When the controversy over the UraniumOne deal emerged in the 2016 presidential election campaign, we saw the media and the government closing circles to protect Hillary Clinton. Fact checkers at the major newspapers were quick to point out that there was nothing nefarious in the works through rhetorical sleight of hand. Trump made a big deal out of the UraniumOne deal by claiming that it effectively delivered 20% of the US uranium market into Russian hands. One fact checker had the temerity to state the US government had no hand in the deal whatsoever which is ludicrous considering the CFIUS had to approve the deal.
They also tried to nuance the situation by stating the deal involved a Russian company that purchased a Canadian company and that the Canadian company had a 20% stake in US uranium “capacity” and “holdings.” Splitting hairs, they declared that the deal did not give Russia access to 20% of the American nuclear stockpile. But even if they did, they stated, none of it could be exported out of the United States. Then minimizing the subject, they said that even if it could be exported out of the US, who cared? And in a further assessment they stated that Hillary Clinton had no hand in the decision whatsoever. According to the New York Times, any reservations had nothing to do with nuclear proliferation, but instead on the reliance of the United States on foreign sources of uranium at the time. Therefore, given the glut of uranium on the market and the inability of Rosatom to export any US uranium, the CFIUS was left with no other choice than to voice no objection to the deal.
Regarding the export of US uranium, the Nuclear Regulatory Commission (NRC) must approve any license to do so. As part of the deal, they assured some concerned members of Congress that on November 4, 2010 it was specified that no uranium mined from holdings in Texas or Wyoming could be exported and this arrangement was explicit with Rosatom. In a 2011 letter to Senator Tom Barasso (R-WY), the NRC explained the process where Rosatom would have to apply for an export license and have to comply with previous US-Russian agreements on the export of uranium. In 2015, however, they admitted that in 2012 they had granted just such a license to RSB Logistics Services to allow uranium- mined from a Rosatom holding in Wyoming- to be exported to Canada for processing, but that it had been later returned for further processing in the United States.
Regardless, UraniumOne does hold 20% of America’s in situ uranium capacity, but supplies only 11% of the actual uranium used in the United States.
As for the FBI investigation involving a confidential informant, that eventually led to the arrest of Rosatom’s US subsidiary (Tenex) chief Vadim Milkerin when he was charged with violating the FCPA and financial crimes, and others associated with the scheme. They all entered guilty pleas and were sentenced to various sentences.
So what really happened here? Russia had a military supported by a third-tier economy. Since about 1995, Russia has tried to develop and exploit its capacity as a nuclear-energy supplier. After 2000, the Bush administration first viewed Russia as a strategic partner rather than a malevolent competitor and they entered into a nuclear cooperation agreement with the Kremlin in May 2008. Before Congress could review it, the deal was scuttled when Russian forces invaded Georgia. In 2009, despite their aggression in Georgia, Obama and Clinton signaled their desire to “reset” relations with Russia. Nuclear cooperation and commerce were to be the cornerstone of this reset.
During the George H.W. Bush administration after the disintegration of the Soviet Union, the US agreed to purchase downgraded uranium from Russia’s nuclear warheads. The Russian agent responsible for this arrangement was a Kremlin-controlled company called Tenex which was a subsidiary of Rosatom. Tenex, through another subsidiary called Tenam USA based in Bethesda, Maryland was also run by Vadim Milkerin. The Obama administration granted him a visa in 2010, but it was already known he was in the country in 2009.
Milkerin was responsible for arranging and managing contracts with American uranium purchasers which gave him tremendous leverage over US companies. With the help of many associates, he used this leverage to extort and defraud US contractors into paying inflated prices for uranium. He then laundered the proceeds through bank accounts in Latvia, Cyprus, Switzerland, and the Seychelles Islands, although sometimes transactions were handled in cash where he would skim the proceeds. The inflated prices served two purposes. First, they lined the pockets of people connected to Putin who operated in the United States and Russia. Second, they compromised the American companies that paid the bribes which rendered them vulnerable to blackmail by the Kremlin.
Milkerin had a problem. To further Russia’s push for nuclear expansion, he was seeking a lobbyist. With the help of an associate linked to the Russian mafia, he found his lobbyist. The lawyer for the lobbyist was Victoria Toensing, a well-known DC lawyer and former federal prosecutor and counsel to the Senate Intelligence Committee. The lobbyist believed that Milkerin was landing him on the wrong side of the law and went to the FBI with his concerns. They then used him as a confidential source, known as CS-1, in the resulting arrest affidavits.
When he became CS-1, the head of the FBI was Robert Mueller. The investigation was run out of the Maryland federal prosecutor’s office since Tenam was based there, and led by Rod Rosenstein. Because of the work of CS-1, the FBI was able to monitor the entire scheme almost from its inception. By the middle of May 2010, the investigation was so successful that the FBI was able to identify three clear-cut attempts and actual extortion on the part of Milkerin. Importantly, through conversations with Milkerin and others, the informant revealed that other Russian nuclear officials intended to ingratiate themselves with Secretary of State Hillary Clinton.
Coincidentally, the sale of the Kazakh mines to Frank Giustra that eventually ended up in the hands of Uranium One which eventually ended up in the hands of Rosatom, drew the ire of Putin who complained to Kazakhstan since Rosatom, at the time, had their eye on the mines. That complaint resulted in the arrest of the president of Kazatomprom which placed in jeopardy the fate of the mines being placed back in the hands of the Khazakh government. These actions caused the stock of Uranium One to plunge and its executives turned to the State Department. Emergency meetings were held between the State Department and the Khazakh regime and the crisis resolved. The solution amounted to Rosatom being able to purchase 17% of Uranium One giving them a foothold in the mines. But Putin did not want a 17% ownership stake; he wanted the whole thing. While this was being worked out, it should be remembered that in 2009-2010, the FBI was investigating Russians associated with Rosatom in the United States.
Next: The “investigation”