British Oligarch Scandal Hits McCain

Russian oligarch Oleg Deripaska is at the center of a major political scandal in Britain, accused of courting and cavorting with major figures from both the Labor and Tory parties.

The aluminum magnate Deripaska, who is very close to Russian Prime Minister Vladimir Putin and uses London as a major business outpost, has become a toxic figure on the other side of the pond.

The Times of London reported on October 12 that British Business Secretary Peter Mandelson--a top official in the Labor Party--had visited Deripaska aboard his megayacht off the Greek island of Corfu. Deripaska's right-hand man in London, Nathaniel Rothschild, then wrote a letter to the Times this week detailing how the Tory's chief economic advisor, George Osborne, and top fundraiser, Andrew Feldman, were also aboard Deripaska's yacht and tried to "solicit a donation" from the Russian oligarch.

Wrote Rothschild:

Since Mr. Deripaska is not a British citizen, it was subsequently suggested by Mr. Feldman during a conversation at which Mr. Deripaska was not present, that the donation was "channeled" through one of Mr. Deripaska's British companies. In a subsequent phone call in mid-September about one month later, Mr. Feldman again raised the issue of the donation with me. Mr. Deripaska decided that he did not wish to make any donation.

These revelations have prompted a major investigation into pay-to-play corruption on both sides of the aisle in Britain, with both the British and American press extensively covering the story.

The Deripaska scandal is especially newsworthy in light of the oligarch's connections to another powerful politician--John McCain. Mark Ames and I reported at length about this topic in a Nation article earlier this month, "McCain's Kremlin Ties."

We wrote:

Because of numerous accusations of involvement in death threats, extortion, racketeering and money laundering, Deripaska had been barred from entering America since 1998. The visa ban was costing Deripaska billions: for years he and fellow RusAl shareholders had sought to cash in their wealth by launching an IPO in London, which could have netted up to $10 billion for RusAl's owners. However, finding institutional buyers would be difficult if not impossible as long as RusAl's primary owner was barred from entering the United States.

Despite rampant Russophobia among Republicans, Deripaska turned to powerful GOP figures to solve his problem--especially to Republicans connected with McCain. In 2003 Deripaska hired former presidential candidate Bob Dole, who had nearly picked McCain as his running mate, and Dole's lobbying partner Bruce Jackson (also a McCain aide) to lobby the State Department to overturn the visa ban. Over the next few years Dole's firm, Alston & Bird, was paid more than $500,000 to push for Deripaska's visa.

Deripaska also reached out to a Washington-based intelligence firm, Diligence, chaired by GOP foreign policy hand Richard Burt, McCain's top foreign policy adviser in 2000 and an adviser in '08 (Burt left Diligence in 2007 to join Henry Kissinger's consulting firm). Deripaska's business partner in London, Nathaniel Rothschild, an heir to the English Rothschild fortune, bought a stake in Diligence, according to the New York Times and confirmed by a Rothschild spokesman. The firm offered Deripaska many useful services: corporate intelligence gathering, visa lobbying through considerable GOP connections and, crucially, help in obtaining a $150 million World Bank/European Bank for Reconstruction and Development loan for a Deripaska subsidiary, the Komi Aluminum Project. Getting the loan was useful in providing a layer of comfort to Western investors skittish about RusAl. So Diligence, now partly owned by Rothschild, provided a "due diligence" report to the World Bank, which the Bank then used to approve its loan to Deripaska.

Not surprisingly, the lobbying worked: in December 2005 Deripaska was issued a multientry US visa, according to the State Department.

However, Deripaska's trip did not end well. Under the visa's terms, he was forced to endure lengthy FBI questioning. The interview went badly--according to people who know him, Deripaska had little patience for prying bureaucrats. When he left the country, the visa ban was reinstated. Once again Deripaska turned to powerful Republicans--this time, to McCain and campaign manager Davis, who arranged the January 2006 Davos introduction. The McCain campaign later claimed that "any contact between Mr. Deripaska and the senator was social and incidental," but afterward Deripaska thanked Davis for arranging "such an intimate setting." The Washington Post reported that Davis was "seeking to do business with the billionaire." Indeed, Deripaska's subsequent thank-you letter mentioned his possible investment in a metals company Davis represented through a hedge-fund client.

Deripaska subsequently met McCain in Montenegro in August 2006, where Deripaska had earlier obtained control of the country's aluminum plant--its major economic asset--at Putin's request. McCain campaign manager Rick Davis was already in the country, helping to secure Montenegro's independence from Serbia in a referendum campaign, which became a key geostrategic victory for the Kremlin and Deripaska. Two former senior US diplomats who served in the Balkans told us that Davis' lobbying firm received several million dollars to help run Montenegro's independence referendum campaign. The terms of the agreement were never disclosed to the public, but top Montenegrin officials told the US diplomats that Davis's work was underwritten by powerful Russian business interests connected to the Kremlin and operating in Montenegro.

Moreover, Davis worked closely with Deripaska's allies to secure Montenegro's "independence"/do Russia's bidding. As we reported:

At key points in the campaign, Davis reached out to Deripaska's allies for help. With the referendum too close to call, the Serbs tried to sway public opinion by threatening to revoke scholarships and other education privileges of Montenegrin students if the country should secede. This caused a panic--so to counter the Serbs, Davis turned to Deripaska emissary Nathaniel Rothschild (Rothschild has reportedly become the richest of all the Rothschilds, thanks to his privileged role as a Deripaska adviser).

Three weeks before the independence referendum, Davis asked Rothschild to come to Montenegro. After arriving in his private Gulfstream jet, Rothschild was trotted out before the cameras with the Montenegrin prime minister, where he pledged $1 million to support students who might be hurt by Serbia's scholarship threat. Another Deripaska ally brought in to secure the student vote was Canadian billionaire Peter Munk, CEO of Barrick Gold, the world's largest gold-mining corporation (it was Munk who had hosted the Davos meeting between McCain and Deripaska a few months earlier). Munk, who serves on the advisory board of RusAl, delivered pledges of support from Canadian universities.

Soon after the referendum, the powerful figures behind Montenegro's independence were carving up the country. That summer Rothschild started discussions with top Montenegrin officials about gaining control of the valuable shoreline, including the half-billion-dollar Porto Montenegro project, which aims to become the world's top mega-yacht marina, complete with luxury hotels, shopping and the country's first eighteen-hole golf course. The property was handed to the Munk-Rothschild-fronted offshore consortium for a pittance, according to MANS, the local NGO partner of Transparency International, in yet another backroom deal. Eventually, Deripaska's role in Porto Montenegro, which was initially secret, was formally acknowledged, although the full list of owners is still a mystery. Deripaska is also developing an 8 billion-euro resort in southern Montenegro and seeking control of a coal mine and a thermal power plant.

Roughly two years later, in March of this year, Rothschild hosted a high-dollar fundraiser for McCain at London's posh eighteenth-century Spencer House, which Rothschild donated for the occasion. Given the close relationship between Rothschild and Deripaska, some speculated that Deripaska was the hidden hand behind the event. The conservative watchdog group Judicial Watch filed a complaint with the Federal Election Commission, alleging that the fundraiser amounted to an illegal contribution by foreign nationals to McCain's campaign.

Deripaska's links to Davis & co may very well be more extensive than we reported. The British press has begun to expose the full-breath of Deripaska's influence-peddling. If only these articles had the same impact on our side of the pond.

Comments (23)

1. Well, Mr Berman at this point?

   McCain linked to Deripaska is about as important as...

   "We just ran out of Dom Perignon in the Main Salon" as C Deck floods on the Titanic.

   Posted by Maskdelta at 10/24/2008 @ 12:26pm

2. We just ran out of Dom Perignon in the Main Salon" as C Deck floods on the Titanic.

   Posted by Maskdelta at 10/24/2008 @ 12:26pm | ignore this person | warn this person

   http://www.youtube.com/watch?v=BtE0Y6CTQMQ

   Very soothing in these troubled times....gulp!

   Posted by OneVote at 10/24/2008 @ 12:35pm

3. McCain linked to Deripaska is about as important as...

   "We just ran out of Dom Perignon in the Main Salon" as C Deck floods on the Titanic.

   Posted by Maskdelta at 10/24/2008 @ 12:26pm

   Mask, That may well be true, but this article does one thing. It shows how the ultra-wealthy rig the game so they win and everyone else loses.

   Posted by Wolfgang1 at 10/24/2008 @ 12:37pm

4. Well, Wolf....welcome to ...

   reality.

   And don't expect "the Revolution" even under Obama....or ever. Just getting things a little bit better.

   Posted by Maskdelta at 10/24/2008 @ 12:41pm

5. But there are "revolutions" and then again there are "avalanches"...

   Posted by hsuBfools at 10/24/2008 @ 1:03pm

6. Excerpt from:

   'Jim Cramer: Here's how to cheat

   The popular CNBC host, a former hedge fund manager, could draw scrutiny from federal regulators after telling an interviewer about methods for manipulating the stock market.

   By Reuters 03/23/2007

   Stock market commentator and CNBC television host Jim Cramer has raised eyebrows after describing illegal activities used by hedge fund managers to manipulate stock prices.

   In a December video interview on the Web site of TheStreet.com (TSCM, news, msgs), a financial news company he co-founded, Cramer, while never saying he used such tactics himself, described how it was possible to push stocks higher or lower at his previous job running a hedge fund.

   The interview, which has received widespread attention only after being posted to online video site YouTube, may be studied by government and stock market regulators, said hedge fund experts and legal sources......'

   Yesterday on Cramer's Mad Money he voiced outrage that hedge funds are manipulating the stock market still and that the wild volatility we see in the stock market is attributed to pattern manipulation combined with forced selling. This is destroying our economy and our investments. Where the hell is the SEC? They supposedly are suppose to police and stop this. What an outrage!! Every attempt at recovery is met with hedge fund selling and reverse shorting followed by buyback of distressed shares. This is criminal conspiracy - its called stock manipulation. Deregulation is a good thing?

   Posted by OneVote at 10/24/2008 @ 1:04pm

7. And don't expect "the Revolution" even under Obama....or ever. Just getting things a little bit better.

   Posted by Maskdelta at 10/24/2008 @ 12:41pm

   When you say "things get a little bit better", that depends upon how better folks like the Rothschilds, Deripaska, Munk, Buffet and the like decide.

   The governments of the world are mere puppets for these guys to play with and we are nothing more than ants to be squashed if we get in their way.

   It's just nice to attach some names to the list of unknown enemies who create wars, cause market crashes and manipulate currencies to further enlarge their estates.

   Posted by Wolfgang1 at 10/24/2008 @ 1:09pm

8. Posted by OneVote at 10/24/2008 @ 1:04pm

   OV, Can you post the link to the interview you were talking about?

   Posted by Wolfgang1 at 10/24/2008 @ 1:19pm

9. Or perhaps the Talking Heads-- 'Burning Down the House' is more apropoop!?!?!

   Posted by hsuBfools at 10/24/2008 @ 1:25pm

10. Posted by Wolfgang1 at 10/24/2008 @ 1:19pm | ignore this person | warn this person

    http://www.cnbc.com/id/27343664/

    Posted by OneVote at 10/24/2008 @ 1:25pm

11. Posted by hsuBfools at 10/24/2008 @ 1:03pm

    HSUB, Obama isn't stupid.

    Ergo, he's not going to replay 1993-1994 of the Clinton first term for HIS first term.

    Posted by Maskdelta at 10/24/2008 @ 1:49pm

12. It's just nice to attach some names to the list of unknown enemies who create wars, cause market crashes and manipulate currencies to further enlarge their estates.

    Posted by Wolfgang1 at 10/24/2008 @ 1:09pm | ignore this person | warn this person

    "Asked if regulators plan to prosecute anyone for the financial crisis, Cox said, "There's no question that somewhere in this terrible mess many laws were broken." He added that "the best thing that we can do, of course, as many of you are focused on ... is to infer lessons from what happened and prevent anything like this and this astonishing harm from happening again."

    Source: "Cox Urges Crackdown" - the Bond Buyer - Andrew Ackerman 10/24/2008

    What a country - where white collar criminals roam free and shoplifters are jailed.

    Posted by OneVote at 10/24/2008 @ 2:03pm

13. Posted by OneVote at 10/24/2008 @ 1:25pm

    Thanks for the link. That guy needs to back off on the coffee or crystal meth, but he's pretty entertaining.

    The more I hear about the stock market, the more it reminds me of Vegas, but the houses in Vegas controls the situation better than the SEC does.

    Posted by Wolfgang1 at 10/24/2008 @ 2:08pm

14. I think McCain learned a 1/2 lesson after the Keating Scandal. He keeps most of the thugs away from himself, but he has no problem hiring people that work for thugs, tyrants and greedy bastards.

    Posted by crabwalk at 10/24/2008 @ 2:16pm

15. Yeah, I can see a lot of previously sidelined non-delusional moderate repubs siding with dems a la Obama sans the Billary triangulation.

    It's most likely the far right new con repubs that are looking at being sidelined and thus the McPalin self-disembobulation.

    Not so strange that the economic crisis hit now.

    And that there's no way the new con repub dic'tator following can't spin stick it to anyone else.

    Posted by hsuBfools at 10/24/2008 @ 2:16pm

16. Did ya'll hear that Northern Virginia, which includes the Pentagon, Arlington and John McCains home and campaign office...

    is "communist country"?

    Yep, sure enough. Another McCain advisor, his bro, told us so.

    I guess that also makes it a part of the not real-America. Who get's to decide who is a "real" American? Is there a form I need to fill out, or do I just need to memorize the by-laws of the NRA?

    Posted by crabwalk at 10/24/2008 @ 2:26pm

17. "If only these articles had the same impact on our side of the pond. "

    Well, I've got the Dom on ice, for the night of Nov.4, to celebrate the landslide.

    So the more interesting Qs might be what, if any, are this Russian mobster's ties to US Dems?

    Posted by sloper at 10/24/2008 @ 2:41pm

18. So the more interesting Qs might be what, if any, are this Russian mobster's ties to US Dems?

    Posted by sloper at 10/24/2008 @ 2:41pm | ignore this person | warn this person

    Good starter is Gus Russo's The Outfit.

    Posted by OneVote at 10/24/2008 @ 3:08pm

19. Posted by Wolfgang1 at 10/24/2008 @ 2:08pm | ignore this person | warn this person

    Pretty hyper, but he does have his devoted following and he is not afraid to take Wall Street to task.

    Posted by OneVote at 10/24/2008 @ 3:11pm

20. Just getting things a little bit better.

    Posted by Maskdelta at 10/24/2008 @ 12:41pm

    that won't be hard.

    or,

    it will be very hard.

    cross your toes.

    Posted by frosty zoom at 10/24/2008 @ 6:10pm

21. Ergo, he's not going to replay 1993-1994 of the Clinton first term for HIS first term.

    Posted by Maskdelta at 10/24/2008 @ 1:49pm

    Bill Clinton, the George Bush of Our Time

    Monday, May. 24, 1993

    "I have decided today to propose that we establish a deficit-reduction trust fund and put every penny of new taxes and the budget cuts proposed in my budget into the trust fund so that the American people know that it has got to go to deficit reduction." -- BILL CLINTON, MAY 12, 1993

    "The President's proposed 'tax-increase trust fund' is just a gimmick to make his unpopular tax increases look good." -- SENATE REPUBLICAN LEADER ROBERT DOLE, MAY 12, 1993

    THEN

    "I have a brand-new idea. Taxpayers should be given the right to check a box on their tax returns so that up to 10% of their payments can go for one ! purpose alone: to reduce the national debt." -- GEORGE BUSH, AUG. 20, 1992

    "I don't understand how earmarking a portion of the individual taxpayer's taxes for debt reduction can make a difference when we're running a deficit. It's really just a gimmick." -- ALICE RIVLIN, NOW DEPUTY BUDGET DIRECTOR FOR PRESIDENT CLINTON, AUGUST 1992

    Posted by frosty zoom at 10/24/2008 @ 6:14pm

22. Throughout his 1992 campaign and the first days of his presidency, Bill Clinton pledged to end the ban on gays in the military. Facing vehement congressional opposition, he shifted his position in July 1993, when he announced "don't ask, don't tell."

    Posted by frosty zoom at 10/24/2008 @ 6:16pm

23. ...and Putin swear McCain had something to do with the Georgia incident. Why no press on that one?

    Posted by mcteach at 10/25/2008 @ 2:12pm