Vice President Joe Biden’s youngest son R. Hunter Biden and Secretary of State John Kerry’s family friend Devon Archer were appointed to the board of directors of Burisma Holdings.
While this does not appear to be big news, this company is Ukraine’s largest private gas producer and is owned by Nikolai Zlochevsky, one of ousted Russia-backed President Viktor Yanukovych’s allies:
The gas producer is controlled by Nikolai Zlochevsky, a former member of Parliament for Mr. Yanukovych’s Party of Regions, according to a person familiar with the matter. He served as Mr. Yanukovych’s minister of environmental protection from July 2010 and then become minister of ecology and natural resources in December 2010, key positions with influence over the oil and gas industry.
Mr. Zlochevsky was removed from the post in April 2012 and appointed deputy secretary of Ukraine’s National Security and Defense Council, a role he held until Mr. Yanukovych’s government collapsed in late February. During his tenure as a government minister, Burisma and entities associated with the firm received a large number of permits for oil and gas exploration in Ukraine and stepped up their output considerably, according to Ukrainian press reports.
Yanukovych is a fugitive and under US sanctions. In November 2013, Yanukovych chose a Russian bailout in lieu of a European Union trade deal. This caused a massive uproar with pro-Westerners in Ukraine, and they descended upon Independence Square in Kyiv and stayed there until Parliament ousted Yanukovych in February. However, his dismissal and the installation of the new government led to a standoff between Russia and the West that is reminiscent of Cold War levels. It is only getting worse, with Russia annexing Crimea from Ukraine and with east Ukraine in shambles and holding referendums to be independent from Kyiv.
Now the son of America’s vice president and a family friend of the secretary of state serve at a company owned by his ally, and the White House and Biden’s spokeswoman Kendra Barkoff told the public there is absolutely no conflict of interest:
During the daily White House press briefing on Tuesday, press secretary Jay Carney said where Hunter Biden works “does not reflect an endorsement by the administration, by the president or vice president.”
“Hunter Biden is a private citizen and a lawyer. The Vice President does not endorse any particular company and has no involvement with this company,” Barkoff said. “For any additional questions, I refer you to Hunter’s office.”
As Mediaite pointed out, right now is probably not the best time to appoint the vice president’s son to the board:
While it’s normal for the powerful children of powerful people to be pulled onto the boards of vast multinational corporations, the fact that Biden happened to join a Ukrainian energy company in the midst of the conflict in Crimea is probably not a good idea. First, as the Russian media quickly proved, it immediately breeds speculation about Americans attempting to secure their energy interests in Ukraine. Second, the best way to spark accusations of “conflicts of interest” is by appointing a man to your board who is, literally, the spitting image of America’s Vice President.
However, Kremlin spokesman Dmitry Peskov said Russia does not see a conflict of interest and took the opportunity to take another swipe at Ukraine. “Anyway, as everyone knows, there’s no gas in Ukraine,” he said. “The gas in Ukraine is Russian.”
The Kremlin does have a point. Russia is one of the top suppliers of gas to Ukraine and Europe. In fact, the majority of the pipelines from Russia to Europe run through Ukraine. After Yanukovych was ousted, Gazprom, which is Russia’s largest gas company, started to threaten Ukraine’s gas supply, and Russian President Vladimir Putin made subtle hints Europe’s gas supply might be in trouble. The ambassadors of Slovakia, Poland, the Czech Republic, and Poland sent a letter to House Speaker John Boehner (R-OH) and asked the US to export more natural gas to Europe. Gazprom did shut off gas to Europe in 2006 and 2009.
Before Yanukovych was ousted, he signed a fracking contract with Chevron. In April, the large American gas company said they would honor the contract and explore for natural gas in shale rock by the Poland-Ukraine border. Natural gas experts believe Ukraine’s shale gas reserves are the third-largest in Europe.
On Wednesday, Ukraine Prime Minister Arseniy Yatsenyuk told European Commission chief Jose Manuel Barroso that Ukraine will use EU and IMF money to pay for Russian gas, but only after Russia lowers the price:
He said: “We want a deal based on market conditions. If Russia rejects this, we will bring Russia to [an international arbitrage] court in Stockholm. If I’m not mistaken, there’s 20 days left – this is the final call for Russia to sit at the negotiating table.”
He noted that Russia’s ultimatum on gas debts is offset by its seizure of Ukrainian energy assets in Crimea last month, worth “tens, if not hundreds, of billions of dollars.” He listed stolen assets as: 2 billion cubic metres of gas in storage vats; two energy firms; onshore and offshore drilling facilities; and offshore gas fields.
Hunter Biden hopes his appointment will help Ukraine become less dependent on Russian energy:
The release quoted Hunter Biden as saying 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.”