The Guardian reports exclusively that Vladimir Putin's former chief of staff has an investment in an American company that President Trump praised for its part in recent trade agreement with China.
Alexander Voloshin – who served as Boris Yeltsin’s chief of staff before working for Putin between 2000 and 2003 – has an undisclosed stake in American Ethane, a Houston-based firm that recently signed a multibillion dollar export deal with China.
Voloshin is part of a consortium of Russian investors in American Ethane that at one point included the oligarch and billionaire Roman Abramovich.
In November 2017, Trump presided over a series of trade agreements with his Chinese counterpart, Xi Jinping. One of the biggest was a $26bn (£20bn) deal to supply liquid ethane to China, struck between privately owned American Ethane and a large Chinese conglomerate.
Trump applauded and nodded vigorously as American Ethane’s CEO, John Houghtaling, signed a “historic” memorandum of understanding with his Chinese partner.
The president was promoting “American prosperity and trade” in deals that would generate “thousands of American jobs”, the White House announced.
In fact, the chief beneficiaries of the Trump-endorsed deal live and work in Moscow. One of them is Voloshin, who spent three years at Putin’s side, and headed his first presidential administration.
... Wilbur Ross, the US commerce secretary, who has been accused of not declaring his own business dealings with Moscow, attended the ceremony, together with the then US secretary of state, Rex Tillerson ...
Despite swapping government for business, Voloshin remains an influential figure in Russian politics. His western contacts include bankers, scholars, reporters, and the former US secretary of state Henry Kissinger, who advises the Trump White House on Russia.
An investigation into Voloshin’s US business interests was carried out by Dossier Center, a research unit, together with the Guardian.
The Guardian explains how Voloshin came to invest in this particular American company.
It reveals that a group of wealthy Russians sought to invest in America’s shale revolution. They included Mikhail Yuriev, a former state Duma deputy, Andrey Kunatbaev and Konstantin Nikolaev. After two failed drilling attempts, the Russians decided to pivot from shale to ethane, a gas byproduct generated by fracking.
In Moscow, Yuriev approached Voloshin. Voloshin in turn recruited Abramovich, who provided $50m in start-up capital. The four Russians plus Abramovich became co-investors in American Ethane. Houghtaling, a New Orleans lawyer and entrepreneur, became the firm’s CEO. Houghtaling’s wife is Russian.
[Voloshin's] stake is now potentially worth tens of millions of dollars. Voloshin borrowed the money used to buy shares from Nikolaev, via a firm in the Seychelles, it is understood.
The Russians identified a site on the Gulf coast of Texas for a new ethane production and export facility.
In 2014, Voloshin transferred the $1.25m from his account in Moscow to the US. The money went via New York and Deutsche Bank.
In an interview with the Guardian, Houghtaling said American Ethane’s Russian connections had been disclosed to relevant US authorities and to potential investors. Private companies are not obliged to reveal their backers but both Nikolaev and Kunatbaev are named publicly as board members.
The firm, he added, went through major ups and downs before securing last year’s mega-deal with China ...
According to Houghtaling, the China deal will greatly benefit the US’s balance of trade deficit with Beijing – a key White House goal. He said it was the Chinese side that insisted American Ethane take part in the Trump signing ceremony.
“The [Russian] investors are not on any sanctions list. We view it as positive that Russians are investing in the US. The deal materially reduces China’s dependency on Russian gas.”
Still, Voloshin’s involvement in the project was kept secret. As a former member of Putin’s inner circle, he qualifies as a “PEP” or politically exposed person, meaning his financial transactions are subject to enhanced scrutiny. A special vehicle – the “AV SPV” - was set up to hold his stake.
Leonid Nevzlin, a Russian-Israeli businessman whose oil firm Yukos was seized by the Kremlin, said the arrangement was “productive” for the Moscow investors.
“By going through America to China you protect yourself from current and potential sanctions [against Russia],” he said. “Russian investments into China are unprotected. But the Chinese behave themselves in a gentlemanly way towards the Americans ..."
Voloshin travels regularly to the US. In 2015, he and his wife, Galina, went on a holiday to the Grand Canyon. One of his children studied for three years in Boston. Voloshin is a board member of the East-West institute thinktank in New York, and counts Toby T Gati, a former US assistant secretary of state, among his professional contacts. His activities for American Ethane include a trip to Japan for investor presentations.
Journalists frequently seek out Voloshin. He is regarded as one of few Moscow experts who offer insight into the Kremlin’s opaque workings, albeit off the record.
Full story: Former Putin adviser has secret investment in US energy firm praised by Trump (The Guardian)