Wednesday, October 7, 2020

Part 2: Hunter Biden, Burisma, and Corruption:

 V. 

SECRETARY OF STATE JOHN KERRY FALSELY CLAIMED HE HAD NO KNOWLEDGE ABOUT HUNTER BIDEN’S ROLE ON BURISMA’S BOARD

a. Introduction 

On Dec. 8, 2019, a reporter asked former Secretary of State John Kerry about his awareness of Hunter Biden on Burisma’s board during his time at the State Department.59 Kerry responded, “I had no knowledge about any of that. None. No.” 60 The reporter pressed for more information and Kerry said, “What would I know about any—no. Why would I know about any company or any individual? No. The answer is no. No communication. No nothing.”61 Testimony and documents obtained by the Committees call into question the accuracy of Kerry’s statement. On May 13, 2014, the day after Hunter Biden joined Burisma’s board, Secretary Kerry’s stepson, Christopher Heinz — who was also Hunter Biden’s business partner — emailed to inform Kerry’s chief of staff, and to distance himself, from that decision. 

Moreover, in May 2014, Secretary Kerry’s chief of staff, David Wade, briefed him about press inquiries specifically relating to Heinz, Hunter Biden, and Burisma. Separately, State Department officials wrote that they sent the secretary articles with the headlines, “Biden’s son joins Ukrainian gas company’s board,” “Biden’s son joins Ukrainian gas producer board,” and “White House says no issue with Biden’s son, Ukraine gas company.”62 Accordingly, these records suggest that Kerry did, in fact, know about Hunter Biden and Burisma. 

b. In May 2014, Wade, Secretary Kerry’s chief of staff, briefed him about press inquiries relating to Heinz, Hunter Biden, and Burisma. 

On May 13, 2014, State Department officials began fielding press inquiries relating to Hunter Biden joining Burisma’s board and the extent to which Secretary Kerry’s stepson, Heinz, was involved. That day Heinz emailed Secretary Kerry’s chief of staff about Burisma’s announcement in an apparent attempt to distance himself from Hunter Biden’s decision.63 Heinz wrote to Special Assistant Matt Summers and Chief of Staff Wade: 

Apparently Devon Archer and Hunter Biden both joined the board of Burisma and a press release went out today. I cant to speak [sic] why they decided to, but there was no investment by our firm in their company.64 

Wade testified that he did not recall receiving this email from Heinz, but he did, to the best of his recollection, reach out to speak with Heinz the following day to “try to confirm since we were being asked whether he, or that Rosemont Seneca was buying or investing in Burisma.”65 Wade testified that he spoke to Heinz on May 14, 2014, and confirmed, based only on Heinz’s assurances, that “Rosemont Seneca was not involved” with Burisma.66 

According to Wade, that same day he spoke to Secretary Kerry and “let him know that Chris Heinz and Rosemont Seneca were not involved [with Burisma], that the media questions [about Rosemont Seneca buying or investing in Burisma] were inaccurate, and that Chris Heinz was not buying or investing in a Ukrainian natural gas company, but that my understanding was that … Hunter Biden and Devon Archer, according to the stories, that that was accurate, that they were … joining a board.”67 Wade confirmed that Secretary Kerry learned about Hunter Biden’s association with Burisma through him: 

Question: What was Secretary Kerry’s reaction to you informing him of these news inquiries about Mr. Heinz and the additional information regarding Mr. Archer’s [and] Mr. Hunter Biden’s connection and involvement with Burisma? 

Wade: He knew nothing about it. 

Question: So he learned about this information from you? 

Wade: I believe so, yeah. 

Question: And when you told him that the information that you were able to confirm with Mr. Heinz that Rosemont Seneca had … not invested or bought Burisma, what was Mr. Kerry's reaction to that? 

Wade: If I recall, his reaction was that he was comfortable answering a press question if he got it. . . . . 

Question: That he was comfortable answering the media question regarding what? 

Wade: Regarding … Christopher Heinz or Rosemont Seneca investing in — in a Ukrainian natural gas company or buying a Ukrainian natural gas company. 

Question: And did you discuss with Mr. Kerry what his response to that type of inquiry would have been? 

Wade: I'm sure — I'm sure I did. I don't — I don’t … remember those details of the conversation. 68 

c. In May 2014, State Department staff sent news articles to Secretary Kerry relating to Hunter Biden and Burisma. 

David Thorne, who served as a senior adviser to Secretary Kerry, informed Wade that he sent the following collection of press clips and articles to the secretary on May 14, 2014:69 

Thorne forwarded these clips to Wade and wrote, “I sent it to JK.” 70 Wade told the Committees that “JK” stood for “John Kerry.” 71 The headlines of the articles that Thorne sent to Kerry included, “Biden’s son joins Ukrainian gas company’s board,” “Biden’s son joins Ukrainian gas producer board,” and “White House says no issue with Biden's son, Ukraine gas company.”72 


d. Conclusion 

Former Secretary Kerry’s December 2019 denial of having any knowledge about Hunter Biden or Burisma is inconsistent with the evidence uncovered by the Committees. Kerry was briefed about Hunter Biden, Burisma and Heinz the day after Burisma announced Hunter Biden joined its board. Additionally, Secretary Kerry’s senior advisor sent him press clips and articles relating to Hunter Biden’s board membership. This appears to be yet another example of highranking Obama administration officials blatantly ignoring Hunter Biden’s association with Burisma.

VI. 

STATE DEPARTMENT OFFICIALS VIEWED ZLOCHEVSKY AS A CORRUPT, “ODIOUS OLIGARCH,” BUT VICE PRESIDENT BIDEN WAS ADVISED NOT TO ACCUSE ZLOCHEVSKY OF CORRUPTION. 

a. Introduction 

The State Department clearly viewed Burisma and its owner, Mykola Zlochevsky, as corrupt, and did not want to have any association with either one. For example, as soon as Deputy Chief of Mission George Kent learned of a de minimis USAID arrangement with Burisma, and succeeded in severing that relationship. As U.S. officials pressed Ukrainian officials to hold Zlochevsky accountable for his actions, Vice President Biden was “leading the policy charge” of pushing anti-corruption measures in Ukraine, which included confronting oligarchs.73 Yet as staff prepared talking points for Vice President Biden to answer questions about whether he viewed Zlochevsky as corrupt, they suggested that he “not … get into naming names or accusing individuals.”74 Biden’s spokeswoman told reporters, “the vice president does not endorse any particular company and has no involvement with this company.”75 This stands in stark contrast to the decision of then-Ambassador Geoffrey Pyatt to call out Zlochevsky by name as an example of corruption in a September 2015 speech. Biden’s unwillingness to confront a man whom State officials considered to be an “odious oligarch” 76 demonstrated a lack of leadership, but also raises a serious question about why Vice President Biden would avoid linking Zlochevsky with corruption. 

b. State Department officials viewed Zlochevsky and Burisma as corrupt. 

According to testimony and documents obtained by the Committees, State Department officials viewed Burisma and its owner, Zlochevsky, as corrupt. Insofar as the link between Zlochevsky and corruption was not already clear to State Department officials, in early 2015 they learned that Zlochevsky likely bribed Ukrainian prosecutors to interfere in a United Kingdom criminal proceeding against him, which was subsequently closed. (Section VII of this report will describe this bribe and its consequences in more detail.) In short, State Department officials’ understanding of Zlochevsky’s actions relating to the U.K. criminal case strongly influenced their perspective of him and Burisma. Below are several examples of State Department officials sharing their perspective of Zlochevsky and Burisma: 

 “Zlochevsky was viewed as corrupt, not just in Ukraine but by the USG/FBI[.]” – George Kent, Department of State, Sept. 201677

 “We have extensive concerns about corruption in Ukraine, and we believe Mr. Zlochevsky is an example.” – Memo to then-U.S. Ambassador to Ukraine Marie Yovanovitch, Dec. 201678 

 “Burisma's owner was a poster child for corrupt behavior.” – George Kent Testimony to the Committees 79 

 “I would have advised any American not to get on the board of Zlochevsky’s company.” – George Kent Testimony to the Committees 80 

 “The proliferation of Ukrainian companies clearly (and not so clearly owned/controlled by odious oligarchs or those who outright stole assets and absconded (like Zlochevsky) is likely a long one.” – George Kent, Department of State, Aug. 2016 81 

 “Throughout 2015 and 2016, U.S. officials, particularly those at the U.S. Embassy in Kyiv, consistently pressed Ukrainian officials to hold Zlochevsky to account and made clear our negative view about Burisma.” – George Kent Testimony to the Committees 82 

 “…our focus was on [Zlochevsky’s] corrupt acts as minister when he abused the office to award national gas exploration contracts to companies that he controlled through shell companies.” – George Kent Testimony to the Committees 83 

 “In the case of former Ecology Minister Mykola Zlochevsky, the U.K. authorities had seized $23 million in illicit assets that belonged to the Ukrainian people.” – Geoffrey Pyatt, then-U.S. Ambassador to Ukraine, Sept. 201584 

 The closing of the U.K. case against Zlochevsky was a “gross miscarriage of justice that undermined months of U.S. assistance … after the FBI and MI5 spent months and arguably millions working to try to put together the first possible asset recover case (against former Minister of Ecology Zlochevsky).” – George Kent, State Department, Aug. 2016 85

 “The U.S. and U.K. were cooperating on a case to seize [Zlochevsky’s] corrupt assets overseas (which had passed through the U.S.).” – Geoffrey Pyatt, then-U.S. Ambassador to Ukraine, Dec. 201586 

 There is “a moral hazard associated with publicly associating/promoting our assistance projects with companies/individuals seen in Ukrainian society as corrupt/compromised.” – George Kent on whether any U.S. agency should cooperate or associate with Burisma or Zlochevsky, Aug. 2016 87 

 “United States Government (USG) cooperation on the project [with Burisma] would make us look bad. Not to mention the Members of Parliament on the energy committee and others would wonder how we speak about anti corruption [sic], but work with those that were associated with corrupt practices.” – Redacted State Department official in an email to colleagues, Sept. 2016 88 

 “There is a clear link between the company and its primary owner. . . . From the rumors that we hear in the energy sector, there is no sense that Burisma has changed how it conducts its business. . . . I fall on the side of not having anything to do with the company to avoid undermining our broader efforts to promote transparency and [anti-corruption].” – Redacted State Department official in an email to colleagues, Sept. 2016 89 

c. State Department officials viewed Vice President Biden as a “warrior” and “leading the policy charge” on anti-corruption measures in Ukraine. 

According to testimony, former State Department officials saw Vice President Biden as a leading U.S. figure who pushed for anti-corruption measures in Ukraine. Kent testified, “Vice President Biden was leading the policy charge, pushing President Poroshenko and Prime Minister Yatsenyuk to take more decisive anti-corruption action.”90 Ambassador Victoria Nuland called Vice President Biden a “warrior” on this issue and said, “I was proud to work with Vice President Biden on Ukraine policy and especially on trying to help the Ukrainian period [sic] root out corruption in their country.”91 

On December 9, 2015, Vice President Biden spoke in Ukraine in front of the parliament of Ukraine, the Verkhovna Rada, and told the members that they are facing a “test of courage”and have an “obligation” to Ukrainians to reform their country to “build a united, democratic Ukrainian nation that can stand the test of time.”92 In doing so, Biden stated that Ukrainians have “a historic battle against corruption.” 93 He said “oligarchs and non-oligarchs must play by the same rules.”94 Biden called on the Rada to “seize the opportunity. Build a better future for the people of Ukraine.”95 Biden’s speech, which pushed anti-corruption measures, was, according to Nuland, “very powerful and powerfully received by the Rada.” 96 Yet, while Vice President Biden called for members of the Rada to have courage to confront corruption in Ukraine, the vice president’s staff was advising otherwise. 

d. Vice President Biden’s staff recommended he not link Zlochevsky with corruption. 

Nuland told the Committees that by confronting oligarchs, the U.S. would send an anti-corruption message.97 Yet as Vice President Biden’s staff responded to press inquiries relating to Burisma and Zlochevsky, one staffer wrote, “I am concerned about getting into anything relating to Mr. Zlochevsky directly.”98 Just a few days before the vice president gave his December 2015 speech at the Rada pushing anti-corruption measures, his staff prepared talking points for him and included a response to the question: “Do you think Zlochevsky is corrupt?”99 His staff wrote: 

I’m not going to get into naming names or accusing individuals. We have been working consistently to push the Ukrainian leadership to make meaningful changes in the Prosecutor General’s office and across the government to help ensure that the Ukrainian people are represented fairly and fully.100 

It is clear that members of Vice President Biden’s staff wanted to distance him from an individual whom the State Department clearly believed was corrupt and an individual who employed his son. This stands in stark contrast to then-Ambassador Geoffrey Pyatt, who identified Zlochevsky by name as a corrupt actor during a September 2015 speech in Odessa, Ukraine. But the Committees were not able to locate any public statements Vice President Biden gave from 2014 to 2016 in which he called Zlochevsky corrupt. Instead, in December 2015, Biden’s spokeswoman told reporters, “the vice president does not endorse any particular company and has no involvement with this company.”101 

e. Conclusion 

In his December 2015 speech at the Rada, Vice President Biden told members to have courage to confront corruption and change the course of history for their country. Yet when it came to calling out an individual whom the State Department viewed as a “corrupt” and “odious oligarch,” Vice President Biden’s staff advised him to not accuse Zlochevsky of corruption. In December 2015, while in Ukraine, Biden did not link Zlochevsky with corruption and did not demonstrate the same level of courageousness that he encouraged Ukrainian political leaders to pursue. 

Several witnesses highlighted efforts by certain U.S. officials to enable a successful investigation of Zlochevsky, and also noted that the U.S. decision to condition a $1 billion loan guarantee was made in part because of the then-Ukrainian prosecutor general’s failure to pursue a case against Zlochevsky. But at the end of the day, between 2014 through 2017, despite the concerted effort of many U.S. officials, not one of the three different Ukrainian prosecutor generals held Zlochevsky accountable.

VII. 

WHILE HUNTER BIDEN SERVED ON BURISMA’S BOARD, BURISMA’S OWNER, ZLOCHEVSKY, ALLEGEDLY PAID A $7 MILLION BRIBE TO UKRAINE’S PROSECUTOR GENERAL’S OFFICE TO CLOSE THE CASE. 

On May 12, 2014, Burisma trumpeted the addition of Hunter Biden to its board of directors, stating, “Biden will be in charge of the Burisma Holdings’ legal unit and will provide support for the Company among international organizations.”102 In that same press release, Hunter Biden stated, “As a new member of the Board, I believe that my assistance in consulting the company on matters of transparency, corporate governance and responsibility, international expansion and other priorities will contribute to the economy and benefit the people of Ukraine.” 103 The company’s release went on to say that, Hunter was “a well-known public figure,” but the release did not mention Hunter’s connection to a more well-known public figure, his father, the vice president of the United States.104 

When Hunter Biden joined Burisma’s board in May 2014, the prosecutor general of Ukraine was Oleh Makhnitsky. Makhnitsky served as the acting prosecutor general for only a few months before resigning from the post.105 His resignation gave way to Vitaly Yarema, who on June 19, 2014, became the prosecutor general of Ukraine.106

George Kent, a career diplomat who served in a number of roles at the State Department over his career, including several tours in Ukraine, did not hold Prosecutor General Yarema or his team in high regard. In fact, he testified, “Yarema’s team failed to bring a single prosecution over a seven-month period, and which allegedly took a bribe from Burisma’s owner Zlochevsky to close the case against him and collapse our effort to recover the $23 million frozen in the United Kingdom” 107 

a. Allegations that Zlochevsky bribed Ukraine’s Prosecutor General Office 

In January 2015, Kent arrived in Kyiv and learned that the U.S. embassy was not communicating with the Ukraine’s Prosecutor General’s Office (PGO). 108 Shortly after his arrival, Kent asked a Department of Justice (DOJ) official posted at U.S. Embassy Kyiv to set up a high-level meeting with the PGO. According to Kent, the goal of this meeting was for U.S. officials to raise the money-laundering case against Burisma’s owner, Zlochevsky.109 Kent secured a Feb. 3, 2015,110 appointment with the First Deputy Prosecutor General, who was the “number two prosecutor in the country at the time, Anatoliy Danylenko.”111 

Kent testified that, during the Feb. 3, 2015 meeting with the PGO, he “confronted the First Deputy Prosecutor General, Anatoliy Danylenko, demanding to know who had paid the bribe and how much it was. I also demanded that the case against Zlochevsky be resumed.”112 

During testimony, Kent provided the Committees additional insight into what occurred during the Feb. 3, 2015, meeting at the PGO: 

When I asked the question to Danylenko, ‘How much was the Zlochevsky bribe and who took it?’ Danylenko laughed and said, ‘That’s exactly what President Poroshenko asked us last week.’ And I Kent said, ‘So what did you tell the President Poroshenko?’ and Danylenko said, ‘Seven million dollars and last May 2014, before we came into office.’113 

Kent apparently did not believe that Zlochevsky’s bribe occurred in May 2014. He responded to Mr. Danylenko, 

“Nice try, but the letter that someone—some prosecutor in your office [PGO] wrote was signed in late December 2014, six months after you all [Yarema’s team] came into office.”114 

On Feb. 10, 2015, one week after Kent’s conversation with the PGO, President Poroshenko dismissed General Prosecutor Yarema and other members of his team. 115 

b. George Kent reporting of the Zlochevsky’s bribe allegation to U.S. officials 

Kent told the Committees that after the meeting with Danylenko, the DOJ official at U.S. Embassy Kyiv reported the allegation — that Zlochevsky paid the PGO a $7 million bribe — to the FBI.116 At this time, the Committees are seeking an explanation from the FBI about what, if any, actions they took after receiving this information from U.S. Embassy Kyiv. 

Kent testified that it was not until sometime after the Feb. 3, 2015, meeting with the PGO that he became aware that Hunter Biden was on the board of Burisma.117

After Kent learned of the alleged Zlochevsky bribe, he became aware of Hunter Biden’s connection to Burisma. Soon after, Kent spoke with Vice President Biden’s office about his concerns. This conversation occurred sometime between Feb. 3 and Feb. 14, 2015, when Kent ended up on a phone call with a staffer from Vice President Biden’s office.118 He could not recall the exact date of the phone call, 119 and when asked whether he apprised the staffer for Vice President Biden about Zlochevsky’s alleged bribe, Kent testified, “I can’t remember — to be perfectly honest, I don’t remember who I spoke to.”120 Kent told the Committees he did not memorialize this February 2015 phone call with Vice President Biden’s office.121 

Despite not recalling whether he mentioned the alleged Zlochevsky bribe to Vice President Biden’s office, or to a member of the Obama National Security Council, over the years, Kent did mention his knowledge of the alleged Zlochevsky bribe to high-ranking State Department officials. For example, on Aug. 31, 2016, Kent told State Department colleagues that “[Zlochevsky] who almost certainly paid off the PGO in December 2014 (I had the then First deputy PG Danylenko tell me the bribe was $7 million) to have the case against him closed and his $23 million in assets frozen in the UK unfrozen?”122 

c. Conclusion 

Based on Kent’s testimony, the alleged $7 million bribe from Zlochevsky to Ukraine’s PGO likely occurred while Hunter Biden was on Burisma’s board. Hunter Biden has stated that his position on the board was to “consult on matters of transparency, corporate governance and responsibility[.]” 123 The Committees requested information from the FBI about what, if any, actions it took in regard to this allegation.124 The FBI has not yet responded to that request.


source and footnotes

https://www.hsgac.senate.gov/imo/media/doc/HSGAC_Finance_Report_FINAL.pdf

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