LONDON (Reuters) – A senior American banker as soon as secretly awarded a shareholding in great Moscow investment financial institution Renaissance Capital to view to be one of Vladimir Putin’s closest friends and brokered conferences for the buddy with top U.S. international policy officials a decade within the past, emails relate.
Robert Foresman is shown on this undated relate supplied June 7, 2019. Courtesy TMK/Handout through REUTERS
The American banker, Robert Foresman, currently vice president at UBS investment financial institution in Unique York, held a series of well-known roles in Moscow’s financial world. He headed Dresdner Bank’s investment banking operations in Russia within the early 2000s, served as Renaissance Capital’s vice president from 2006 to 2009, and then led Barclays Capital’s Russia operation until 2016. Putin’s buddy, Matthias Warnig, sits on the boards of loads of Russian enlighten-controlled companies.
A deeply spiritual conservative, the blue-eyed, curly-haired U.S. banker, has said it has all the time been his calling to be a peacemaker between the two nuclear superpowers.
Now, a cache of Renaissance Capital emails from 2007 to 2011 relate contemporary crucial functions about the shut relationship Foresman cultivated within Putin’s circle over time and how he leveraged these ties to know affords. The emails, which acquire been reviewed by Reuters, also shine a gentle-weight on the fragment played by Western bankers within the heady days of Moscow’s 2007 financial tell, when the Kremlin was engaging to rob over ever increased swathes of the Russian financial system.
The emails acquire been exchanged amongst Renaissance Capital’s top executives and between the financial institution and its shoppers and enterprise associates before possession of the financial institution changed fingers in 2012. They acquire got figured in a lengthy-working true warfare over the controversial takeover by the Russian enlighten of Mikhail Khodorkovsky’s Yukos oil company within the mid 2000s, and are reported right here for the principle time.
Foresman’s relationship with the Kremlin was more complex – and more mercantile – than that of peacemaker, these emails relate. They give insight into how Foresman and his colleagues sought to help the Kremlin pull off, and profit from, its dismantlement of Yukos at a time when analysts command Moscow was making an are attempting for international legitimacy for the politically-charged direction of. They also relate how the American banker guided Warnig spherical Washington international policy circles within the direction of the Bush and Obama administrations.
In an announcement to Reuters, Foresman said he view of it execrable to utter on matters that can utter to lawsuits before the English court docket – a reference to a civil lawsuit within the UK – but he refuted any suggestion of wrongdoing. Renaissance Capital’s contemporary management declined to utter.
Foresman’s Moscow connections won sleek attention as of late when the banker was named in special counsel Robert Mueller’s story on Russian interference within the 2016 election. Basically basically based on the story, Foresman was amongst the a huge collection of influential other folks who reached out to Donald Trump when the lengthy fling American chief’s campaign was building momentum.
In March 2016, Foresman emailed Trump’s assistant appealing the presidential candidate to a world enterprise forum in St Petersburg, announcing he’d had “an methodology” from “senior Kremlin officials” about the candidate, basically based completely completely on the story. Foresman asked for a assembly with Trump, or with campaign manager Corey Lewandowski or “another relevant particular person,” announcing he had various concerns to communicate about that he felt wretched discussing over “unsecure e-mail.”
In a later e-mail, Foresman sought a assembly with view to be one of Trump’s sons, Don Jr or Eric, to pass on knowledge that desires to be “conveyed to [the candidate] for my fragment or [to] someone [the candidate] fully trusts.”
The Mueller story says there wasn’t any evidence that Trump’s campaign team followed up on these approaches. When wondered by Mueller about these contacts, Foresman played down his ties to the Kremlin. He suggested he was merely making an are attempting for to “burnish his credentials” with the Trump team, the Mueller story says. No charges acquire been made against Foresman.
A SECRET AGREEMENT
Back in 2007, Foresman was fragment of a miniature neighborhood of Renaissance Capital executives focused on drawing up a secret settlement to award an unspecified stake in Renaissance Capital, the privately owned investment financial institution where he was vice president, to shut Putin companion Warnig, basically based completely completely on a series of emails linked to the deal. The shares acquire been awarded for “nil consideration,” or without any money altering fingers, the settlement confirmed. The emails reviewed by Reuters didn’t relate the proportion or be aware of the stake.
Contacted by Reuters, Foresman and Warnig declined to communicate about the transaction.
Warnig served as an officer in East Germany’s Stasi secret police on the identical time as Putin was a KGB officer in Dresden within the boring Nineteen Eighties. Warnig has said they first met within the early Nineties in St Petersburg, when Putin was that metropolis’s deputy mayor. This day Warnig is chief govt of Russia’s Nord Movement 2 gas pipeline to Europe. He also sits on the boards of loads of Russian enlighten-controlled companies, at the side of oil broad Rosneft. He served for 12 years on the board of Bank Rossiya, sanctioned by the U.S. Treasury as the “interior most financial institution” for senior Russian officials.
From 2001 to 2006, Foresman labored aspect by aspect with Warnig as head of Dresdner’s investment banking arm in Moscow, whereas Warnig was Dresdner Bank’s president for Russia.
Within the months before and after he purchased the Renaissance Capital stake, Warnig sought to funnel now not now not up to three Kremlin-linked affords the financial institution’s methodology, Renaissance Capital emails dated between 2007 and 2009 relate. In a single instance, in 2007, Warnig helped broker vital backing from Rosneft for a consortium at the side of Renaissance Capital that was bidding for Yukos’ Dutch sources in an auction.
The consortium went on to know the auction. However the transaction changed into mired in court docket cases and was blocked. Yukos executives efficiently argued in a Dutch court docket that the Russian enlighten had no true to sell a Dutch-integrated company. The Dutch Supreme Court dominated earlier this year the sale was unlawful.
The emails acquire been submitted as evidence as fragment of that case. They acquire got also been submitted as fragment of a civil fraud lawsuit filed by Yukos’ historical management that’s resulting from device to trial on June 10 within the UK High Court. The swimsuit alleges Foresman, as vice-chairman of Renaissance Capital, played a key position in paving the methodology for the consortium to knowingly take part in a rigged auction for the Yukos subsidiary. It alleges the international merchants who formed the consortium stood to invent gigantic interior most create, and seeks tens of millions of greenbacks in damages.
In his utter to Reuters, Foresman said he’s contesting the lawsuit vigorously.
Among the many international bankers that joined the investor consortium with Foresman was Stephen Jennings, a broad and lanky Unique Zealander. Jennings basically based Renaissance Capital in 1995, and the financial institution changed into a image of Russia’s transition to a market financial system. In an interview in 2005 with the Monetary Times, Jennings professed hopes that Russia’s financial boost under Putin would ultimately influence a center class sturdy passable to counter any authoritarian flip.
As a replacement, the lawsuit alleges, Foresman and Jennings sought to acquire the profit of Kremlin abuses of the market gadget and the rule of thumb of law. They acted, the swimsuit claims, along with the two various major Western merchants within the consortium: Stephen Lynch, a historical U.S. Peace Corps volunteer, and Richard Deitz, the wiry founding father of hedge fund VR Capital, which has offices in Unique York, London and Moscow.
Deitz and Jennings declined to utter for this text. Lynch didn’t acknowledge to emailed questions. An individual aware of the consortium rejected any suggestion that the auction was rigged.
A PRIZE ASSET
The auction of Yukos Finance BV, a Dutch subsidiary of Khodorkovsky’s oil company. was the closing in a series of Yukos chapter gross sales by the Kremlin. These gross sales acquire been to pay off greater than $33 billion in help-tax bills levied against Yukos by Moscow after Khodorkovsky posed a political inform to the Kremlin and was jailed for fraud. The Yukos chapter remodeled Rosneft from a enlighten-owned minnow to Russia’s ultimate oil company after it snapped up rather a lot of the sources. The Dutch unit was a prize: It held up to $1.5 billion in money reserves, of which up to $650 million was rep of debt. It also had a 49% stake in a strategically crucial Slovakian pipeline operator, Transpetrol, which later sold in 2009 for $240 million.
The chapter auction took home on Aug. 15, 2007. The international investor consortium, acting thru a Russian bidding car, named Promneftstroy, won the auction for now not up to $310 million – well under the roughly $890 million blended be aware of the Yukos unit’s rep money reserves and its Transpetrol stake. The consortium won after making true three bids against a rival company, Versar, which, basically based completely completely on Yukos, never participated in any enterprise aside from unsuccessfully bidding in Yukos auctions. Versar ceased to exist in 2010 when it was merged into another company, Russian company records relate.
Foresman had begun urging executives at Renaissance Capital to participate within the Yukos chapter auctions earlier that year, the emails relate.
In an e-mail dated Feb. 21, 2007, Foresman wrote to Three senior executives at “RC” – Renaissance Capital – pointing to the Kremlin-fling Yukos asset auctions as a possibility.
“I in actuality acquire motive to place confidence in that RC, and handiest RC, can pull off the alternate of our lives,” Foresman wrote. “Lets pull off one thing that makes us gigantic profit, makes top world merchants very chuffed, materially mitigates Rosneft’s litigation risk. And enables the Kremlin to relate that the auction of Y sources is now not rigged but reasonably is competitive.” Rosneft’s success within the auctions had raised the likelihood of a true inform and the Kremlin was under international scrutiny over the technique.
A memo drawn up by Renaissance Capital the day before the auction named the deal “Mission Surplus” and said it might maybe probably maybe maybe rep the consortium a profit of up to $340 million. The memo, considered by Reuters, indicated the Western bankers believed the auction would creep in their opt.
“The opportunity to participate and be the seemingly winner has largely arisen resulting from very shut relationships that definite Renaissance participants revel in with the Kremlin,” the memo said. The Kremlin declined to utter.
The U.S. authorities was watching lawsuits closely on fable of the strategic significance of the pipeline network Transpetrol operated. Foresman told an unidentified U.S. embassy legit in Moscow in October that year that the consortium “had now not been acting as a proxy for Rosneft” within the auction and said there was no prearranged handle Rosneft over the Transpetrol stake, basically based completely completely on a diplomatic cable about the dialog later leaked by Wikileaks. Foresman didn’t dispute the contents of the cable in a deposition for the UK civil lawsuit.
But documents within the e-mail cache and depositions of consortium people sleek that Rosneft was closely enthusiastic with the consortium within the deal. Foresman described in his deposition in November 2018 how Warnig channeled the consortium’s proposal for taking fragment within the auction to the head of Rosneft.
Within the hours before the sale of the Yukos unit, the consortium reached two true agreements with Rosneft.
Within the principle of those agreements, reviewed by Reuters and dated Aug. 15, 2007, Rosneft agreed to clutch any true claims the Russian oil broad had against the Dutch company’s sources.
Within the 2d, also reviewed by Reuters and dated Aug. 15, 2007, the enlighten oil champion agreed to lengthen compensation of a $60 million mortgage it had extended to Promneftstroy, the bidding car, until the consortium arranged to sell Yukos’s Slovak pipeline to a company nominated by Rosneft. A month later, the consortium agreed to sell the pipeline stake to a Cyprus-registered company for $One zero five million – now not up to half the be aware it fetched two years later. An e-mail chain main up to the sale settlement signifies the customer was designated by Rosneft.
Within the hours after the auction, another investor within the consortium, Benjamin Heller, then a managing director at U.S. fund HBK Investments, wrote to an companion announcing: “Rosneft on the overall controlled the auction and made up our minds it might maybe probably maybe maybe obvious at a definite be aware.” Heller, who isn’t named as a defendant within the lawsuit, declined to utter. Rosneft didn’t acknowledge to Reuters’ questions about the auction. On the time of the sale, the enlighten oil broad denied any involvement in it.
The actual person aware of the consortium said there acquire been mistakes in Heller’s e-mail. “Rosneft didn’t home the be aware, and there acquire been two bidders,” said this particular person. “Your total premise that Rosneft controlled the consortium, controlled the be aware and controlled the auction is now not pretty.”
He added that on the time of the auction the consortium didn’t acquire access to records valuing the Transpetrol stake above $103 million – a sale be aware that had been mentioned a year earlier. He said the consortium had reached out to every aspect of the Yukos divide, agreeing to pay help well-known loans to Yukos’ historical proprietor.
Two months later, in boring 2007, the consortium’s hopes of making profits began to unravel when an Amsterdam court docket dominated that the auction violated Dutch law, and resulting from this fact the consortium householders didn’t acquire title to any of the sources of Yukos Finance BV.
In emails dated Oct. eleven, 2007, a few months after the consortium won the auction, Foresman and his colleagues at Renaissance Capital began discussing the drafting of a secret “phantom allotment settlement” for an unnamed “prospective contemporary shareholder.” Phantom allotment affords are a current diagram under which a company guarantees the holder a future money price that’s tied to the be aware of a notional allotment of stock. Among the many executives discussing the award of these shares was the financial institution’s founder, Jennings, who was the major proprietor on the time. He declined to utter about the transaction.
An settlement figuring out Warnig as the recipient of “forty,034 phantom shares” in Renaissance Capital’s guardian company, Renaissance Holdings Management Restricted, was drawn up by the investment financial institution’s true counsel and despatched to Foresman in an e-mail dated Nov. 27, 2007.
An additional consultancy settlement drawn up by the true counsel and despatched to Foresman on Dec. 17, 2007, supplied for paying $seven-hundred,000 to an unnamed recipient for advice on “definite investment banking transactions and enterprise improvement alternatives.” In his November 2018 deposition for the UK civil swimsuit, Foresman said Renaissance Capital paid consultancy prices to Warnig. He didn’t specify the amount.
Foresman and the more than a few Renaissance Capital executives sought to protect these arrangements secret, the emails relate. When a RenCap worker mistakenly despatched a message to Warnig’s legit company e-mail handle in 2007 about the shareholding, Foresman fired off an inflamed acknowledge to Three senior Renaissance Capital executives. “Right here is clearly unacceptable and I will now not place confidence in this can occur,” he said within the message, dated Dec.18, 2007. He said Warnig had straight away destroyed the message.
In a later e-mail to the identical colleagues, dated Feb. 12, 2008, Foresman wired how Warnig had insisted the agreements remain fully confidential: They acquire been to be known handiest by the executives at Renaissance who drew up the agreements. The e-mail says: “Our man has signed his phantom allotment settlement, in his title, and as well the consultancy settlement within the title of a true entity.” It went on, “He wired absolutely the confidentiality of this.”
Warnig’s relationships with Foresman and Renaissance Capital’s founder and chairman, Jennings, acquire been cemented over dinners and “banya” steam-bathtub sessions in Moscow, the emails relate. And Foresman helped originate doorways for Warnig with U.S. ambassadors to Russia and U.S. authorities officials in Washington within the direction of the administrations of George W. Bush and Barack Obama.
The e-mail cache exhibits, as an instance, that Foresman helped home up conferences in 2009, early in Obama’s presidency, for Warnig with the U.S. authorities’s then nationwide intelligence officer for Russia and Eurasia, Fiona Hill, as well to with Mary Warlick, then the acting deputy assistant secretary of protection for Russia, Ukraine and Eurasia. He also brokered conferences for Warnig with officials within the Department of Energy and one at a time in Houston with Ross Perot Jr, the U.S. billionaire. Perot declined to utter for this text. Hill and Warlick didn’t acknowledge to requests for utter.
The emails reviewed by Reuters didn’t relate what came of the conferences.
After one such consult with in March 2009, Foresman indicated these conferences acquire been to change staunch into a help channel for Putin into Washington. In a single e-mail, he wrote, “my buddy briefed his Mountainous buddy on the conferences” – an apparent reference to Warnig talking with Putin. “That particular person was extremely tickled with the messages that acquire been purchased and fully dedicated to enhancing things. He asks for a repeat efficiency in Q2 for which he’ll acquire my buddy bring particular messages,” Foresman wrote.
Reporting by Catherine Belton; enhancing by Janet McBride