(10/15/2020) I’ve tried over the last two weeks to have the following published by my usual outlets, but I have not been successful. While I updated a few elements below, I have intentionally left out details of the recently released Hunter Biden emails. The emails may provide added context and evidence of potential wrongdoing, but as you will see, sufficient information existed prior to our knowledge of the emails to suggest a problem.
In September, Senate Republicans released a report on Hunter Biden containing seemingly consequential information.
While the report by itself would not be sufficient for a criminal conviction, it leaves open a number of critical questions into Hunter Biden’s activity, and Joe Biden’s knowledge of that activity, with individuals and entities in Russia, China, and Ukraine, at least from a counterintelligence and public corruption perspective.
I will leave the counterintelligence discussion to the counterintelligence experts, but the report suggests, at best, former Vice President (VP) Joe Biden missed a rather elementary calculation of what constitutes a conflict of interest or, at worst, knowingly and actively engaged in criminal corruption.
Notwithstanding legitimate expertise, what potential benefits could Hunter Biden provide to those identified in the report as having paid him handsomely for his services?
Access (w/insulation)- Connections to public officials (or their family) provide a line to power not typically available. Sometimes these connections are purchased for a fee (or a favor) through brokers or middlemen.
Legitimacy- The mere involvement of Hunter Biden in a business deal or on a company’s board provides a layer of comfort to business partners and clients as well as deters law enforcement from investigating the company, particularly in a country where their most significant financial and military aid would come from the father of that board member.
Official Acts- It is one thing to be heard by a public official, it is another to get the public official to act on your behalf - an enormously valuable asset. Family members can serve as great middlemen for this activity because they provide a layer of insulation between the government official and the person seeking the official act, while being a reliable voice able to speak on behalf of the official.
Hunter Biden’s own words confirm his understanding of the perceived value companies see in him as the son of the Vice President. In an October 2019 interview on ABC he says, “I think that it is impossible for me to be on any of the boards I just mentioned without saying I’m the son of the Vice President of the United States.”
Of course, Hunter Biden’s appointment to the board of Ukrainian energy company Burisma (May 2014) created a conflict of interest, particularly given the timing (then-President of Ukraine fled to Russia in February 2014 and Russia invaded Crimea February/March 2014). But a conflict is not criminal. It’s imprudent because it gives the appearance of criminal corruption (which can be just as damaging as actually engaging in criminal corruption), and it could lead to the undermining of policy (which state department officials confirmed in the Senate Report), but by itself it is not criminal.
The rather obvious imprudence of the conflict of interest created by Hunter Biden joining the Burisma board was not lost on Chris Heinz, stepson of then-Secretary of State John Kerry and former business partner of Devon Archer and Hunter Biden. The day after Hunter Biden joined the Burisma board, Chris Heinz emailed two of John Kerry's aides stating, "Apparently Devon and Hunter both joined Burisma...I can't speak [sic] why they decided to, but there was no investment by our firm in the company." According to a Washington Post article, Chris Heinz, "...believed joining the board of Burisma Holdings was a bad idea and ended his business relationship with Biden and another partner, his spokesman told The Washington Post."
Devon Archer is a long time business partner of Hunter Biden. He joined the Burisma board a month before Hunter Biden and just five days after meeting with VP Joe Biden at the White House.
In 2018, Devon Archer was convicted, along with others, of federal fraud charges related to a bad bond deal designed to defraud a Native American tribe, but his conviction was overturned on the basis of that there was insufficient evidence. Last week, in response to the government’s appeal, the 2nd Circuit Court of Appeals reinstated Devon Archer’s conviction. He is awaiting sentencing.
While public officials are the source of corruption risk, their family (Hunter Biden) and associates (Devon Archer) are an extension of that risk. Understanding the corruption risk around Hunter Biden and Devon Archer requires analyzing their propensity toward certain behavior, but also requires an assessment of the countries, businesses, and people doing business with them.
Ukraine has a well-documented corruption problem. This is particularly relevant when the son of a sitting VP chooses to do business in Ukraine during a time of extreme instability. Instability is an enormous vulnerability for countries as it creates a heightened risk of corruption.
The owner of Burisma, Mykola Zlochevsky, was believed by members of various government agencies to be corrupt. He was appointed Ukraine’s ecology minister while also owning energy companies in the private sector in Ukraine under the cover of shell companies. This allowed him to award government contracts to his own companies without Ukrainian citizens being aware.
According to the Senate Report, Mykola Zlochevsky was believed by officials in the state department to have paid a $7 million bribe to Ukrainian prosecutors in December 2014 (approximately seven months after Hunter Biden joined the board) in exchange for dropping a corruption investigation (tied to the freezing of $23 million of Zlochevsky’s funds in the UK, which eventually was unfrozen). The money was seized in the UK just weeks before Hunter Biden was announced a member of the Burisma board.
Six years after being alleged to have paid off prosecutors to drop a case, Ukrainian law enforcement intercepted an alleged bribe from Mykola Zlochevsky for the same type of behavior. In 2020, Ukraine’s anti-corruption enforcement arm intercepted a $6 million bribe from Mykola Zlochevesky intended for an investigator in exchange for having an embezzlement case dropped. This would suggest at least an alleged pattern of being willing to pay officials off to get out of criminal investigations. This is key when viewed in the context of Hunter Biden joining his board, and the timing of that decision. There is added significance when trying to understand, if VP Joe Biden lied about knowledge of his son's overseas activity with Burisma, why lie?
In February 2014, just two weeks prior to Russia’s invasion of Crimea and two and three months prior to Devon Archer and Hunter Biden joining the Burisma board, respectively, a shell company owned by Hunter Biden and Devon Archer received a $3.5 million wire from Russian billionaire Elena Baturina, as payment for a “consultancy agreement.” Elena Baturina was married to an allegedly corrupt former mayor of Moscow and was also alleged to have deep ties into Russia's world of organized crime. Elena Baturina's husband, Yuriy Luzkhov, was removed as mayor of Moscow in 2010 due to corruption allegations in which Baturina was also involved.
Relevant to this and many other transactions referenced in the Senate Report is the use of shell companies, law firms, and other unusual activities to create what appears to be an overly complex flow of funds. Shell companies, though not illegal, are often used as a way to move illicit funds internationally because they obscure ownership, as are the use of law firms given their built-in attorney/client privilege protections. But adding “consultant” as justification makes them even more obscure and thus even more suggestive. Consultant fees are a common way to move illicit funds because of the challenge it creates for law enforcement to tie directly back to criminal behavior. All these different layers of ambiguity make it difficult for law enforcement to determine source, destination and purpose of funds (common money laundering technique).
The timing of events is important to understanding their significance:
2/14/2014 Rosemont Seneca Thornton (shell company owned by Hunter Biden and Devon Archer) receives $3.5million from Elena Baturina, Russian billionaire widow of allegedly corrupt former mayor of Moscow with ties to organized crime.
2/22/2014 Ukrainian President Yanukovych flees Ukraine for Russia (he and his administration are believed to have stolen billions from the government coffers).
2/27/2014: Pro-Kremlin armed men seize government buildings in Crimea.
3/1/2014: Russia’s upper parliament approves military action in Crimea.
4/15/2014: Burisma sends two wires totaling $112,758 to Rosemont Seneca Bohai (Devon Archer owned shell company).
4/16/2014 Devon Archer meets with VP Joe Biden at the White House.
4/21/2014 VP Joe Biden visits Ukraine.
4/22/2014 Novatus Holding, a Singapore holding company solely owned by Kazakh oligarch Kenges Rakishev, used a Latvian bank to wire $142,300 to Devon Archer owned Rosemont Seneca Bohai purportedly for a car. A Kazakh oligarch uses his Singaporean holding company with a Latvian bank account to send money to a U.S. shell company for a car?
4/22/2014 Devon Archer joins the board of Burisma.
4/28/2014 Britain’s Serious Fraud Office seizes $23 million from Burisma-head Mykola Zlochevsky as they believe the funds to be proceeds of corruption. The funds were unfrozen within the year based in part on confirmation from the Ukrainian prosecutor’s office that Mykola Zlochevsky was not under investigation in Ukraine. Allegations of a payoff by Mykola Zlochevsky to Ukrainian prosecutors quickly followed.
5/12/14 Hunter Biden joins the board of Burisma making approximately $50k/month. (*Some reporting suggests his appointment was in April.)
5/13/14 Chris Heinz sends an email to Secretary of State John Kerry's aides separating himself from Hunter Biden and Devon Archer's decision to join the board. (John Kerry also later claimed to media outlets he had no knowledge of Hunter Biden's participation on the board of Burisma. This is is significant given the Chris Heinz email and the number of warnings articulated through the state department and briefings Secretary Kerry allegedly received, according to the Senate Report.)
Notwithstanding the activity in China and Russia (including the alleged flow of funds to members of a possible human trafficking cell), the son of the VP was appointed to a lucrative board of directors position in an industry where he had no clear experience, by a corrupt figure, during a time of instability, and in a country where the VP was responsible for leading foreign policy matters including their much-needed shift toward a more anti-corruption posture.
The Senate Report and subsequent reporting make it difficult to reconcile claims made by VP Joe Biden about his lack of knowledge of Hunter Biden's activity at Burisma. But politicians lying to the media is not a crime, it’s an election strategy.
The Senate Report, regardless of the subsequent reporting of Hunter Biden’s emails, confirm a deeper investigation would be necessary, assuming within statute, to determine the full scope of the activity. But, unfortunately, even the best possible outcome is not very good for VP Joe Biden or Hunter Biden when measured objectively against anti-corruption standards.