. As foreign policy adviser, Ami guides international strategy and relationships and plays a central role in shaping and executing President Clinton’s vision. This includes managing relationships with heads of state, business leaders, philanthropists, and NGOs around the globe” Before taking his job at the foundation, Desai worked for Clinton when she was a US senator, and before that, for Senator Edward Kennedy.

Last week’s report isn’t the first disclosure that in Desai’s emails he was selling access to Clinton for foreign money. More of them can be found here. Among the excerpts already published by US investigators, mainly from Freedom of Information Act pursuit of State Department files, there is no reference to Pinchuk or Ukraine. The US archive on reports of fraud at the Clinton Foundation is very large and can be combed through here. Fraud involving Pinchuk isn’t reported in this database.

(…) On November 3, the week before the election, AP broke the news that the Federal Bureau of Investigation (FBI) had been pursuing an investigation of Clinton’s government favours for foundation donations, but that the Justice Department stopped it. “Though agents believed they had grounds to move forward with an investigation, Justice Department lawyers were more skeptical. The lawyers did not direct the FBI to stop looking into the matter during the meeting, but public-corruption prosecutors in Washington expressed disinterest in a Clinton Foundation-related investigation based on the information presented.”

In all the email evidence which US media investigations pursued to expose Clinton’s foreign favour trading, there was no focus on the Pinchuk emails and the flow of Pinchuk money. Conflict of interest was the Clinton offence the US investigators were after. But in the Pinchuk case, there was another potential offence, and that was reported on February 17, 2014. Pinchuk had looted his Moscow-based Rossiya Insurance Company of up to $200 million, according to investigations by Russian insurance regulators and prosecutors, before the company’s licence was cancelled in October 2013.

The subsequent question was: did that money find its way through Pinchuk’s foundation into Clinton’s foundation, to be traded for political and personal favours?

The release of the CyberBerkut emails last week provides fresh evidence of this trading, but CyperBerkut doesn’t mention the Rossiya Insurance Company crime. As well-known as the crime was in 2013 and 2014, no US media investigator, nor any Russian government investigation has reported pursuing the Rossiya money-trail through Pinchuk’s accounts into Clinton’s. So the big question for the FBI and the Department of Justice —  what check did the Clinton Foundation carry out of the legality of the money it took from Pinchuk? – has never been asked. Or if the US Government did ask the question, the Clinton answer has been concealed.

Note: Thomas Weihe comments:  “First, it is obviously a lie that I don’t respond to queries. Every more or less professional and honest journalist gets an answer from me quickly, and I reply honestly. Second, the whole story is completely wrong. It is so wrong that individual corrections cannot improve it. Everything is invented. There is no truth to anything you say. The so-called evidence proves absolutely none of the claims you make. You should be ashamed of publishing such crap.” (Read more: John Helmer, 7/17/2017)

(Timeline editor’s note: We are excited to have received permission to republish some of Mr Helmer’s well-sourced work on Ukraine, the Clintons and Victor Pinchuk. Please be sure to read his entire article at the link provided. According to Mr. Helmer’s bio, he is the “longest continuously serving foreign correspondent in Russia, and the only western journalist to direct his own bureau independent of single national or commercial ties.”)

“In the mind of Fiona Hill (lead image, right), the recently departed senior director for Russia at the National Security Council (NSC), everybody in Washington is vulnerable to Russian attacks of one kind or another, but not her.

Instead, she admitted in testimony to the Congressional committees investigating impeachment evidence against President Donald Trump,  that she’s on an attack operation of her own.  “I’m sorry to be very passionate but this is precisely…why I joined the [Trump] administration. I didn’t join it because I thought the Ukrainians had been going after the President.”  She says the reason she joined up was to fight the Russians.

“I thought it was very important to step up, as an expert, as somebody who’s been working on Russia for basically my whole entire adult 1ife, given what had happened in 2016 and given the peril that I actually thought that we were in as a democracy, given what the Russians I know to have done in the course of the 2016 elections… I’m extremely concerned that this is a rabbit hole that we’ re all going to go down in between now and the 2020 election, and it will be to all of our detriment.”

Hill testified that she’s certain that “what happened in 2016” was that the Kremlin intervened to help Trump defeat Hillary Clinton. “We’re in peril as a democracy because of other people interfering here. And it doesn’t mean to say that other people haven’t also been trying to do things, but the Russians were [the ones] who attacked us in 2016, and they’re now writing the script for others to do the same. And if we don’t get our act together, they will continue to make fools of us internationally.”

“He’s [President Vladimir Putin] looking out there for every opening that he can find, basically, and somebody’s vulnerability to turn that against them. That’s exactly what a case officer does. They get a weakness, and they blackmail their assets. And Putin will target world leaders and other officials like this. He tries to target everybody.”

So, in the logic of Hill’s analysis of how the Russians operate against everybody, including herself, what evidence is there that Hill hasn’t, by concealment, calculation, corruption, or by mistake, succumbed to Putin’s attack,  too? Not once was Hill asked by either the Democrats or Republicans during the deposition, nor did she volunteer her own explanation, of how she managed to inoculate herself and is now telling the truth.

If Hill is telling the truth, and equally if she isn’t,  she has inflicted serious damage on her own colleagues and superiors,   the US Government’s Russia-hating professionals. In her testimony Hill depicts them as lying to each other and to the press; constantly scheming for and against the President; incapable of coordination among themselves, agreement with their allies, or negotiation with their enemies. Most valuable of all to the Kremlin, Hill reveals that the American warfighter is predictable in everything he or she understands, plans or does.

To reveal this much is precious intelligence for Moscow because the Russian secret services and Putin would be less willing to believe it if it had come from home-grown agents. Either Hill is a willing dupe, or she is the fool she is warning her colleagues to beware of.

On October 14, Hill gave ten hours of question-and-answer testimony before the Congressional committees on intelligence, foreign affairs and oversight. The record comprises 446 pages of verbatim transcript. This has just been released in unclassified, partially redacted form; click to read in full.

(…) Hill’s testimony reveals, though she doesn’t admit it, that Trump had come to distrust the intelligence analysis and policy advice he was getting from Hill as the coordinator of all the government agencies involved in Ukraine and Russia. She admitted to knowing little personally and directly of what Trump and his senior aides and advisors discussed and decided among themselves. What she knew was indirect, down the White House staff chain,  and by hearsay.

Her preoccupation, Hill emphasized repeatedly, was with Russian plotting in Washington, and in Hill’s assessment, the Russian successes. Christopher Steele, whom Hill had known as her counterpart intelligence officer for Russia at the British MI6 years before, had been lured, she testified, by the Russians into the “rabbit hole” Hill called the Golden Showers dossier.   Victoria Nuland, former Assistant Secretary of State, was tricked by the Russians into promoting the Steele dossier to NSC officials. Ambassador Geoffrey Pyatt, ex-Ambassador to Ukraine, was victimized by the Russians who eavesdropped on his telephone calls with Nuland when he and she were plotting the Kiev putsch of February 2014.

Left to right: Christopher Steele; Victoria Nuland; Geoffrey Pyatt. (Credit: John Helmer)

Hill swore on oath that she too was targeted by Russian agents when she was writing her last book on President Vladimir Putin in 2012.   “My phone was hacked repeatedly, and the Brookings system was hacked repeatedly,” she told the Congressmen. “And at one point, it was clearly obvious that someone had exfiltrated out my draft…And then, mysteriously, after this I started to get emails from people who purported to have met me at different points in my career, people I kind of vaguely remember. I’d look online, and there would be these, you know, Linkedln pages or there might be, you know, something I could find out some information for them. And they’d start offering me information, you know, that somehow purported to, strangely enough, some of the chapters that I was actually working on. And when I would go to meetings in Russia, people would basically, you know so that I was being played, or they were attempting to play me as well.”

Hill was not asked if she reported this to the Federal Bureau of Investigation (FBI) at the time.  That she didn’t report the alleged plot not only discredits her making the allegation now, seven years later; it also warns the Russian services to tell Putin that there is nothing US officials like Hill don’t imagine or won’t fabricate.

For Hill, those Americans who have been targeted the most are so obviously innocent, it’s a Russian operation to think, say, broadcast or publish otherwise. She is convinced, for example,  of the innocence of former Vice President Joseph Biden and former Secretary of State Hillary Clinton in taking money from Ukrainians seeking to influence US policy, when they were in charge, or when Clinton was running for president. (Hill said she is just as certain Paul Manafort was guilty of taking Ukrainian money.)

As for the current allegation against the Bidens, father and son, that they were corruptly trading US Government favour for cash paid through the Ukrainian oil and gas exploration company Burisma, Hill revealed she had seen no intelligence report on the subject during her time in office. “From your knowledge of Burisma, are they a corrupt company? DR. HILL: I don’t know a lot about Burisma, I’ll be frank… And you never heard of any reason why anybody should be investigating Vice President Biden? A[nswer]. …correct… And are you aware of any evidence that Vice President Joe Biden in any way acted inappropriately while he was Vice President…A[nswer]. I’m not.”

For details of the Burisma case, and the involvement of Ukrainian oligarch Igor Kolomoisky, read this.

Hill also expressed the unqualified conclusion, after her professional assessment of the US intelligence, that the narrative of the anti-Trump forces in Congress and the press is accurate.  “Do you have any reason,” she was asked by Daniel Goldman, head of investigations for the intelligence committee, “to doubt either the facts alleged in the [Mueller] indictment or the Intelligence Community’s assessment that Russia did interfere in the 2016 election? A[nswer]: I do not. Q. And do you have any reason to believe that Ukraine did interfere in the 2016 election? A[nswer]: I do not. We’re talking about the Ukrainian Government here when you say Ukraine, correct? A. Yes. Yes, I do not.”

Neither Goldman nor the Republican Congressmen asked Hill what she knew of Victor Pinchuk, the Ukrainian oligarch acting for the Ukrainian Government in sending large sums of money to the Clinton Foundation and Hill’s employer, Brookings.”  (Read more: John Helmer, 11/12/2019) (Archive)

(Credit: John Helmer)

“Investigations by US government officials, including the Federal Bureau of Investigation (FBI), of Christopher Steele’s (lead image, right) Russiagate dossier have identified Catherine Belton (left) as one of the targets for his fabrications. Belton was herself investigated as one of the journalists Steele recruited to plant his allegations of Russian interference days before the 2016 presidential election.

Catherine Belton is the former Moscow correspondent for Financial Times. (Credit: public domain)

In her book Putin’s People, Belton repeats many of Steele’s allegations but she does not cite him or his consulting company Orbis as her source. Belton adds at the end of the book: “I’ll always be grateful to Chris [Steele] for his moral support.” After Belton’s book appeared in April 2020, Steele admitted to lawyers engaged in a London High Court lawsuit against him that Belton is “a friend, yes, she’s a friend”.

Fresh evidence revealed in the indictment issued by the US Department of Justice on September 16, shows that the FBI has concluded Steele was lying when he and his American accomplices planted false allegations of Russian election interference through several named intermediaries, including a Russian bank and Russian émigrés in the US,. The New York Times and The Atlantic were identified in last month’s US court papers as willing outlets for the fabrications. Earlier litigation by the Alfa Bank group in the US has identified five New York Times reporters and David Corn of Mother Jones as collaborators in the scheme.

Belton’s name, tagged with the note “London meeting”, has also surfaced in meeting notes taken at the State Department on October 11, 2016, when Steele met with Assistant Secretary Victoria Nuland and a deputy, Kathleen Kavalec.  Kavalec’s meeting notes, partially declassified, reveal that Steele’s allegations of Russian election interference followed a briefing of the same allegations at the FBI a month earlier, on September 19, 2016,  by Michael Sussmann, a lawyer working in secret for the Democratic National Committee (DNC).  Sussmann is now charged with lying then to the FBI.

The Justice Department’s indictment says Sussmann was one of the plotters with Steele and others, including journalists, university academics, and IT experts in publishing false stories of Russian election interference; their plot aimed at hurting the Republican candidate, Donald Trump, by making it appear he was in cahoots with the Kremlin to hurt the Democratic candidate, Hillary Clinton.

“In or about late October 2016 – approximately one week before the 2016 U.S. Presidential election – multiple media outlets reported that U.S. government authorities had received and were investigating allegations concerning a purported secret channel of communications between the Trump Organization, owned by Donald J. Trump, and a particular Russian bank (‘Russian Bank-I’).”

The Kavalec notebook also reveals that Steele claimed there were “3 distinct channels” for this Russian operation “run by Kremlin, not FSB, Ivanov, Peskov, Putin.”  In addition to accusing Alfa Bank as the first channel “Alfa-Trump-Kremlin-comms”, Steele told Nuland that Serge Millian, a Russian émigré businessman in the US, was the second; Carter Page, a wannabe Trump campaign adviser, was the third.

In the sequence of Kavalec’s notes. Steele told Nuland there were “hackers out of R[ussia] – acting in US – [payments out of the state] pension fund Miami consulate payments – implants. Operations Paige [sic], Millian (émigrés?), Manafort.”  Steele then mentioned the London meeting with Belton whom he identified as “FT [Financial Times]”.

Reporting by Belton in the Financial Times followed days after her meeting was mentioned by Steele to Nuland.  In  Belton’s published report, she named Serge Millian as the channel Steele had alleged at State and the FBI. “Now, “ Belton claimed on November 1, one week before Election Day,  “the US administration has formally accused Russia of attempting to interfere in the US electoral process through the hacking of the Democratic National Committee’s email servers, Mr Millian’s activities — and his ties to the Republican presidential nominee — are coming under increasing scrutiny.” Belton did not identify her sources for her allegations against Millian. She implied, however, that they were US intelligence agents and the FBI.  “Mr Millian came on to the FBI’s radar”, Belton reported. “The FBI probe was part of a wake-up call for US intelligence over suspicions that Russia was activating networks long thought defunct after the end of the cold war.”

Millian avoided Belton for an interview and she reported. “He declined repeated requests for an interview and left the US for Asia on a business trip in early October.” Two weeks before, Steele had told Nuland, according to Kavalec’s transcript, Millian was “now in China.”

According to Belton, Millian had been a real estate broker for Trump, selling Trump organisation properties to Russians. Steele had told Nuland “real estate entities used for massive set of purchases by Russians. Set up espionage network in FL[orida] – to buy a lot of properties for POTUS [Trump’s] businesses through a R[ussian] brokage. 100’s of real estate transactions.”

Mikhail Fridman (l), Petr Aven (c), and Lord Browne at the L1 Energy launch in New York, May, 2015. (Credit: LetterOne Group)

Two months ago, on July 28, Belton was exposed as a liar and fabricator of her source material by her British publisher, HarperCollins.  Settling the High Court case brought against them both by Mikhail Fridman and Pyotr Aven of Alfa Bank, the publisher said there was “no significant evidence” for Belton’s allegations of KGB connections in the early careers of Fridman and Aven; and that she had failed to check her claims with Fridman and Aven before publishing them. The publisher agreed to delete Belton’s allegations from the book.

The terms of that settlement, and the ongoing High Court case in London, have stopped Macmillan, the US publisher of the book, from issuing the paperback edition, according to industry sources.

Once Belton’s allegations against the Alfa Bank group were abandoned by HarperCollins, lawyers for the remaining plaintiffs – Roman Abramovich, Rosneft and Shalva Chigirinsky – are now focusing on Belton’s acknowledged dependence on Steele – and on the fabrications Steele got Belton to print before the US election.” (Read more: John Helmer, 10/04/2021)  (Archive)

(Republished in part, with permission.)

(…) In a report commissioned by Alfa Bank and released by the Ankura Consulting Group in April 2020, the technical methods were exposed by which Sussmann and his Democratic National Committee clients had fabricated the evidence of the Russian “channel” to Trump. For the full Anura report, click to read.

In reporting this and the Sussmann indictment last month, it is now clear in retrospect that [Catherine] Belton was on the end of the chain of lying which started with Sussmann and Steele.  Sussmann first provided the Alfa channel fabrication to Steele on July 29, 2016; Steele admitted this to a lawyer for Alfa in London in March 2017.  Sussmann repeated the lie to the FBI on September 29, 2016. Steele then repeated it at the State Department on October 11, 2016. Hillary Clinton repeated it in a public tweet on November 1, 2016.  Steele has admitted some of the journalist names to whom he had repeated the Alfa lie in this UK court record; he has not admitted what he told Belton.

Belton did not admit her Alfa fabrications to HarperCollins in March of 2021, when the publisher issued a statement claiming the book was “an authoritative, important and conscientiously sourced work.”  Four months later, on July 28, The Bookseller printed a fresh statement from HarperCollins repeating the same endorsement and adding: “HarperCollins will robustly defend this acclaimed and groundbreaking book and the right to report on matters of considerable public interest.”  Hours later that day in court, the publisher contradicted itself and withdrew its defence of Belton’s Alfa claims.

To this day, the Financial Times website version of Belton’s November 1, 2016, story of the “second channel” shows no correction. Steele’s allegations at the State Department Belton repeated as innuendo: “questions are mounting over whether Mr Millian was one of a number of people who could have acted as intermediaries to build ties between Moscow and Mr Trump.”

In fact, the questions which started mounting immediately after Steele had met Nuland and Kavalec were immediately relayed to the FBI with warnings from both of them that they suspected Steele of faking.

By May 2019, a year before Belton’s book was due to be published, the first reports were surfacing in the Washington press revealing that Nuland and Kavalec had suspected Steele. Belton then erased Steele from the book as her source for the allegations she had already printed in the Financial Times on Millian’s Florida real estate schemes.

But into the book Belton kept up the same allegation, turning the innuendo into fact with a change of source: “Money then flowed into real estate in Miami, New York and London,” Belton alleged, ascribing this to Jack Blum, whom she reported as “a Washington lawyer specialising in white-collar financial crime”.  Blum is also the treasurer of an anti-Russia think tank in Washington funded in part by George Soros.  “Real estate was exempt from any kind of reporting of suspicious activity,” Belton says she was told at an “author interview with Blum, December 2018. Alan Garten, general counsel for the Trump Organization, did not respond to a request for comment.”

In Belton’s book, she continued to parrot Steele. “In total,” she wrote, “more than $98.4 million worth of property in south Florida was bought by Russians in seven Trump-branded luxury towers.”  Kavalec’s notes reveal that Steele had told Nuland “$98M in 7 towers”.

Kavalec’s records reveal that at the October 11, 2016, meeting with Nuland, Steele spent most of his time promoting his claim that the Millian “channel” and the “émigré network” were responsible for “domestic espionage”. Money to pay for this, he claimed, came from a Russian state “pension fund Miami consulate payments”. Steele also claimed Millian and others used real estate transactions because there was “no due diligence”. He named two of the alleged fronts as “Global Group” and “Florida Best Realty – Marat Zitsman – located in Trump Towers. 12s [dozens] of Russians.”

Source: this and also as a typed transcript, dated May 19, 2019.  This version reports Belton’s first name as “Chasenual[sp?]! and “meeting” as “wre[?]ly” Another source, with commentary, can be read here. The reference to “Winer” above Belton’s name identifies Jonathan Winer, a State Department official at the time who was also part of the Russian allegation chain between Sussman, Steele, and Belton. In her book, Belton reports interviewing Winer in December 2018.  Winer is reportedly the source for the claim of “an alliance of the KGB working with organised crime.” For more on Winer’s role as go-between Steele and Nuland, read this.

Kavalec’s subsequent reporting to the FBI casts doubt on Steele’s truthfulness and motive.  In her written report to Nuland and the FBI,  Kavalec wrote: “It is important to note that there is no Russian consulate in Miami.” Nuland also issued a warning to cut off contact with Steele because “this is about U.S. politics, and not the work of — not the business of the State Department, and certainly not the business of a career employee who is subject to the Hatch Act.”  For more details, click to read.

FBI officials have confirmed that Kavelec sent the FBI a report of these concerns by email; she also spoke directly to Stephen Laycock, then the FBI’s section chief for Russian and Eurasian counter-intelligence and later one of the bureau’s top executives as assistant director for intelligence. In the pre-election period Laycock was also a member of the inter-agency “Russian Malign Influence Group”, together with Kavalec and Justice Department officials.  Laycock was also aware that FBI agents reporting to him had met in July in Rome with Steele.

The email to Laycock from Kavalec arrived on October 13, eight days before the FBI swore to the Foreign Intelligence Surveillance Court that it had no negative information on Steele’s credibility; the FBI used his anti-Trump dossier to secure secret surveillance warrants to investigate Trump’s possible ties to Moscow. The publicly disclosed version of Kavalec’s email to Laycock has been heavily redacted on the grounds of national security. 

The manipulation of some agents and groups inside the FBI was under investigation by others at the FBI in the days leading up to the presidential election. This resulted in the FBI sacking Steele as a confidential source on November 1, 2016.

Source: https://www.scribd.com/

On the same day, Belton repeated in the Financial Times word for word what Steele had told her about the Millian “channel” and “espionage network”.

By then Laycock was about to move up from the Russian section of the Agency’s counter-intelligence division to take charge of counter-intelligence at the FBI’s Washington field office.    The following year he was promoted again, this time to assistant director of the intelligence directorate.  He continued at the top of the Bureau until his retirement in 2020 when he went to work for the computer security firm KACE, a unit of Dell, and SCL Risk Management.   SCL are Laycock’s name initials; the firm is registered at his home address in Burke, Virginia.

Laycock prospered during the Russiagate affair; looking back, he has told others “that of all the characteristics of a successful leader that come to mind…there is one word that I think about a lot in looking back on my FBI career regarding leadership roles and success, and that is to be Thankful…being thankful and appreciating opportunity is what, again in my opinion, got me to where I ended in my incredible FBI career.”

Forgetful was the term Laycock relied on when he was interviewed under oath at the Senate Judiciary Committee on June 15, 2020.   He was repeatedly asked what he knew of Steele and his claims about Russian operations in the US. According to Laycock, he had “heard the name before [October 2016]”. Asked whether he or his staff had checked Steele’s claims Laycock testified he was “not aware”, “I don’t know”, “I can’t remember”. Asked what Kavalec had told him about Steele after the October 11 meeting with Nuland, Laycock said: “I don’t remember exactly what she said.”

Kathleen Kavalec (l) of the State Department’s Russia desk and Bureau of European and Eurasian Affairs and Stephen Laycock (r) head of Russian counter-intelligence at the FBI. (Credit: public domain)

Asked whether Steele’s credibility had been called into question, Laycock told the Senate investigation: “I don’t recall that.” Asked again if he was present at meetings of his staff when Steele’s credibility had been examined, Laycock said: “I don’t recall any.” Had there been any verification of Steele’s allegations? “I don’t recall specifically any steps. It was more just status updates of kind of where things were.”

In her book Belton says that in July 2019 she interviewed Frank Montoya, head of the FBI’s counter-intelligence division between 2012 and 2014, before he was reassigned to Seattle. He then retired and went to work for StrikeForce Technologies — https://strikesource.com/team-member/frank-montoya-jr/ StrikeForce is one of the promoters of the Russia hacking allegations which Steele had started with Nuland.

STRIKE FORCE TECHNOLOGIES – RUSSIAGATE PLOT WAS SHARE PRICE BOOSTER FROM ELECTION DAY 2016 TO THE TRUMP-PUTIN MEETING IN JULY 2018

StrikeForce remains very small, with a current market capitalization of $70 million. Source: https://markets.ft.com/ CrowdStrike, the company which initially reported the allegation of Russian hacking of the DNC, did not list on the Nasdaq exchange until 2019. Its share price has moved steadily upwards; its current market cap is $57 billion. Shawn Henry, the second ranked executive at CrowdStrike, is an ex-FBI agent.

The only American reporter to have identified Belton’s reporting in the Financial Times as tied to Steele and the Sussmann plot is Matt Taibbi. He reported on September 22  “a long list of press figures “from [Brian] Stelter’s own CNN colleague and shameless intelligence community spokesclown Natasha Bertrand, to reporters from The New Yorker, Time, MSNBC, Fortune, the Financial Times, and especially Slate and The Atlantic — were witting or unwitting pawns in a scheme to sell the public on a transparently moronic hoax, i.e. that Donald Trump’s campaign was communicating mysterious digital treason to Russia’s Alfa Bank via a secret computer server.” Taibbi did not mention Belton by name.

It is not yet clear if FBI agents met with Belton at the time of her Millian story, or later. Belton refuses to respond to a request to confirm meetings she has had with FBI agents before her book was published.  The FBI was asked to clarify its contacts with Belton and to say if its agents had been the ones identified at the London meeting with Belton which Steele had mentioned to Nuland. The FBI replied: “we will decline comment.”

Sources who are familiar with FBI investigations of Russian money-laundering and US organized crime suspect that Steele, then Belton, were manipulated by the FBI counter-intelligence division trying to score personal and bureaucratic points against their traditional rivals, the organized crime division of the Bureau and the CIA’s counter-intelligence division. The FBI’s counter-intelligence division had been discredited in 2001 when Robert Hanssen, one of the division’s supervisors, had been convicted of spying for the Russians for many years.   His exposure followed the disgrace of the parallel operation at the CIA after the FBI arrested Aldrich Ames.

In her book, Belton has parroted the Montoya-Laycock script from the counter-intelligence division without checking with the FBI’s organised crime division. “It is a comic-book version of the facts”, says a source familiar with the Russian evidence and the FBI’s investigations of American crime gangs. “Some things are funny, like her spelling of the Genovese crime family.” The source says Belton misreports most of the details in her book about Jewish-Russian émigrés whom she calls “mobsters” and accuses of “network funnelling money from the former Soviet Union into America, including – indirectly – into the business empire of Donald Trump.”

“They,” Belton’s book claims, “were part of an interconnecting web of figures that became testimony to the enduring power of the black-cash networks created in the final years of the Communist regime. Some of them later joined Trump in real-estate ventures, helping bail him out when he fell into financial difficulty, offering the prospect of lucrative construction deals in Moscow… The money flows that went through part of this network to Trump’s business operations are yet to be fully uncovered – they remain at the centre of a legal standoff between the Trump Organization and Congress over what records can be disclosed. But some of the contours of Moscow’s influence over Trump can be traced.”

This was the Steele fabrication which the FBI counter-intelligence division and its Crossfire Hurricane group turned into a weapon in support of the Clinton campaign against Trump. Named seventeen times in Belton’s book, Sam Kislin, says a source directly involved in their business, “was partners with Misha Chernoy in Trans-CIS Commodities, starting off as trading in pig iron, not chrome. Sam had nothing to do with TransWorld, especially when Misha left. They also ran Blond Management together. Arik Kislin was the runner and gofer. Sam and Semyon [Mogilevich] were substantial contributors to the Democrats, not the Republicans. Yaponchik [Vyacheslav Ivankov] was sent to the U.S. to put down the warfare in Little Odessa [Brighton Beach, Brooklyn] because the American Mob was getting a lot of heat from the NYPD [New York Police Department] about the violence of the Russian gangsters in NY.”

Belton’s version of the Yaponchik story was sourced to court testimony by an FBI organised crime division agent, Lester McNulty.   McNulty’s affidavit of 1995 makes no reference to Trump or to Trump businesses.

Belton, however, links Yaponchik to Trump by reporting: “Agents eventually tracked him [Yaponchik] down to a luxury condo in Trump Tower in Manhattan, and then to the Taj Mahal [casino], to which he made nineteen visits while under surveillance between March and April 1993, gambling $250,000 there. Trump had survived his first threat of bankruptcy, and the Russians were among those who had helped him do so. The Taj Mahal became such a popular spot for Russian émigrés that part of a Russian movie was filmed there, a comedy that featured a casino owned by the Russian mob.”

“This”, said the source familiar with Belton’s “network”, “is a myopic view of the situation without any understanding of what was happening in the US from a US point of view. Donald Trump’s father owed the Mob a lot of money (some said $58 million). When Biff Halloran of Transit-Mix went to prison the Mob turned to [Donald] Trump to help reduce his father’s debt. Trump was building hotels, partially financed by the Mob, but using cement and building materials provided by the Colombo, Lucchese and Genovese families. The Teamsters got to do all the trucking; the Westies got the Irish construction jobs, the ILA got the dock jobs on the stevedoring at the piers where the cement was imported. It was a money machine.”

“The Russians had nothing to do with it. They only bought space in the buildings as a wash for the cash they were bringing into the country; hotel rooms and golf clubs. With all that, Trump still managed to fail. When they started up Atlantic City, the Mob used Trump as a front to get the licenses and took a hefty cut of the winnings and the skim. This was to reduce the father’s debt and the new debt run up by the Donald. The problem was that Atlantic City was run by the Philly Mob which was having a small war between Angelo Bruno, Phil Testa and Little Nicky Scarfo. It all fell apart. What is important about this is that this was all American greed and corruption. We did not need Russian adventurers to show us how it was done. The Russians brought their cash to the laundry but we didn’t ask them how to run a laundromat.”

“With all the book’s references to leading Russians coming to the US, the influence of the Solntsevskaya and Izamailova groups, [Belton’s book] pretends that the Russians were running things. They were providing hot money which got cooled down by passing through the NY building trades. Fat Tony Salerno, Paulie Castellano, Ralphie Scapo, Jimmy Blue-Eyes of the Westies did not take orders and advice from Russians. They took the money and gave them a fair return.”

“Pezzo Novantas [Sicilian slang for bigshot] like Trump just made it harder because they were ignorant and without power. Frankly, I was insulted by this book and its underlying premise that the Russian bad guys came to the US and corrupted the US with their evil ways.”

Shalva Chigirinsky (Credit: public domain)

A Russian émigré Belton interviewed four times in 2018 and 2019 and cites as her source for evidence of money links between Russian intelligence and Trump is Shalva Chigirinsky; Belton spells his name Tchigirinsky and cites him 64 times in the book. “In 2015, when Trump decided to run for the US presidency, Shalva Tchigirinsky was close by. He told me he was with Trump’s close friend and ally Steve Wynn, the casino owner who was to become a major donor for the Trump election campaign and subsequently the Republican Party’s finance chairman, soon after the decision was announced.” When she met Chigirinsky (right), she described him as“an ethnic Georgian with a thick mane of dark hair”. In fact, Chigirinsky is a Mingrelian Jew and from 2016 his hair was grey.

“What’s clear,” according to Belton, “is that ever since Tchigirinsky first appeared at the Taj Mahal in 1990, a network of Moscow/Solntsevskaya money men and intelligence operatives surrounded him, and that they stepped up the business connection after 2000”.

By the time Chigirinsky agreed to talk to Belton in 2018, his veracity had been called into doubt by court rulings on corporate fraud and wife beating in the UK and US. Belton omitted them in her footnotes. “Whether Tchigirinsky was involved in the Taj Mahal bondholders’ pact we may never know. He insisted he’d never invested in the Taj Mahal, but at one point when we were speaking of the financial difficulties that were facing the casino at that time, he spoke of the business almost as if it were his own.”

Chigirinsky is now suing Belton and HarperCollins in the High Court for libel. He filed on April 16, 2021. Two weeks later, the Financial Times reported the litigation with an attempt to discredit it. “Chigirinsky could not immediately be reached for comment through his lawyers,” the newspaper claimed, adding: “Jessica Ní Mhainín at the Index on Censorship, a group that campaigns for free expression, said London’s courts were becoming the venue of choice for legal action designed to ‘quash critical journalism, not only in the UK, but around the world’ .  She added that the UK is harbouring a global industry that profits from such lawsuits against journalists, and called for the introduction of reforms.”

At her new post in Bosnia-Herzogovina, Kavalevec [sic] was asked to clarify what her note of the Steele-Nuland meeting meant in referring to Belton and the London meeting. She did not respond.

Belton’s book does not mention the CIA in the text or index; she cites no CIA source of support for her allegations.” (Read more: John Helmer, 10/04/2021)  (Archive)

(Republished in part, with permission.)