By John Helmer, Moscow
Corruption is a global problem.
That’s one of the opening lines in the US Department of Justice’s guide to the Foreign Corrupt Practices Act, the law enacted in Washington in 1977 to prohibit US individuals and companies from offering inducements of value to the officials of foreign governments. “Corruption impedes economic growth,” says the guide , “by diverting public resources from important priorities such as health, education, and infrastructure. It undermines democratic values and public accountability and weakens the rule of law… International corruption also undercuts good governance and impedes U.S. efforts to promote freedom and democracy, end poverty, and combat crime and terrorism across the globe. Corruption is also bad for business.”
When the US Congress was defining the corruption the statute was meant to prevent, it sought “to make clear that the offer, payment, promise, or gift, must be intended to induce the recipient to misuse his official position; for example, wrongfully to direct business to the payor or his client, to obtain preferential legislation or regulations, or to induce a foreign official to fail to perform an official function.”
It’s also clear that if an American were to offer an inducement of this kind to a Russian official for a business advantage, that would come under the scope of the law. But would the same law apply if an American invited a Russian to make a payment in order to influence an official function of the President of the US? Such a hypothetical invitation or payment might be corrupt, but probably wouldn’t be a violation of the Foreign Corrupt Practices Act.
When Matthew (Matt) Romney (image left), one of the children of the now defeated presidential candidate Mitt Romney (right), visited Moscow just before the election on November 6, he said he was asking Russians to give him money to invest. Reportedly also, he intimated that he had a message from his father to President Vladimir Putin. And when asked about his father’s public attacks on Russia as “without question our No. 1 geopolitical foe,” Junior intimated that was just election talk, and that once elected Senior would behave differently.
Put those three subjunctives in sequence. Do they add up to an offer that, in return for an investment in Junior’s business, Senior might be encouraged by his son to deal differently with Russia than he had publicly announced? So, another question — was Matt Romney asking for a Russian bribe to influence his father, if Mitt won the election? And if so, another question — which Russians were invited to hear Junior’s pitch, and what did they do about it – laugh out loud, or reach into their pockets?
Presidential siblings have asked to trade kinship for money before; most hilariously when President Jimmy Carter’s late brother Billy had a chin-wag with the ruler of Libya, the late Muammar Qaddafi, and drew a loan of $220,000. That was in 1978-79. Less funny was Neil Bush’s relationship with Boris Berezovsky; their recorded meetings in Riga in 2005 and London in 2006; and an undisclosed investment by Berezovsky in one of Bush’s schemes.
The New York Times broke the story  of Matt Romney’s Russian adventure on November 1. This didn’t intimate wrongdoing, but it did expose the possibility that the presidential candidate might not be as tough on Russia privately or commercially as he claimed to be for votes. Romney was already losing New York state, but the added publicity cannot have helped improve matters.
The Russian Foreign Ministry was keen not to appear hostile to either member of the Romney family. The Washington Embassy spokesman, Yevgeny Khorishko, told the Times: “We haven’t got any information about Mr. Romney and his visit to Moscow. He didn’t inform us about his visit.” That was a trifle too ingenuous, as if Junior’s visa application had been stamped without anyone noticing the name on the passport, or the details on the application. Maybe Junior’s papers were filed with the Russian Consulate in San Francisco, and it failed to notify the embassy in Washington or the ministry in Moscow. If Khorishko were telling the truth, the entire US department at the Foreign Intelligence Service (SVR) was also asleep at the switch.
Later in Moscow, apparently after Junior had come and gone, deputy foreign minister Sergei Ryabkov confirmed the visit, but described it as business only, and not serious business to boot. “Is it news now, given that we are speaking on November 8?” Rybkov was quoted by News.ru. “This is a businessman, who has business contacts in Moscow. The more serious business will come to us with a different mission, the better it will be for Russian-American relations.”
Matt Romney’s boss, Gary Sabin, chairman and chief executive of Excel Trust, which is based in San Diego, California, told the New York Times through a spokesman that he had been to Moscow with Romney, but it was “a harmless trip. It was a trip that has been planned for some time. Any travel they’ve done on behalf of Excel is strictly on the private side. It would have nothing to do with anything governmental.”
By global standards, Excel Trust is small beer. The firm reported $827 million in assets to the US Securities Exchange Commission as of September 30, and liabilities of $328 million. A year ago it took in rents and other revenues of $38.7 million; this year the revenue line is up to $62.1 million. The bottom-line was in the red in 2011; this year, as of September 30, net income was $1.5 million. Excel’s share price on the New York Stock Exchange hit a $14 high in 2010, and has seesawed since then. Between October and mid-November it dived to a low of $11.38. There has been a 51-cent pickup since Election Day.
According to the company website, Romney Junior is a Harvard Business School-trained strategist. Excel’s strategy presentation, issued this month, identifies assets already under management in Virginia, Arizona, and Florida. A pipeline of new projects, valued at almost $400 million , includes sites in California and Texas. Sabin’s spokesman told the Times that Excel wanted to raise safe-haven investment from sovereign wealth funds in Europe and Russia. Sabin appears to be the dominant shareholder of the trust; a prospectus filing with the SEC in October indicates that no individual stockholder can hold more than 9.8% of Excel’s shares, and that a combination of five stockholders cannot hold more than 50% .
In his presentations in Moscow, Romney will have had to tell potential Russian investors and stockholders that Excel’s current dividend payout and rate of return numbers are negative .
Real estate funds in Switzerland are known to have attracted large Russian investments, but it isn’t known whether their rates of return have been better or worse than Excel’s; or indeed whether that mattered to the Russian investors. German real estate funds are also known to have invested in the opposite direction – German money in Russian real estate. Morgan Stanley has recently offered  its first fund of Russian real estate assets for investors, Russian or foreign to buy into. Nothing exceptional, nothing new.
Among Russians with interests in real estate investment vehicles, Suleiman Kerimov, for example, is reported to have been a substantial investor in Credit Suisse operations in Lucerne . He is also reported to have hosted Oleg Deripaska on board his motor yacht, anchored off Ketchikan, Alaska, when the two of them had a pre-presidential election chin-wag with Republican Party presidential candidates. But that was in July 2008; the candidates then were Senator John McCain and his vice presidential nominee, Sarah Palin. They also turned up losers on Election Day. A detailed investigation of the influence-peddling between McCain, his associates, and the Russians has been published  by Mark Ames, who turned up more than one boat-boarding and get-together before 2008.
According to deputy foreign minister Ryabkov the elapse of time since Matt Romney’s Moscow trip “has lost [for the visit] the character of a hot potato”. Dead meat, not hot potatoes, the Romneys are now. But what of the Russians who met with Junior?
According to the Times, one of them was a conduit to the Kremlin. “While in Moscow, Mr. Romney told a Russian known to be able to deliver messages to Mr. Putin that despite the campaign rhetoric, his father wants good relations if he becomes president, according to a person informed about the conversation.” Independent sources claim to have heard Junior say something like this.
The number of Russians known to be able to send messages to Putin runs into the thousands; the number of messengers who get through Spassky Gate are a small fraction.
State Duma deputy Mikhail Serdyuk, a member of the Just Russia faction, followed the Times’s claim by announcing publicly that if Junior were conducting negotiations on his father’s behalf, or carrying messages to the Kremlin, the facts of whom he met and what was said should be disclosed to the Russian parliament. Serdyuk said today he had filed his request for disclosure to the General Prosecutor on November 5, and has been told to expect a reply in thirty days, give or take a few.
The Russian press has reported speculation that Matt Romney’s purported channel to Putin may have been Anatoly Chubais, head of the state technology holding Rusnano, and one of the most pro-American of Boris Yeltsin’s advisors in the 1990s. Serdyuk was asked whether he believed there had been contact between the Romneys and Chubais. He responded that he had no details yet, but that it is “common knowledge” that Rusnano has been doing business with Bain & Company, a consultancy company with which Mitt Romney had once been employed and in which he held stock. Izvestia reported  early this month that Chubais has authorized a contract for a Bain strategy assessment of Rusnano at a price above a competing tender from Boston Consulting, but below the quote from McKinsey.
Rusnano’s press office said today: “Anatoly Chubais didn’t meet either with Mitt or Matt Romney.”