How Russian Oil Tycoon Courted Friends in U.S.
NY Times November 5, 2003
nytimes.com
Excerpt: "The Carlyle Group, an investment bank that retained the elder
Mr. Bush as an adviser until a few weeks ago, has a close business
relationship with Mr. Khodorkovsky."
In early 2001, as George W. Bush's administration moved into the White
House, one of Russia's wealthiest men, Mikhail B. Khodorkovsky, sought a
meeting with the new national security adviser, Condoleezza Rice.
According to a former staff member, National Security Council analysts
were asked to perform a background check.
Mr. Khodorkovsky did not get the meeting Ñ part of the tycoon's efforts
to secure approval from the American establishment Ñ because of
"allegations of past business improprieties," the former staff member
said, also noting that Mr. Khodorkovsky spent heavily in Washington to
court the Capitol's inner circle.
But Mr. Khodorkovsky's steady efforts to win access to other influential
Americans have paid off. Last July, he met with Energy Secretary Spencer
Abraham to discuss America's oil policy. Former President George H. W.
Bush traveled to Russia in September and spoke at a dinner attended by
Mr. Khodorkovsky.
That event prompted Moscow newspapers to speculate that the visit was
part of an effort by American companies to secure a merger with Yukos
Oil, where Mr. Khodorkovsky was chief executive until he quit on Monday
in a swirl of fraud and embezzlement charges. His replacement, a
Russian-born American, was confirmed yesterday. [Page A10.]
The Carlyle Group, an investment bank that retained the elder Mr. Bush
as an adviser until a few weeks ago, has a close business relationship
with Mr. Khodorkovsky. Although Mr. Bush was in Russia as a Carlyle
representative, the bank said, his visit had nothing to do with oil
deals and he did not meet privately with Mr. Khodorkovsky.
Last summer, too, Mr. Khodorkovsky traveled to a meeting of business
leaders in Sun Valley, Idaho, as a guest of a former senator, Bill
Bradley, a New Jersey Democrat. Mr. Bradley also advises the Open Russia
Foundation, a Russian philanthropy based in Britain that is bankrolled
by Mr. Khodorkovsky.
Henry Kissinger, secretary of state in the Nixon administration, is on
the foundation's board, a position he said he accepted at the invitation
of Lord Rothschild, another board member. Mr. Kissinger said he had only
met Mr. Khodorkovsky twice, briefly and in a group.
"It is in no sense an endorsement of Mr. Khodorkovsky's business
practices," Mr. Kissinger said of his board seat, adding that Mr.
Khodorkovsky exercised "no particular influence" over the foundation's
grants. He declined to comment further on Mr. Khodorkovsky.
In his efforts to carve out contacts and make his name, Mr. Khodorkovsky
has also donated substantially to philanthropies in Russia and to
American think tanks.
People close to him said he had three motives: improving his own
reputation after surviving Russia's scandal-plagued privatizations;
refashioning operations and perceptions of Yukos Oil in preparation for
a merger with a Western company; and the furtherance of economic and
political changes in Russia.
"He wanted to have ties to the United States and he had a goal of
exporting oil to the United States," said Sarah Carey, a Washington
lawyer who sits on Yukos's board and is a close adviser to Mr.
Khodorkovsky. "In order to do that you need to develop constituencies
here in Washington."
Philanthropy, she added, "is what smart guys do when they get rich."
Foreigners are not allowed to donate money to American politicians or
political parties, and most of Mr. Khodorkovsky's charitable giving has
centered in Russia, where Yukos reports philanthropic donations of more
than $50 million annually across a broad range of causes.
Through Yukos, however, Mr. Khodorkovsky has given handsome sums to
American organizations, including a $1 million donation to the Library
of Congress and a $500,000 pledge to the Carnegie Endowment for
International Peace, a think tank that is home to some of the most often
quoted analysts of Russian affairs.
Carnegie notes that Yukos's contributions amount to less than 3 percent
of its annual budget. Anders Aslund, a Russia expert at the foundation
who has criticized the Russian government in its standoff with Mr.
Khodorkovsky, said Yukos's backing is disclosed on the Carnegie Web
site. He added that while the donations are significant, they do not
affect his assessment of Mr. Khodorkovsky.
The American Enterprise Institute, another Washington think tank that
has weighed in on Mr. Khodorkovsky's behalf, declined to address
financial dealings with Yukos, citing the institute's policy not to
comment on such matters.
Fiona Hill, a Russia analyst at the Brookings Institution, said many
think tanks, needing money for Russia studies programs, had courted Mr.
Khodorkovsky zealously. She said that Brookings, however, decided not to
accept his donations.
"The think tanks were all joking about who wanted to take money to fund
the Mikhail Khodorkovsky chair of good corporate governance," Ms. Hill
said. "There were still questions about his business dealings and
whether he really made the transition from being a robber baron and now
wore a white hat."
Others in Washington said that influence is not so easily purchased and
that Mr. Khodorkovsky had traction in the United States because of an
authentic commitment to corporate and political change in Russia.
"What distinguishes Khodorkovsky is that he recognized that the rule of
law was necessary to legitimize his company," said Steve Biegun, who is
a national security specialist on the staff of Senator Bill Frist of
Tennessee, the Republican leader, and has met several times with Mr.
Khodorkovsky.
"Russian oligarchs have spread a lot of money around Washington over the
last decade, but we're not stupid here," he added, noting that Mr.
Khodorkovsky's qualities helped generate "a much deeper response than
when other Russian businessmen have been hounded."
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