Part Three: Lukoil, Investment Firms, and Motive

Part 1 ➝  Frank Giustra’s Uranium Deal, Kazakhstan Corruption, and the Boston Bombers’ Uncle
Part 2 ➝ Ruslan Tsarni’s Witness Statement

LUKOIL

So why did Ruslan Tsarni leave at least four of Nelson Resources’ subsidiaries on December 2, 2005?  I’ll tell you why:  Because three days later, Russian oil conglomerate Lukoil, through its subsidiary Caspian Investments Resources, Ltd., completed a $2 billion dollar acquisition of Nelson Resources.  That’s right.  Nelson Resources sold out to Lukoil well under market value and their shareholders were outraged including Chaparral Resources which was first acquired by CAIH and then later obtained by Nelson Resources’ subsidiary NRL Acquisitions.

Okay, not all of them were outraged.  The major stockholders of Nelson cleared a ton of money:  Energy Investments International Ltd. (previously Korinth) walked away with $375 million, Cott Holdings Group Ltd. (solely owned by Baitabek Kuandykov) received $337.97 million, and CAIH received $378 millions.  Not bad for selling out your smaller stockholders, eh? 

Here’s the kicker:  Weeks prior to Nelson Resources announcing any sort of deal with Lukoil, Nelson executives such as CEO Nick Zana, Peter Luis O. Gross, Baltabek Kuandykov, Aziz Ait-Said, and Giles Theiffrey all exercised their stock options and then sold the shares.  It’s hardly surprisingly that on October 26, 2005, the Ontario Securities Commission launched an investigation.  According to The Globe and Mail, when Gilles Thieffry was asked when Nelson investors had approached Lukoil he answered, “Hand on heart, the answer is really:  I don’t know.”  Thieffry was also quoted as saying, “Having dealt with some of those majority shareholders for the best two years, I would vouch for their integrity.” Uh huh, can we get someone to vouch for Thieffry’s?

As for Nelson Resources’ advisor during this massive deal with Lukoil it was none other than Canaccord Capital.  Three months after Frank Giustra acquired a $350 million dollar uranium deal with the help of companies like Canaccord and its CEO Paul Reynolds, Canaccord was also helping Nelson Resources close on a two billion dollar deal with Russian oil company Lukoil.  In fact, Nelson executives started selling their shares not only before they announced the Lukoil deal but on the exact same day President Bill Clinton and Giustra were in Kazakhstan meeting with President Nazarbayev, chatting with Kazakh opposition leaders in the middle of the night, and tying up UrAsia’s fat uranium deal.  

As for Timur Kulibayev, according to Stratfor emails the huge sums of money that he pocketed from the sale technically belonged in the Kazakhstan government’s coffers. A trial statement that was introduced into High Court by Mukhtar Ablyazov which echoed Ruslan Tsarni’s witness statement also detailed Timur’s profits and illegal dealings:  

• Between October 14 – May 4, 2006, Timur received:
  • $375.9 million from the sale of Energy Investments International Ltd shares (20% stake in Nelson)
  • $116.2 million from the sale of Center Finance Corp. shares (8.5% stake in Nelson)

• On October 14 and 15, 2005, Timur also received $140 million in bribery money from Chinese energy company, CNPC.

• After receiving these funds/profits Timur then laundered the money:
  • $128 million spent on houses including the purchase of Prince Andrew’s home Sunning Hill
  • $110 million spent on buying shares in Halyk Saving Bank.
  • $280 million spent on buying shares of KazMunayGas.

Within a week of Timur’s first payouts from Nelson stock he inexplicitly resigned from his post as first vice-president of the state-owned oil and gas company, KazMunayGas (KMG) to “pursue private business interests.”  Some speculated that Timur used his proceeds from the Lukoil deal to purchase stock in KMG Exploration when it went public the following year. Mukhtar Ablyazov sent a letter (the contents of which is way over my head) to Parliament which contained allegations about Kulibayev’s involvement in KMG, CAIH, and CNPC.  It is unclear when the letter was written.  Read it here.

BACK TO BIG SKY ENERGY 

So what happened to Big Sky Energy after Tsarni successfully and illegally transferred one of their uranium licenses?  It appears that in March, 2010, the SEC sent out a notification that Big Sky had been deregistered for failing to file a Form 10-KSB (google it, I have no idea).  Apparently the company had not filed one since December 31, 2006, at which time Big Sky reported a loss of $103.5 million for the 2005-2006 period.  Huh. Yeah, I guess most companies tend to lose money when oil licenses are fraudently transferred (Atryau license) or they are lost in shady, civil litigation suits (Liman-2 license).  From 2007 – March, 2010, however, multiple investment firms were buying Big Sky stock or had retained it including Wellington Management Company, LLC (Boston, Massachusetts) and U.S. Global Investors.

U.S. GLOBAL INVESTORS AND CANACCORD

Remember U.S. Global Investors?  It was one of the companies also involved in the Frank Giustra/Urasia/Uranium One deal. CEO of the company, Frank Holmes, is the same guy who flat out lied about his ownership of Uranium One stock during an interview with CNBC news and then later changed his story. Notice how Holmes brings up PetroChina in the video?  Yeah, so the side story is this:  PetroChina is a subsidiary of CNPC which purchased PetroKazakhstan back in 2005. PetroKazakhstan used to be Hurricane Hydrocarbons (remember Hurricane owner Bruce Kososki who “founded” Nelson Resources and worked at CAIH?) until it merged with CAIH after which it was renamed PetroKazakhstan. Then it was sold to CNPC, the parent company of PetroChina which, as a side note, really ticked off Lukoil.

And yes, this entire story is that ridiculously convoluted and incestuous. Additionally, like Paul Reynolds from Canaccord who donated between one to five million dollars to the Clinton Foundation, Holmes also donated somewhere between $250,000 – $500,000 to the foundation during the time period that Rosatom (ARMZ) was trying to acquire UrAsia.

Getting back to Big Sky Energy, U.S. Global Investors not only held stock in Big Sky as early as 2005, but they continued to hold stock in the company into 2010—although it appears the stock was worthless.  According to a 2006 U.S. Global Investors annual report, U.S. Global may have first acquired shares on March 1, 2005, which, ironically, was the exact same day that Big Sky Energy signed a consulting agreement with Ruslan Tsarni (exhibit 10.69[28]).  

As for Canaccord, in one SEC filing it stated,

“On April 12, 2004, Big Sky issued 299,716 common shares to Canaccord Capital (Europe) Limited for total proceeds of $74,929 in connection with the exercise of a warrant issued on April 3, 2002.  The warrant was for a total of 299,716 common shares with an exercise price of $0.25.”

Indeed, SEC filings show that Canaccord had been involved with Big Sky since at least 2002:

“Investor relations expense includes those costs related to public relation activities and fees paid to investor relations services under two investor relations arrangements.  We paid Canaccord Capital Europe $95,387.  We also retained Armor Capital to introduce us to institutional investors as we worked towards securing additional financing.  We had also retained Canaccord Capital Europe to raise additional equity financing for us in 2002. We paid Canaccord Capital Europe a $110,000 deposit and $10,000 for legal fees and expenses as part of this agreement.”

Besides what I’ve just noted, in summary, these were Canaccord’s activities from what I have found so far:

• In February, 1998, Canaccord bought large blocks of Nelson Gold stock for Elliot Associates L.P. and its subsidiaries
• In 1998, Howard Miller, a former employee of Canaccord, became deputy chairman of Nelson Gold
• Sometime between 1999-2000, Canaccord advised Ramco during the Ramco/Halliburton/Golden Eagle Partners/CAIH vs. Dutch dispute.
• In 2000, Canaccord was the financial advisor in the Nelson Gold/CAIH deal
• On April 6, 2001, Big Sky Energy gave Canaccord warrants to acquire 50,790 common shares issued as consideration for consulting servicies Canaccord provided Big Sky.
• On April 16, 2001, Nelson Resources entered an agency agreement with Canaccord for a “best-efforts” private placement up to four million dollars.
• In 2004-2005, Canaccord joined the financial team Giustra put together for his uranium deal.
• In 2004, Canaccord was hired by Caspian Energy Ltd.—the same subsidiary of Lukoil that purchased Nelson Resources a year later.
• In 2005, Nelson Resources nominated Canaccord as their AIM advisor
• In 2005, Canaccord advised Nelson Resources during the Nelson/Lukoil deal.
• In 2005, Bell Coast Capital Corp. (later known as Uranium Power Corp.) hired Canaccord to act as their agent to conduct a private placement after which the funds were used to acquire 50% of the Sheep Mountain uranium mines—the same U.S. mines that Uranium One acquired a year and a half later.
• Canaccord’s CEO Paul Reynolds donated money to the Clinton Foundation and the “Clinton Giustra Super Greedy Initiative” (CGSGI) during the same time period that Rosatom was trying to acquire Uranium One.

Now that’s a lot of inside information held by Canaccord, am I right?  All of this also begs the question of how in the world did Canaccord not know what was going on and who they were dealing with in regards to Nelson Resources?  I mean, of course they did.  If there’s one person I’d love to have a chat with besides Ruslan Tsarni himself, it’s  Canaccord CEO Paul Reynolds.  Of course that’s not possible because he died in 2015 after “falling ill,” or as the rest of us like to call it “being poisoned” “having a heart attack,” during a triathlon in Hawaii.  His death came three weeks prior to Jo Becker’s explosive article in the New York Times about the uranium deal and shady, Clinton Foundation donations being published—an article that the Clinton team not only knew was coming out but also strategized on how to spin the story.

Other investors/investment companies that were involved in Big Sky Energy’s private stock offerings, subscription receipts, and/or common stock included:

• Credit Suisse First Boston LLC
• Goldman Sach & Co. ITF Libra Offshore Ltd.
• Raytheon Master Pension Trust Energy Hedge Account
• Ingalls & Snyder, LLC
• Moonmouth Company S.A.
• Wellington Management Company LLC (Boston)
• Spindrift LP
• Placer Creek

Now, I’m not implying that just because President Clinton’s buddies were involved in these companies that he surely was as well.  In fact, I am not even sure if guys like Frank Holmes and Paul Reynolds knew Bill Clinton before the UrAsia deal but I do know that both Frank Holmes and Canaccord had worked with Giustra before or while they were involved with Nelson Resources and Big Sky Energy.  Frank Holmes was involved in the 2001 Wheaton River deal with Giustra while Canaccord was one of the underwriters for Wheaton’s equity financing in 2003.  And for all I know, they knew Giustra prior to that. Suffice it to say, Bill Clinton may not have been the only one pulling strings or, perhaps, distracting President Nazarbayev while Giustra’s “most obscure company ever to land the fattest uranium deal out of Kazakhstan” landed the fattest uranium deal out of Kazakhstan.  It may have also been his business associates who had been playing ball with Kazakh “fraudsters and tax dodgers” for some time.

It becomes very clear that Giustra knew exactly what he was doing and who the power players were well before he and Clinton landed in Kazakhstan in September, 2005. Additionally, he may have been well aware that Timur Kulibayev was using Nelson Resources (and most likely Big Sky Energy) as a front to obtain Kazakh oil and gas deals and then pocketing the proceeds.  How hard would it have been for Giustra to cozy up to political dissident Mukhtar Ablyazov who was president of BTA bank at the time and whisper in his ear, “Guess who’s stealing money? Want to make some of your own and screw President Nazarbayev in the process?”  I’m not saying that’s what happened. But it could have happened.  So many things could have happened.  The other point is that because of Giustra’s close associates’ previous dealings with companies controlled by Timur Kulibayev it would have been quite easy for Giustra to make a deal in Kazakhstan. Yet, it seems he went behind Nazarbayev’s back (not proven) and bought the uranium illegally from Mukhtar Abylazov and Mukhtar Dzhakishev.

As for Bill Clinton, I hardly believe he is innocent in all of this.  There’s a reason Giustra donated $31 million to the Clinton Foundation months after the UrAsia deal was complete. Furthermore, it was not the first time Clinton allegedly went to bat in Kazakhstan for a Canadian mining company.  In the book, Clinton Cash, the author wrote that in 1999, Bill Clinton approached President Nazarbayev about the Western uranium company, World Wide Minerals, Ltd., because the company was having difficulties getting the Kazakhstan government, more specifically, KazAtomProm, to honor a joint venture they had entered into together (my understanding is that Mukhtar Ablyazov’s associate, Mukhtar Dzhakishev, was head of KazAtomProm at that point but not when the initial deal was made).  This was also during the time period when “Kazakhgate” was in full swing but I have no idea if that played into this situation or not.  At the end of the day Kazakhstan never honored the deal which ended up costing World Wide Minerals billions of dollars in losses (yes, billions).  But here’s the kicker:  In a 2005 Sedar filing, the company stated, 

“Arbitration is also provided for under agreements between World Wide and Kazatomprom entered into in 1997 to create a joint venture to develop existing uranium mines…Kazatomprom did not complete the joint venture.  In late 2005, interests in certain of these projects were sold to a Canadian company, UrAsia Energy, Ltd.”

Huh. Well if that isn’t a kick to the….

As of today it appears that World Wide Minerals is still pursuing legal action against Kazakhstan.

RUSLAN TSARNI’S MOTIVES

In light of all of this information it seems mind blowing that Ruslan Tsarni, just a regular ol’ Chechen businessman who’s nephews just happened to set off two bombs at the Boston marathon, submitted a witness statement that was not only in favor of an enemy of state, but also called out on the carpet the two richest and most powerful men in Kazakhstan. And it seems strange that Tsarni, who surely knew what he was doing and who he was working for during his time at Golden Eagle, Nelson Resources, and Big Sky Energy, would turn on them.  What was Tsarni’s motives?  Disgruntled worker? Come on. The illegal transfer of Big Sky’s license is suspicious enough.  And good luck finding anything out there on who Tsarni transferred that the license (Ligostrade).

And let’s talk about coglioni.  Tsarni obviously had some when he publicly smeared the president of Kazakhstan and his son-in-law during a highly publicized trial.  And by coglioni of course I mean “protection” because I can not believe Ruslan Tsarni would have submitted such a statement without some sort of guarantee and protection from people who could provide both.  I cannot overemphasis how dangerous it would have been to speak out against these men.

Perhaps Ruslan Tsarni’s background before he started working at Golden Eagle Partners in 2000 can provide some clues as to why he believed he would survive such a public statement.

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