September 27, 2019

THE WISDOM OF SOLOMON:

Will Hunter Biden Jeopardize His Father's Campaign?: Joe Biden's son is under scrutiny for his business dealings and tumultuous personal life. (Adam Entous, July 1, 2019, The New Yorker)

Hunter had heard that, during the primaries, some of Obama's advisers had criticized him to reporters for his earmarking work. Hunter said that he wasn't told by members of the Obama campaign to end his lobbying activities, but that he knew "the writing was on the wall." Hunter told his lobbying clients that he would no longer represent them, and resigned from an unpaid seat on the board of Amtrak, a role for which, Hunter said, the Senate Democratic leader Harry Reid had tapped him. "I wanted my father to have a clean slate," Hunter told me. "I didn't want to limit him in any way."

In September, 2008, Hunter launched a boutique consulting firm, Seneca Global Advisors, named for the largest of the Finger Lakes, in New York State, where his mother had grown up. In pitch meetings with prospective clients, Hunter said that he could help small and mid-sized companies expand into markets in the U.S. and other countries. In June, 2009, five months after Joe Biden became Vice-President, Hunter co-founded a second company, Rosemont Seneca Partners, with Christopher Heinz, Senator John Kerry's stepson and an heir to the food-company fortune, and Devon Archer, a former Abercrombie & Fitch model who started his finance career at Citibank in Asia and who had been friends with Heinz at Yale. (Heinz and Archer already had a private-equity fund called Rosemont Capital.) Heinz believed that Hunter would share his aversion to entering into business deals that could attract public scrutiny, but over time Hunter and Archer seized opportunities that did not include Heinz, who was less inclined to take risks.

In 2012, Archer and Hunter talked to Jonathan Li, who ran a Chinese private-equity fund, Bohai Capital, about becoming partners in a new company that would invest Chinese capital--and, potentially, capital from other countries--in companies outside China. In June, 2013, Li, Archer, and other business partners signed a memorandum of understanding to create the fund, which they named BHR Partners, and, in November, they signed contracts related to the deal. Hunter became an unpaid member of BHR's board but did not take an equity stake in BHR Partners until after his father left the White House.

In December, 2013, Vice-President Biden flew to Beijing to meet with President Xi Jinping. Biden often asked one of his grandchildren to accompany him on his international trips, and he invited Finnegan to come on this one. Hunter told his father that he wanted to join them. According to a Beijing-based BHR representative, Hunter, shortly after arriving in Beijing, on December 4th, helped arrange for Li to shake hands with his father in the lobby of the American delegation's hotel. Afterward, Hunter and Li had what both parties described as a social meeting. Hunter told me that he didn't understand why anyone would have been concerned about this. "How do I go to Beijing, halfway around the world, and not see them for a cup of coffee?" he said.

Hunter's meeting with Li and his relationship with BHR attracted little attention at the time, but some of Biden's advisers were worried that Hunter, by meeting with a business associate during his father's visit, would expose the Vice-President to criticism. The former senior White House aide told me that Hunter's behavior invited questions about whether he "was leveraging access for his benefit, which just wasn't done in that White House. Optics really mattered, and that seemed to be cutting it pretty close, even if nothing nefarious was going on." When I asked members of Biden's staff whether they discussed their concerns with the Vice-President, several of them said that they had been too intimidated to do so. "Everyone who works for him has been screamed at," a former adviser told me. Others said that they were wary of hurting his feelings. One business associate told me that Biden, during difficult conversations about his family, "got deeply melancholy, which, to me, is more painful than if someone yelled and screamed at me. It's like you've hurt him terribly. That was always my fear, that I would be really touching a very fragile part of him."

For another venture, Archer travelled to Kiev to pitch investors on a real-estate fund he managed, Rosemont Realty. There, he met Mykola Zlochevsky, the co-founder of Burisma, one of Ukraine's largest natural-gas producers. Zlochevsky had served as ecology minister under the pro-Russian government of Viktor Yanukovych. After public protests in 2013 and early 2014, the Ukrainian parliament had voted to remove Yanukovych and called for his arrest. Under the new Ukrainian government, authorities in Kiev, with the encouragement of the Obama Administration, launched an investigation into whether Zlochevsky had used his cabinet position to grant exploration licenses that benefitted Burisma. (The status of the inquiry is unclear, but no proof of criminal activity has been publicly disclosed. Zlochevsky could not be reached for comment, and Burisma did not respond to queries.) In a related investigation, which was ultimately closed owing to a lack of evidence, British authorities temporarily froze U.K. bank accounts tied to Zlochevsky.

In early 2014, Zlochevsky sought to assemble a high-profile international board to oversee Burisma, telling prospective members that he wanted the company to adopt Western standards of transparency. Among the board members he recruited was a former President of Poland, Aleksander Kwaśniewski, who had a reputation as a dedicated reformer. In early 2014, at Zlochevsky's suggestion, Kwaśniewski met with Archer in Warsaw and encouraged him to join Burisma's board, arguing that the company was critical to Ukraine's independence from Russia. Archer agreed.

When Archer told Hunter that the board needed advice on how to improve the company's corporate governance, Hunter recommended the law firm Boies Schiller Flexner, where he was "of counsel." The firm brought in the investigative agency Nardello & Co. to assess Burisma's history of corruption. Hunter joined Archer on the Burisma board in April, 2014. Three months later, in a draft report to Boies Schiller, Nardello said that it was "unable to identify any information to date regarding any current government investigation into Zlochevsky or Burisma," but cited unnamed sources saying that Zlochevsky could be "vulnerable to investigation for financial crimes" and for "perceived abuse of power."

Vice-President Biden was playing a central role in overseeing U.S. policy in Ukraine, and took the lead in calling on Kiev to fight rampant corruption. On May 13, 2014, after Hunter's role on the Burisma board was reported in the news, Jen Psaki, a State Department spokesperson, said that the State Department was not concerned about perceived conflicts of interest, because Hunter was a "private citizen." Hunter told Burisma's management and other board members that he would not be involved in any matters that were connected to the U.S. government or to his father. Kwaśniewski told me, "We never discussed how the Vice-President can help us. Frankly speaking, we didn't need such help."

Several former officials in the Obama Administration and at the State Department insisted that Hunter's role at Burisma had no effect on his father's policies in Ukraine, but said that, nevertheless, Hunter should not have taken the board seat. As the former senior White House aide put it, there was a perception that "Hunter was on the loose, potentially undermining his father's message." The same aide said that Hunter should have recognized that at least some of his foreign business partners were motivated to work with him because they wanted "to be able to say that they are affiliated with Biden." A former business associate said, "The appearance of a conflict of interest is good enough, at this level of politics, to keep you from doing things like that."

In December, 2015, as Joe Biden prepared to return to Ukraine, his aides braced for renewed scrutiny of Hunter's relationship with Burisma. Amos Hochstein, the Obama Administration's special envoy for energy policy, raised the matter with Biden, but did not go so far as to recommend that Hunter leave the board. As Hunter recalled, his father discussed Burisma with him just once: "Dad said, 'I hope you know what you are doing,' and I said, 'I do.' " [...]

One of Kathleen's motions contains a reference to "a large diamond" that had come into Hunter's possession. The motion seems to imply that it was one of Hunter's "personal indulgences." When I asked him about it, he told me that he had been given the diamond by the Chinese energy tycoon Ye Jianming, who was trying to make connections in Washington among prominent Democrats and Republicans, and whom he had met in the middle of the divorce. Hunter told me that two associates accompanied him to his first meeting with Ye, in Miami, and that they surprised him by giving Ye a magnum of rare vintage Scotch worth thousands of dollars.

Hunter was on the board of the World Food Program USA, a nonprofit that generates support for the U.N. World Food Programme, and he had hoped that Ye would make a large aid donation. At dinner that night, they discussed the donation, and then the conversation turned to business opportunities. Hunter offered to use his contacts to help identify investment opportunities for Ye's company, CEFC China Energy, in liquefied-natural-gas projects in the United States. After the dinner, Ye sent a 2.8-carat diamond to Hunter's hotel room with a card thanking him for their meeting. "I was, like, Oh, my God," Hunter said. (In Kathleen's court motion, the diamond is estimated to be worth eighty thousand dollars. Hunter said he believes the value is closer to ten thousand.) When I asked him if he thought the diamond was intended as a bribe, he said no: "What would they be bribing me for? My dad wasn't in office." Hunter said that he gave the diamond to his associates, and doesn't know what they did with it. "I knew it wasn't a good idea to take it. I just felt like it was weird," he said.

Hunter began negotiating a deal for CEFC to invest forty million dollars in a liquefied-natural-gas project on Monkey Island, in Louisiana, which, he said, was projected to create thousands of jobs. "I was more proud of it than you can imagine," he told me. In the summer of 2017, Ye talked with Hunter about his concern that U.S. law-enforcement agencies were investigating one of his associates, Patrick Ho. Hunter, who sometimes works as a private lawyer, agreed to represent Ho, and tried to figure out whether Ho was in legal jeopardy in the U.S. That November, just after Ye and Hunter agreed on the Monkey Island deal, U.S. authorities detained Ho at the airport. He was later sentenced to three years in prison for his role in a multiyear, multimillion-dollar scheme to bribe top government officials in Chad and Uganda in exchange for business advantages for CEFC. In February, 2018, Ye was detained by Chinese authorities, reportedly as part of an anti-corruption investigation, and the deal with Hunter fell through. Hunter said that he did not consider Ye to be a "shady character at all," and characterized the outcome as "bad luck." [...]

On April 1, 2019, John Solomon, an opinion contributor to The Hill, wrote about Shokin's claim that he had been conducting a corruption probe into Burisma and Hunter when he was dismissed. A month later, the Times reported that Hunter "was on the board of an energy company owned by a Ukrainian oligarch who had been in the sights of the fired prosecutor general." The story, by Kenneth P. Vogel and Iuliia Mendel, provoked some Democrats to express concern that the Times was again lending credence to allegations made by Schweizer and other Trump allies. Giuliani retweeted the article, and Trump called for the Justice Department to investigate. Jon Favreau, a former speechwriter for President Obama, tweeted, "Zero lessons have been learned from 2016: 1. Mainstream outlet credulously accepts Trump conspiracy about opponent 2. Trump propaganda machine uses story to spread the conspiracy on social media and through digital ads 3. Voters believe it, ignoring subsequent fact checks."

There is no credible evidence that Biden sought Shokin's removal in order to protect Hunter. According to Amos Hochstein, the Obama Administration's special envoy for energy policy, Shokin was removed because of concerns by the International Monetary Fund, the European Union, and the U.S. government that he wasn't pursuing corruption investigations. Contrary to the assertions that Shokin was fired because he was investigating Burisma and Zlochevsky, Hochstein said, "many of us in the U.S. government believed that Shokin was the one protecting Zlochevsky." In May, Giuliani scheduled a visit to Ukraine, and told the Times that he would look into Hunter's involvement with Burisma, "because that information will be very, very helpful to my client," but then abruptly cancelled the trip, amid reports that Ukraine's President-elect was unwilling to meet with him. A week later, on May 16th, Lutsenko appeared to shift his position on Burisma, telling Bloomberg News that he saw no evidence of wrongdoing by Biden or his son, and that "a company can pay however much it wants to its board." The reasons for his reversal were unclear, but Daria Kaleniuk, the head of the Anti-Corruption Action Center, in Kiev, speculated that Lutsenko, in talking with Giuliani, had been trying to "pump his political muscle," a strategy that had proved ineffective in the new political climate.

That month, Hunter declined Burisma's offer to serve another term on the board, believing that the controversy had become a distraction. 

Posted by at September 27, 2019 4:27 PM

  

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