Feds Investigate Giuliani

“Oh! What a tangled web we weave,
When first we practice to deceive!”

– from the play “Marmion,” Canto VI Stanza 17, by Sir Walter Scott (1771-1832), Scottish author & novelist

Rudy Giuliani (RIGHT) at the James J. Fox cigar bar in London, with Lev Parnas (lower LEFT) and, Igor Fruman (speaking on the phone), and a third, unnamed associate. (Obtained by ProPublica)

Yesterday, Friday, 15 November 2019, the Wall Street Journal reported around noon Eastern Time, that Federal prosecutors in Manhattan were investigating whether Rudy Giuliani – a former Federal Prosecutor who is Trump’s personal lawyer – stood to profit personally from a Liquefied Natural Gas (LNG) venture in Ukraine, which has been linked to corrupt oligarchs, and other corrupt officials, some of whom may have been, or may be yet, associated with the Ukrainian government – including two Naturalized American Citizens, Lev Parnas, and Igor Fruman.

Lev Parnas was born in Ukraine to Jewish parents who emigrated with him to the United States when he was aged three, while Igor Fruman was born in Belarus to Jewish parents, and later moved to Detroit.

Federal authorities arrested the two men October 9, 2019 at Dulles International Airport outside of Washington, D.C. as they both sought to leave the United States with one-way flight tickets on Lufthansa Airlines flight to Frankfurt, and charged them with illegally contributing to Trump’s election campaign. Deeming them flight risks, a Federal Judge in Northern Virginia set bail at $1 million each, and the pair are still in custody.

Lev Parnas (left) and Igor Fruman are shown after their arrest on Oct. 9 at Dulles International Airport, outside Washington, D.C.

The Federal indictment said Parnas acted “at least in part, at the request of one or more Ukrainian government officials,” and though none were named, it was well known that U.S. Ambassador to Ukraine Marie Yovanovitch’s primary critic in the Ukrainian government was Yuriy Lutsenko, who at the time was the Ukraine’s Prosecutor General and well-known to use the law as a weapon for his own personal political fights.

Federal Prosecutors indicted two other men, David Correia and Andrey Kukushkin, along with Parnas and Fruman, and accused them of funneling money to state and federal candidates in exchange for potential influence, noting that the four men wanted to set up recreational marijuana businesses in Nevada and other states, and sought political help to obtain the necessary licenses.

NPR reported 23 October 2019 that, “a company called Global Energy Producers (GEP) gave $325,000 to America First Action, the superPAC supporting Trump.” GEP is a shell company created by Parnas and Fruman.

According to Trevor Potter, a Republican former Commissioner and Chairman of the Federal Election Commission (FEC), General Counsel to the now-late Arizona U.S. Senator John McCain in his 2000, and 2008 presidential campaigns, who is now an investigator and founder of Campaign Legal Center (CLC), a non-partisan, non-profit legal advocacy group which monitors money and political campaigns, CLC found that the campaign contribution came from GEP which appeared to be a shell company, and as he described, was “a blank slate.”

As Potter recalled, “The company hadn’t existed. It had been formed literally a couple weeks before the contribution. It had no website, no history of political activity, so you’re thinking this is most likely a company created to make this contribution. You have to disclose on the FEC reports the true source of the money, who the contributor actually is.”

Establishing a shell company to donate political contributions is an illegal act under Federal law.

As CLC further investigated, they found that GEP – through Parnas and Fruman – had donated to then-Representative Pete Sessions, a Republican who represented Texas’ 32nd Congressional District. Sessions was defeated by Colin Allred, his Democratic challenger in the November 2018 election.

In his official capacity, then-Representative Sessions, who was Chairman of the House Rules Committee, wrote a letter in 2018 to Secretary of State Mike Pompeo stating that U.S. Ambassador to Ukraine Marie Yovanovitch should be fired, and accused her of expressing “disdain” for the President and administration.

In July 2018, CLC notified the FEC of possible campaign finance violations by Parnas and Fruman.

Interestingly, in a totally separate, and seemingly unrelated turn of events, Dale W. Perry, the American owner of a large energy company doing business in Ukraine, first got wind of Parnas and Fruman after they’d met with one of his former business partners in March 2019, and described an unusual plan.

Perry characterized Parnas and Fruman’s scheme saying, “What was so troubling was, it was basically the presentation of the intent to take the gas sector back to where it was during the Yanukovych regime.”

Viktor Yanukovych is the former Ukrainian President, who, as Perry said, was “a heck of a lot more corrupt,” was friendly with Russian president Vladimir Putin, in office 2010-2014, was removed from office by the Ukrainian parliament February 2014, went into self-imposed exile in southern Russia that same month, and in January 2019 was tried and convicted in absentia of treason by Ukrainian court after it was discovered he had written a letter to Putin March 1, 2014 asking him to use Russian army and police forces to restore order in Ukraine, which in turn, led to the Russian invasion of Crimea. He has been in exile since 2014.

Petro Poroshenko, considered a Ukrainian oligarch, succeeded Yanukovych, who in turn was defeated May 2019 by Volodymyr Zelenskiy, who campaigned on an anti-corruption platform, and won with 73.22% of votes cast.

In May, as part of the celebration and acknowledgement of Zelenskiy’s election victory, Secretary of Energy Rick Perry traveled to Kiev, Ukraine to serve as the senior U.S. government representative at his inauguration. While there, in a private meeting with Zelenskiy, Perry pressed him to fire members of the Naftogaz advisory board. Those in attendance left with the impression that Perry wanted to replace the American representative, Amos Hochstein, a former Diplomat and Energy Representative who served in the Obama administration, with someone “reputable in Republican circles.”

Rick Perry, Secretary, U.S. Department of Energy – official portrait

During that same trip, a second meeting occurred at a Kyiv hotel, which included Ukrainian government officials and energy sector business individuals. At that meeting, Secretary Perry was explicitly clear that Trump wanted to see the entire Naftogaz supervisory board replaced, and referred to a list of advisors to join the board, which he’d earlier given to Zelensky, which included the names of Michael Bleyzer, a Ukrainian-American businessman from Texas, and Robert Bensh, another Texan who frequently worked in Ukraine. The U.S. Department of Energy confirmed that information.

Photographs of the event also show present in that room was Gordon D. Sondland, the U.S. Ambassador to the European Union, and Kurt D. Volker, then the State Department’s Special Envoy to Ukraine. An observer who chose to remain anonymous for fear of retaliation, said he was shocked by the American requests, and had always thought of the U.S. government “as having a higher ethical standard.”

The AP reported that “the Naftogaz supervisory board is supposed to be selected by the Ukrainian president’s Cabinet in consultation with international institutions, including the International Monetary Fund, the United States and the European Union. It must be approved by the Ukrainian Cabinet. Ukrainian officials perceived Perry’s push to swap out the board as circumventing that established process.”

As Texas governor, Perry appointed Bleyzer to a two-year term on a state technologies fund board in 2009. The next year, records show Bleyzer donated $20,000 to Perry’s reelection campaign.

U.S. businessman Harry Sargeant III speaks about his dealings with Venezuela during an interview with Reuters at his home in Gulf Stream, Florida, U.S., February 7, 2019. Picture taken February 7, 2019. REUTERS/Joe Skipper

Another, related third party – Harry Sargeant III, an oil magnate in Boca Raton, FL – figures prominently in this ordeal. Federal and State campaign finance records show that over the past 20 years, Sargeant, along with his wife and their numerous corporate entities, have donated at least $1.2 million to Republican campaigns and PACs, including $100,000 this past June to the Trump Victory Fund. Sargeant was also Finance Chair of the Florida State GOP, and gave nearly $14,000 to Giuliani’s failed 2008 presidential campaign.

In early March 2019, Parnas, Fruman, and Sargeant schemed to replace Naftogaz CEO Andriy Kobolyev with Andre Favorov, another senior-level executive from within the company. A memorandum to that effect was provided to the U.S. Embassy in Kiev.

Andrew Favorov
Head of integrated gas business at Naftogaz Ukraine, is responsible for increasing value in Naftogaz’s key business division. His priority is to optimize costs and maximize ROIC in segments like purchase of domestically produced and imported gas, gas transmission and storage, and gas trading in Ukraine. Andrew Favorov obtained Master of Business Administration at Georgetown University and Bachelor of Science in Psychology at Georgia State University. He also volunteered at Central Georgia Mental Hospital and USAID projects in Kazakhstan.

Favorov is also Managing Partner of Energy Resources of Ukraine, which currently has business agreements to import natural gas and electricity to Ukraine.

Parnas and Fruman’s plan to oust top officials of the Ukrainian state-owned natural gas company Naftogaz was aided significantly by Rudy Giuliani, and was done with the intent to direct lucrative contracts to companies controlled by Trump’s political allies. Soon-to-be-former U.S. Secretary of Energy Rick Perry (no relation to Dale W. Perry) also significantly assisted those efforts.

Parnas and Fruman’s donation of $325,000 in 2018 to the Trump campaign superPAC America First Action via their shell company Global Energy Producers, in addition to hundreds of thousands of dollars of donations to other GOP politicians, gave them access to top-level Republicans, which included meetings with Trump at the White House and Mar-a-Lago.

Before he was arrested, Parnas spoke to NPR Reporter Jeff Brady and said in part that, “You know, this is actually the first couple of times that I really started doing some bigger donations, because I wanted to get notoriety for my energy company and I felt it might be a great way to play with the big boys, as you call it.”

Parnas, Fruman, and Sargeant pitched Favorov in March with an idea while he was attending the CERAWeek 2019 conference in Houston, TX, a large energy industry trade show. Parnas and Fruman went to special effort to detail that they had flown in from Florida aboard a private jet specifically to recruit him as their partner in a venture to export up to 100 tanker shipments of U.S. Liquefied National Gas (LNG) annually into Ukraine. Naftogaz is Ukraine’s largest natural gas distributor.

Sargeant told Favorov that he regularly met with Trump at Mar-a-Lago, and reassured him that their LNG gas-sales plan had Trump’s full support.

Dale W. Perry, an American who is a former business partner of Favorov, told The Associated Press (AP) that Favorov described the meeting to him soon after it happened and perceived it to be a shakedown.

Dale W. Perry, and another person who also witnessed the event but chose to remain anonymous, said that Favorov said that  Parnas told him that Trump planned to remove U.S. Ambassador Marie Yovanovitch and replace her with someone more open to helping their business interests.

In response, Dale W. Perry was so concerned about everything that had transpired, including the schemes to oust the CEO at Nafotgaz, and Ambassador Yovanovitch, that he reported it to Suriya Jayanti, a State Department Foreign Service Officer stationed at the U.S. Embassy in Kyiv who focuses on the energy industry. As well, he wrote a detailed memo of Favorov’s account dated April 12, 2019 which he then shared with another State Department official, and recently to the AP.

After the CERAWeek 2019 energy industry conference, on March 24, 2019, Giuliani and Parnas met with Healy E. Baumgardner, at Trump International Hotel in Washington, D.C., to pitch her on the idea of a gas deal in Ukraine. Baumgardner is a former Trump campaign advisor and Communications Director for Giuliani’s presidential campaigns, and a Communications official in the George W. Bush administration. Baumgardner is now CEO of 45 Energy Group, a Houston, TX-based energy company which describes itself as a “government relations, public affairs and business development practice group.”

During the meeting at Trump International Hotel, Parnas again repeated that Marie Yovanovitch, U.S. ambassador to Kyiv, would be replaced soon.

Two months later, she was removed.

While as of yet, there is no allegation of criminal wrong-doing by any United States citizen in the effort to overturn members of the board of directors at Naftogaz, it does raise questions about the sincerity, if not hypocrisy, of Republicans’ outcry over Hunter Biden’s association with another Ukrainian energy company, Burisma, whose position on its Board of Directors neither violated any U.S., or Ukrainian law.

What is disconcerting, is that there is evidence of inside knowledge of the U.S. government’s plans in Ukraine, which appear to have been made public, in which it was told that Trump would replace U.S. Ambassador Marie Yovanovitch to Ukraine – a well-known and highly-respected anti-corruption fighter – three months before she was recalled to Washington.

Mr. Dale W. Perry – who is unrelated to Energy Secretary Rick Perry – said, “I had never seen anybody in any part of the world where I’ve worked — and I’ve worked in some 30 different countries — I’ve never seen a businessperson claim that they could see an ambassador removed. When two or three or four businesspeople can go out and see to it that a U.S. ambassador is removed from her post when she’s doing a fabulous, fantastic, excellent job, there is a serious problem with our form of governance.”

During the open hearing of the House Intelligence Committee on November 15, 2019, as part of the Impeachment Inquiry, Ambassador Yovanovich testified, and stated in part that, “Ukrainians who preferred to play by the old, corrupt rules sought to remove me. What continues to amaze me is that they found Americans willing to partner with them and, working together, they apparently succeeded in orchestrating the removal of a U.S. ambassador. How could our system fail like this? How is it that foreign corrupt interests could manipulate our government?”

–//–

wsj.com
WSJ News Exclusive

Federal Prosecutors Probe Giuliani’s Links to Ukrainian Energy Projects

By Rebecca Davis O’Brien
Friday, 15 November 2019
8-10 minutes

Federal prosecutors in New York are investigating whether Rudy Giuliani stood to profit personally from a Ukrainian natural-gas business pushed by two associates who also aided his efforts there to launch investigations that could benefit President Trump, people familiar with the matter said.

Mr. Giuliani’s associates, Lev Parnas and Igor Fruman, pitched their new company, and plans for a Poland-to-Ukraine pipeline carrying U.S. natural gas, in meetings with Ukrainian officials and energy executives this year, saying the project had the support of the Trump administration, according to people briefed on the meetings. In many of the same meetings, the two men also pushed for assistance on investigations into Democratic presidential candidate Joe Biden and alleged interference by Ukraine in the 2016 U.S. election, some of the people said.

In conversations that continued into this summer, Messrs. Parnas and Fruman told Ukrainian officials and others that Mr. Giuliani was a partner in the pipeline venture, which was a project of their company, Global Energy Producers, one of the people said. Another person said the men considered Mr. Giuliani a prospective investor in their company more broadly, but said the pitch was unsophisticated and exaggerated.

In an interview Friday, Mr. Giuliani vehemently denied any involvement in the energy company or the pipeline pitch. “I have no personal interest in any business in Ukraine, including that business,” Mr. Giuliani said, adding that he had no indication if prosecutors were looking into the matter. “If they really want to know if I’m a partner, why don’t they ask me?”

The Ukrainians understood the pipeline to be “part of the essential package” Mr. Giuliani and his associates were pushing, often mentioned immediately after the demand for investigations, said Kenneth F. McCallion, a New York lawyer who represents a number of Ukrainian individuals who learned of the pipeline deal, including former Prime Minister Yulia Tymoshenko, who left office in 2010.

The Wall Street Journal has previously reported that prosecutors are scrutinizing Mr. Giuliani’s business dealings in Ukraine, including his finances, meetings and work for a city mayor in Ukraine. The inquiry grew out of a campaign-finance probe of Messrs. Parnas and Fruman, people familiar with the investigation said. The Soviet-bloc-born businessmen, both U.S. citizens based in Florida, were arrested last month on charges that they conspired to funnel foreign money to U.S. politicians and made illegal contributions of their own. They have pleaded not guilty.

Prosecutors are considering whether Mr. Giuliani may have violated lobbying laws in connection with his Ukraine work, people familiar with the inquiry said. It couldn’t be determined what criminal charges, if any, prosecutors would weigh in connection with Mr. Giuliani’s alleged interest in Global Energy Producers.

“I don’t know what they said to other people about me,” Mr. Giuliani said Friday, referring to Messrs. Parnas and Fruman. “I do know the following: I am not a part of the ownership, or any other involvement with GEP. I never agreed to be part of it. I’m not even sure I was ever asked to be part of it.” He said that if Messrs. Parnas and Fruman had asked for his legal opinion, he would have told them to avoid involvement in any “ownership situation” in Ukraine while working alongside him there, because it would look “stupid.”

Mr. Giuliani, the president’s lawyer, has previously denied wrongdoing and said he was acting in Ukraine on behalf of Mr. Trump. Mr. Giuliani has also said he provided Messrs. Parnas and Fruman “civil advice on business.” On Friday, he said he had also referred Global Energy Producers to another lawyer in connection with campaign-finance issues.

Mr. Giuliani has said his efforts in Ukraine were coordinated with the State Department.

Mr. Giuliani’s work for Mr. Trump and the pressure campaign in Ukraine are central to the impeachment inquiry that began its public phase on Wednesday in the House of Representatives.

In the first public testimony in the impeachment proceedings this week, U.S. officials said Mr. Giuliani opened an irregular channel of diplomacy in Ukraine, pressing for investigations that could help Mr. Trump politically. At the same time, the Trump administration withheld military aid to Ukraine temporarily, in what Democrats say was an inappropriate quid pro quo.

Mr. Trump has called the impeachment inquiry a hoax and said his dealings with the Ukrainian government were proper.

Messrs. Fruman and Parnas have been closely involved with Mr. Giuliani’s Ukraine-related work in the past year, including introducing Mr. Giuliani to Ukrainians and lobbying former Ukrainian President Petro Poroshenko to open investigations that Democrats say would benefit Mr. Trump.

In meetings with officials and businessmen in Ukraine, Messrs. Parnas and Fruman typically presented a number of interconnected demands, according to people familiar with the conversations. They pressed for Ukraine’s leaders to announce investigations into Mr. Biden and into unfounded theories that Ukraine had played a role in interfering in the 2016 elections.

Mr. Giuliani and others close to Mr. Trump have called for investigations into Mr. Biden and his son, Hunter Biden, related to the younger Biden’s time on the board of Burisma Group, a Ukrainian gas company. Mr. Biden has denied wrongdoing, and Ukraine’s former top prosecutor has said there was no evidence of a crime.

They also talked up their company, Global Energy Producers, and a plan to ship U.S. natural gas to Ukraine. The project had many practical impediments—including geography and cost—but had the potential to be extremely lucrative, people familiar with the pitch said. It would need the support of Ukrainian officials and a partnership with Naftogaz, the state-owned energy company.

Messrs. Parnas and Fruman presented themselves, and the pipeline deal, as having the backing of Mr. Giuliani and the Trump administration, according to people familiar with the conversations. They also told Ukrainian officials and others that the project had the backing of Dmytro Firtash, a Ukrainian tycoon who made his fortune brokering natural-gas sales from Russia and Central Asia to Ukraine.

The Trump administration has long promoted U.S. liquefied natural gas, dubbed “freedom gas,” as a way for Europe to reduce its reliance on Russia for energy.

Mr. Firtash, who is in Vienna fighting extradition to the U.S. to face bribery and related charges, has aligned himself in recent years with people close to Messrs. Trump and Giuliani. Mr. Firtash has denied the allegations.

A spokesman for Mr. Firtash’s legal team said in a statement: “Mr. Firtash met Mr. Parnas for the first time in June 2019. Mr. Firtash had no business relationship with Mr. Parnas or Mr. Fruman.” The law firm representing Mr. Firtash, diGenova & Toensing, hired Mr. Parnas this summer to serve as an interpreter, the firm has said.

One potential snag for the proposed pipeline was Naftogaz, the dominant player in Ukrainian energy and a focal point of U.S. foreign policy in the region. One person familiar with the Naftogaz board said the company dismissed Global Energy Producers’ proposed pipeline as impractical.

Messrs. Fruman and Parnas devised a plan to facilitate the pipeline plan by replacing Naftogaz’s chief executive, the Journal and others have previously reported. As part of that plan, in March, they approached a senior Naftogaz executive with a proposal to install him as the head of the company, a former business partner of the executive told the Journal.

Efforts by Trump administration officials and associates to install new management at Naftogaz, in hopes of steering contracts to companies controlled by Trump allies, have also been described by the Associated Press.

—Rebecca Ballhaus, Christopher M. Matthews and Georgi Kantchev contributed to this article.

Write to Rebecca Davis O’Brien at Rebecca.OBrien@wsj.com

https://www.wsj.com/articles/federal-prosecutors-probe-giulianis-links-to-ukrainian-energy-projects-11573837576

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Federal Prosecutors Probe Giuliani’s Links to Ukrainian Energy Projects
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