By Alexander G. Markovsky
Joe Biden’s shenanigans in Ukraine need to be understood in the context of the business and political culture of Ukraine and the former Soviet bloc. We must not be naïve — the Ukrainian company Burisma Holding Limited did not hire a druggie like Hunter Biden, the son of the Vice President of the United States Joe Biden, for his expertise or business acumen. It did not hire obscure Devon Archer, a managing partner of Rosemont Seneca Partners, a $2.4 billion private equity firm co-owned by the stepson of John Kerry Christopher Heinz, for his administrative genius, either.
Burisma expected it was hiring the principals, Joe Biden and John Kerry. Hunter Biden and Devon Archer were just bagmen.
The arrangement is called “крыша,” which translates as “roof” in Russian. It means patronage and protection in exchange for an agreed monthly payment, often payable to a third party to ensure deniability. It is important to point out that “roof” is not just criminal jargon, it is a contract. But unlike a legal document secured by a written text, criminals operate outside the law and leave no paper trail.
“Roof” has been prevalent in the post-Soviet era in the territories of the former Soviet Union, where various entities offer protection — organized crime, police, high ranking government officials, and a few other powerful entities. The necessity for “roof” is often part of business planning. Burisma is not an exception.
In 2002, during the tenure of President Viktor Yanukovych, his ecology minister Mykola Zlochevsky registered Burisma Holding Limited on Cyprus. Burisma managed to secure lucrative government licenses for gas field exploration and production to become the largest private gas company in Ukraine. De jure, the licenses for the exploration of natural resources are drafted as bilateral agreements between the government entities and private enterprises, but de facto they are unilateral and revocable grants of privileges by a president and high-ranking government officials to their cronies and supporters.
As long as President Yanukovych was in power Mr. Zlochevsky’s assets were secured from a hostile takeover. President Yanukovych was his “roof,” his protector, defender, and benefactor. But, nothing under the sun is permanent.
In February 2014 Yanukovych was overthrown in a coup and fled the country. Zlochevsky followed him shortly. In a dramatic reversal of fortunes, Burisma overnight changed from one of the strongest to one of the weakest players in Ukrainian power politics. The recourse of the weakest was to find a new “roof” before newly-elected President Petro Poroshenko, who made no secret of his desire to add Burisma to his basket of assets, would be sworn in during June 2014.
It is not known when and who approached John Kerry and or Joe Biden, assuming the deal followed classic local customs, and what was offered in exchange for lobbing and political support. But on April 22, 2014, Devon Archer was put on Burisma’s board. On May 13, 2014, Hunter Biden himself joined the board.
On the same day, Christopher Heinz rushed to dissociate himself and the firm from what looked like an unscrupulous endeavor. He emailed Matt Summers and David Wade, two of his stepfather’s top aides at the State Department, “I can’t speak why they decided to, but there was no investment by our firm in their company,” wrote Heinz.
The passage clearly displayed that the State Department was aware of the arrangement and revealed Christopher Heinz’s concern regarding if not the legitimacy but certainty the ethics of the undertaking.
For Burisma, the impact of having Hunter Biden and Devon Archer on its board could not be overstated. It thought that it had acquired an ultimate “roof” — the Vice President and the Secretary of State of the United States of America. The hiring sent a subliminal message to Poroshenko that Burisma is protected by the US Government.
Poroshenko ignored the message. As soon as he was sworn in, he directed his prosecutor general, Vitaly Yarema, to open a corruption investigation into Burisma in order to build a case to forfeit the profitable gas licenses awarded to Burisma.
In January 2015 Yarema was replaced with Poroshenko’s close associate Viktor Shokin who continued the investigation.
By 2016 the investigation was at its pinnacle and Burisma’s management panicked. They had been contacting the State Department requesting to end the investigation. In spring 2016 Joe Biden was forced to act. He stepped in to protect his client Burisma Holding and demanded Poroshenko to dismiss Shokin. Poroshenko refused.
They said, ‘You have no authority. You’re not the President — Poroshenko said’ … I said, ‘Call him.’ “I looked at them and said, ‘I’m leaving in six hours. If the prosecutor is not fired, you’re not getting the money.’ Well, son of a b—-. He got fired. And they put in place someone who was solid at the time,” Biden bragged about his accomplishment.
In a process, Biden inadvertently admitted that President Obama, if not involved, at least was aware of the shady business of his Vice President.
Poroshenko couldn’t fight the President of the United States, and Shokin was fired. At this juncture, Poroshenko decided that it is better to have a percentage of something than a hundred percent of nothing. He made a deal with Zlochevsky and his trusted man Igor Kononenko joined Burisma’s board. The vanquished enemies became allies.
Miraculously, there was no longer a need for investigation and a new prosecutor Yuriy Lutsenko, “who was solid at the time,” closed the probe. There was no longer a need for Joe Biden’s services either. Hunter Biden and Devon Archer eventually resigned from Burisma’s board. Zlochevsky returned to the country. The “roof” earned its pay.
Photo credit: YouTube screengrab (cropped)
Alexander G. Markovsky is a senior fellow at the London Center for Policy Research, a conservative think hosted at King’s College, New York City, which examines national security, energy, risk-analysis and other public policy issues. He is the author of Anatomy of a Bolshevik and Liberal Bolshevism: America Did Not Defeat Communism, She Adopted It. Mr. Markovsky is the owner and CEO of Litwin Management Services, LLC. He can be reached at [email protected]