After Mining Deal, Financier Donated to Clinton

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.

DONATING MILLIONS Former President Bill Clinton with Sir Tom Hunter, left, and Frank Giustra, major donors to Mr. Clinton’s char­i­ta­ble foun­da­tion. Credit Evelyn Hockstein for The New York Times

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.”

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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.”

HIGH-LEVEL MEETING Mr. Clinton with Nursultan A. Nazarbayev, pres­i­dent of Kazakhstan, in September 2005. Credit Prosites-Kazakhembus.Homstead.com

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.

By JO BECKER and DON VAN NATTA

 After Mining Deal, Financier Donated to Clinton

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