[Marxism] After Mining Deal, Financier Donated to Clinton Charity

[Louis Proyect]

NY Times, January 31, 2008
After Mining Deal, Financier Donated to Clinton Charity
By JO BECKER and DON VAN NATTA Jr.

Late on Sept. 6, 2005, a private plane carrying the Canadian mining 
financier Frank Giustra touched down in Almaty, a ruggedly picturesque 
city in southeast Kazakhstan. Several hundred miles to the west a 
fortune awaited: highly coveted deposits of uranium that could fuel 
nuclear reactors around the world. And Mr. Giustra was in hot pursuit of 
an exclusive deal to tap them.

Unlike more established competitors, Mr. Giustra was a newcomer to 
uranium mining in Kazakhstan, a former Soviet republic. But what his 
fledgling company lacked in experience, it made up for in connections. 
Accompanying Mr. Giustra on his luxuriously appointed MD-87 jet that day 
was a former president of the United States, Bill Clinton.

Upon landing on the first stop of a three-country philanthropic tour, 
the two men were whisked off to share a sumptuous midnight banquet with 
Kazakhstan’s president, Nursultan A. Nazarbayev, whose 19-year 
stranglehold on the country has all but quashed political dissent.

Mr. Nazarbayev walked away from the table with a propaganda coup, after 
Mr. Clinton expressed enthusiastic support for the Kazakh leader’s bid 
to head an international organization that monitors elections and 
supports democracy. Mr. Clinton’s public declaration undercut both 
American foreign policy and sharp criticism of Kazakhstan’s poor human 
rights record by, among others, Mr. Clinton’s wife, Senator Hillary 
Rodham Clinton of New York.

Within two days, corporate records show that Mr. Giustra also came up a 
winner when his company signed preliminary agreements giving it the 
right to buy into three uranium projects controlled by Kazakhstan’s 
state-owned uranium agency, Kazatomprom.

The monster deal stunned the mining industry, turning an unknown shell 
company into one of the world’s largest uranium producers in a 
transaction ultimately worth tens of millions of dollars to Mr. Giustra, 
analysts said.

Just months after the Kazakh pact was finalized, Mr. Clinton’s 
charitable foundation received its own windfall: a $31.3 million 
donation from Mr. Giustra that had remained a secret until he 
acknowledged it last month. The gift, combined with Mr. Giustra’s more 
recent and public pledge to give the William J. Clinton Foundation an 
additional $100 million, secured Mr. Giustra a place in Mr. Clinton’s 
inner circle, an exclusive club of wealthy entrepreneurs in which 
friendship with the former president has its privileges.

Mr. Giustra was invited to accompany the former president to Almaty just 
as the financier was trying to seal a deal he had been negotiating for 
months.

In separate written responses, both men said Mr. Giustra traveled with 
Mr. Clinton to Kazakhstan, India and China to see first-hand the 
philanthropic work done by his foundation.

A spokesman for Mr. Clinton said the former president knew that Mr. 
Giustra had mining interests in Kazakhstan but was unaware of “any 
particular efforts” and did nothing to help. Mr. Giustra said he was 
there as an “observer only” and there was “no discussion” of the deal 
with Mr. Nazarbayev or Mr. Clinton.

But Moukhtar Dzhakishev, president of Kazatomprom, said in an interview 
that Mr. Giustra did discuss it, directly with the Kazakh president, and 
that his friendship with Mr. Clinton “of course made an impression.” Mr. 
Dzhakishev added that Kazatomprom chose to form a partnership with Mr. 
Giustra’s company based solely on the merits of its offer.

After The Times told Mr. Giustra that others said he had discussed the 
deal with Mr. Nazarbayev, Mr. Giustra responded that he “may well have 
mentioned my general interest in the Kazakhstan mining business to him, 
but I did not discuss the ongoing” efforts.

As Mrs. Clinton’s presidential campaign has intensified, Mr. Clinton has 
begun severing financial ties with Ronald W. Burkle, the supermarket 
magnate, and Vinod Gupta, the chairman of InfoUSA, to avoid any 
conflicts of interest. Those two men have harnessed the former 
president’s clout to expand their businesses while making the Clintons 
rich through partnership and consulting arrangements.

Mr. Clinton has vowed to continue raising money for his foundation if 
Mrs. Clinton is elected president, maintaining his connections with a 
wide network of philanthropic partners.

Mr. Giustra said that while his friendship with the former president 
“may have elevated my profile in the news media, it has not directly 
affected any of my business transactions.”

Mining colleagues and analysts agree it has not hurt. Neil MacDonald, 
the chief executive of a Canadian merchant bank that specializes in 
mining deals, said Mr. Giustra’s financial success was partly due to a 
“fantastic network” crowned by Mr. Clinton. “That’s a very solid 
relationship for him,” Mr. MacDonald said. “I’m sure it’s very much a 
two-way relationship because that’s the way Frank operates.”

Foreseeing Opportunities

Mr. Giustra made his fortune in mining ventures as a broker on the 
Vancouver Stock Exchange, raising billions of dollars and developing a 
loyal following of investors. Just as the mining sector collapsed, Mr. 
Giustra, a lifelong film buff, founded the Lion’s Gate Entertainment 
Corporation in 1997. But he sold the studio in 2003 and returned to mining.

Mr. Giustra foresaw a bull market in gold and began investing in mines 
in Argentina, Australia and Mexico. He turned a $20 million shell 
company into a powerhouse that, after a $2.4 billion merger with 
Goldcorp Inc., became Canada’s second-largest gold company.

With a net worth estimated in the hundreds of millions of dollars, Mr. 
Giustra began looking for ways to put his wealth to good use. Meeting 
Mr. Clinton, and learning about the work his foundation was doing on 
issues like AIDS treatment in poor countries, “changed my life,” Mr. 
Giustra told The Vancouver Sun.

The two men were introduced in June 2005 at a fund-raiser for tsunami 
victims at Mr. Giustra’s Vancouver home and hit it off right away. They 
share a love of history, geopolitics and music — Mr. Giustra plays the 
trumpet to Mr. Clinton’s saxophone. Soon the dapper Canadian was a 
regular at Mr. Clinton’s side, as they flew around the world aboard Mr. 
Giustra’s plane.

Philanthropy may have become his passion, but Mr. Giustra, now 50, was 
still hunting for ways to make money.

Exploding demand for energy had helped revitalize the nuclear power 
industry, and uranium, the raw material for reactor fuel, was about to 
become a hot commodity. In late 2004, Mr. Giustra began talking to 
investors, and put together a company that would eventually be called 
UrAsia Energy Ltd.

Kazakhstan, which has about one-fifth of the world’s uranium reserves, 
was the place to be. But with plenty of suitors, Kazatomprom could be 
picky about its partners.

“Everyone was asking Kazatomprom to the dance,” said Fadi Shadid, a 
senior stock analyst covering the uranium industry for Friedman Billings 
Ramsey, an investment bank. “A second-tier junior player like UrAsia — 
you’d need all the help you could get.”

The Cameco Corporation, the world’s largest uranium producer, was 
already a partner of Kazatomprom. But when Cameco expressed interest in 
the properties Mr. Giustra was already eying, the government’s response 
was lukewarm. “The signals we were getting was, you’ve got your hands 
full,” said Gerald W. Grandey, Cameco president.

For Cameco, it took five years to “build the right connections” in 
Kazakhstan, Mr. Grandey said. UrAsia did not have that luxury. 
Profitability depended on striking before the price of uranium soared.

“Timing was everything,” said Sergey Kurzin, a Russian-born businessman 
whose London-based company was brought into the deal by UrAsia because 
of his connections in Kazakhstan. Even with those connections, Mr. 
Kurzin said, it took four months to arrange a meeting with Kazatomprom.

In August 2005, records show, the company sent an engineering consultant 
to Kazakhstan to assess the uranium properties. Less than four weeks 
later, Mr. Giustra arrived with Mr. Clinton.

Mr. Dzhakishev, the Kazatomprom chief, said an aide to Mr. Nazarbayev 
informed him that Mr. Giustra talked with Mr. Nazarbayev about the deal 
during the visit. “And when our president asked Giustra, ‘What do you 
do?’ he said, ‘I’m trying to do business with Kazatomprom,’ ” Mr. 
Dzhakishev said. He added that Mr. Nazarbayev replied, “Very good, go to 
it.”

Mr. Clinton’s Kazakhstan visit, the only one of his post-presidency, 
appears to have been arranged hastily. The United States Embassy got 
last-minute notice that the president would be making “a private visit,” 
said a State Department official, who said he was not authorized to 
speak on the record.

The publicly stated reason for the visit was to announce a Clinton 
Foundation agreement that enabled the government to buy discounted AIDS 
drugs. But during a news conference, Mr. Clinton wandered into delicate 
territory by commending Mr. Nazarbayev for “opening up the social and 
political life of your country.”

In a statement Kazakhstan would highlight in news releases, Mr. Clinton 
declared that he hoped it would achieve a top objective: leading the 
Organization for Security and Cooperation in Europe, which would confer 
legitimacy on Mr. Nazarbayev’s government.

“I think it’s time for that to happen, it’s an important step, and I’m 
glad you’re willing to undertake it,” Mr. Clinton said.

A Speedy Process

Mr. Clinton’s praise was odd, given that the United States did not 
support Mr. Nazarbayev’s bid. (Late last year, Kazakhstan finally won 
the chance to lead the security organization for one year, despite 
concerns raised by the Bush administration.) Moreover, Mr. Clinton’s 
wife, who sits on a Congressional commission with oversight of such 
matters, had also voiced skepticism.

Eleven months before Mr. Clinton’s statement, Mrs. Clinton co-signed a 
commission letter to the State Department that sounded “alarm bells” 
about the prospect that Kazakhstan might head the group. The letter 
stated that Kazakhstan’s bid “would not be acceptable,” citing “serious 
corruption,” canceled elections and government control of the news media.

In a written statement to The Times, Mr. Clinton’s spokesman said the 
former president saw “no contradiction” between his statements in 
Kazakhstan and the position of Mrs. Clinton, who said through a 
spokeswoman, “Senator Clinton’s position on Kazakhstan remains unchanged.”

Noting that the former president also met with opposition leaders in 
Almaty, Mr. Clinton’s spokesman said he was only “seeking to suggest 
that a commitment to political openness and to fair elections would 
reflect well on Kazakhstan’s efforts to chair the O.S.C.E.”

But Robert Herman, who worked for the State Department in the Clinton 
administration and is now at Freedom House, a human rights group, said 
the former president’s statement amounted to an endorsement of 
Kazakhstan’s readiness to lead the group, a position he called “patently 
absurd.”

“He was either going off his brief or he was sadly mistaken,” Mr. Herman 
said. “There was nothing in the record to suggest that they really 
wanted to move forward on democratic reform.”

Indeed, in December 2005, Mr. Nazarbayev won another election, which the 
security organization itself said was marred by an “atmosphere of 
intimidation” and “ballot-box stuffing.”

After Mr. Nazarbayev won with 91 percent of the vote, Mr. Clinton sent 
his congratulations. “Recognizing that your work has received an 
excellent grade is one of the most important rewards in life,” Mr. 
Clinton wrote in a letter released by the Kazakh embassy. Last 
September, just weeks after Kazakhstan held an election that once again 
failed to meet international standards, Mr. Clinton honored Mr. 
Nazarbayev by inviting him to his annual philanthropic conference.

Within 48 hours of Mr. Clinton’s departure from Almaty on Sept. 7, Mr. 
Giustra got his deal. UrAsia signed two memorandums of understanding 
that paved the way for the company to become partners with Kazatomprom 
in three mines.

The cost to UrAsia was more than $450 million, money the company did not 
have in hand and had only weeks to come up with. The transaction was 
finalized in November, after UrAsia raised the money through the largest 
initial public offering in the history of Canada’s Venture Exchange.

Mr. Giustra challenged the notion that UrAsia needed to court 
Kazatomprom’s favor to seal the deal, contending that the government 
agency’s approval was not required.

But Mr. Dzhakishev, analysts and Mr. Kurzin, one of Mr. Giustra’s own 
investors, said that approval was necessary. Mr. Dzhakishev, who said 
that the deal was almost done when Mr. Clinton arrived, said that 
Kazatomprom was impressed with the sum Mr. Giustra was willing to pay 
and his record of attracting investors. He said Mr. Nazarbayev himself 
ultimately signed off on the transaction.

Longtime market watchers were confounded. Kazatomprom’s choice of UrAsia 
was a “mystery,” said Gene Clark, the chief executive of Trade Tech, a 
uranium industry newsletter.

“UrAsia was able to jump-start the whole process somehow,” Mr. Clark 
said. The company became a “major uranium producer when it didn’t even 
exist before.”

A Profitable Sale

Records show that Mr. Giustra donated the $31.3 million to the Clinton 
Foundation in the months that followed in 2006, but neither he nor a 
spokesman for Mr. Clinton would say exactly when.

In September 2006, Mr. Giustra co-produced a gala 60th birthday for Mr. 
Clinton that featured stars like Jon Bon Jovi and raised about $21 
million for the Clinton Foundation.

In February 2007, a company called Uranium One agreed to pay $3.1 
billion to acquire UrAsia. Mr. Giustra, a director and major shareholder 
in UrAsia, would be paid $7.05 per share for a company that just two 
years earlier was trading at 10 cents per share.

That same month, Mr. Dzhakishev, the Kazatomprom chief, said he traveled 
to Chappaqua, N.Y., to meet with Mr. Clinton at his home. Mr. Dzhakishev 
said Mr. Giustra arranged the three-hour meeting. Mr. Dzhakishev said he 
wanted to discuss Kazakhstan’s intention — not publicly known at the 
time — to buy a 10 percent stake in Westinghouse, a United States 
supplier of nuclear technology.

Nearly a year earlier, Mr. Clinton had advised Dubai on how to handle 
the political furor after one of that nation’s companies attempted to 
take over several American ports. Mrs. Clinton was among those on 
Capitol Hill who raised the national security concerns that helped kill 
the deal.

Mr. Dzhakishev said he was worried the proposed Westinghouse investment 
could face similar objections. Mr. Clinton told him that he would not 
lobby for him, but Mr. Dzhakishev came away pleased by the chance to 
promote his nation’s proposal to a former president.

Mr. Clinton “said this was very important for America,” said Mr. 
Dzhakishev, who added that Mr. Giustra was present at Mr. Clinton’s home.

Both Mr. Clinton and Mr. Giustra at first denied that any such meeting 
occurred. Mr. Giustra also denied ever arranging for Kazakh officials to 
meet with Mr. Clinton. Wednesday, after The Times told them that others 
said a meeting, in Mr. Clinton’s home, had in fact taken place, both men 
acknowledged it.

“You are correct that I asked the president to meet with the head of 
Kazatomprom,” Mr. Giustra said. “Mr. Dzhakishev asked me in February 
2007 to set up a meeting with former President Clinton to discuss the 
future of the nuclear energy industry.” Mr. Giustra said the meeting 
“escaped my memory until you raised it.”

Wednesday, Mr. Clinton’s spokesman, Ben Yarrow, issued what he called a 
“correction,” saying: “Today, Mr. Giustra told our office that in 
February 2007, he brought Mr. Dzhakishev from Kazatomprom to meet with 
President Clinton to discuss the future of nuclear energy.”

Mr. Yarrow said his earlier denial was based on the former president’s 
records, which he said “show a Feb. 27 meeting with Mr. Giustra; no 
other attendees are listed.”

Mr. Dzhakishev said he had a vivid memory of his Chappaqua visit, and a 
souvenir to prove it: a photograph of himself with the former president.

“I hung up the photograph of us and people ask me if I met with Clinton 
and I say, Yes, I met with Clinton,” he said, smiling proudly.

David L. Stern and Margot Williams contributed reporting.