Perry's Focus on Gas Company Entangles Him in Ukraine Case

  • In Politics
  • 2019-10-08 13:40:27Z
  • By Kenneth P. Vogel, Matina Stevis-Gridneff and Andrew E. Kramer
California Republicans Perry
California Republicans Perry  

WASHINGTON - When Energy Secretary Rick Perry led an American delegation to the inauguration of Ukraine's new president in May, he took the opportunity to suggest the names of Americans the new Ukrainian government might want to advise and oversee the country's state-owned gas company.

Perry's focus during the trip on Ukraine's energy industry was in keeping with a push he had begun months earlier under the previous Ukrainian president, and it was consistent with U.S. policy of promoting anti-corruption efforts in Ukraine and greater energy independence from Russia.

But his actions during the trip have entangled him in a controversy about a pressure campaign waged by President Donald Trump and his allies directed at the new Ukrainian president, Volodymyr Zelenskiy, that is at the center of the impeachment inquiry into Trump. That effort sought to pressure Zelenskiy's government to investigate Trump's rivals, including former Vice President Joe Biden, a leading contender for the Democratic presidential nomination to challenge Trump.

Perry's trip raised questions about whether he was seeking to provide certain Americans help in gaining a foothold in the Ukrainian energy business at a time when the new Ukrainian government was looking to the United States for signals of support in its simmering conflict with Russia.

Trump seemed to suggest last week that he made a July 25 phone call to Zelenskiy, during which he repeatedly urged his Ukrainian counterpart to pursue investigations that could politically benefit him, at the urging of Perry. Trump told congressional Republicans last week that Perry wanted him to discuss the liquefied natural gas supply with Zelenskiy, Axios reported.

That topic did not specifically come up in the call between the two leaders, according to the reconstructed transcript released by the White House. Text messages released last week by House investigators showed that other officials were suggesting that the president speak with Zelenskiy to nail down an agreement for Ukraine to move ahead with the investigations being sought by Trump.

At a news conference on Monday in Vilnius, Lithuania, where he was meeting with Ukrainian and Polish energy officials, Perry said he asked Trump "multiple times" to hold a phone call with Zelenskiy.

Perry's role in the diplomacy between the countries highlights the degree to which Trump entrusted his Ukraine policy to an ad hoc coalition of loyalists inside and outside the government, especially after the recall of the ambassador to Ukraine amid questions among Trump's supporters about her loyalty to the president. It also reveals the extent to which Ukrainian politics and national security revolve around energy supplies.

Perry's efforts, while broadly consistent with U.S. national security and energy objectives, intersected with those of the figures involved in the pressure campaign. Two U.S. diplomats who attended Zelenskiy's inauguration with Perry - Gordon Sondland, the U.S. ambassador to the European Union, and Kurt Volker, then the State Department's special envoy to Ukraine - pushed Zelenskiy to publicly commit to the investigations and were involved in setting up the call between Trump and Zelenskiy.

They appeared to work on the effort with Rudy Giuliani, the president's personal lawyer and a leading force in the campaign to pressure the Ukrainian government to pursue the investigations. Two associates of Giuliani also sought changes to the leadership of the Ukrainian state-owned gas company, Naftogaz. Those changes would have required approval from a supervisory board Perry sought to shape.

One of Giuliani's associates, Lev Parnas, pitched a liquefied natural gas deal to the chief executive of Naftogaz in early spring, as The New York Times reported last month.

The deal was rejected by the Naftogaz executive.

But Parnas and a partner who was also involved in Giuliani's political efforts in Ukraine, Igor Fruman, also sought to install a presumptive ally as Naftogaz's chief executive. They told a gas executive named Andrey Favorov that they could use their American political connections to help him become chief executive of Naftogaz, suggesting that, if appointed, he might steer the company to buy liquefied natural gas from them, according to Dale Perry, the managing partner of a company that competes with one run by Parnas and Fruman.

Favorov, who is a lower-ranking executive at Naftogaz, rejected the proposal, which was first reported by The Associated Press.

Dale Perry, who is not related to the energy secretary, said he found it "very troubling and disturbing" that Parnas and Fruman boasted that they had worked with Giuliani to force the recall this spring of the U.S. ambassador to Ukraine, Marie L. Yovanovitch.

But people in Ukraine and the United States who are familiar with the conversations said the Ukrainian government had requested recommendations from Rick Perry for Americans who could advise Naftogaz and the government on governance reforms and liquefied natural gas transportation.

Perry recommended four Americans as possible advisers on energy issues, according to the Americans and Ukrainians who are familiar with the conversations. Names floated included Carlos Pascual, a former U.S. ambassador to Ukraine, and Daniel Yergin, an author and energy expert who has worked with Pascual at an energy advisory firm.

Perry, a former governor of Texas, specifically recommended two Texas-based investors who work in Ukraine, Michael Bleyzer and Robert Bensh, for a supervisory board of Naftogaz, according to the Americans and Ukrainians familiar with the conversations.

Bleyzer, a Republican donor, has proposed gas deals with Naftogaz, according to people familiar with his efforts.

Shaylyn Hynes, a spokeswoman for the Energy Department, said in a statement on Monday night said that Perry "has consistently called for the modernization and reform of Kyiv's business and energy sector in an effort to create an environment that will incentivize Western companies to do business in Ukraine." As part of that effort, and at the request of Zelenskiy's administration, Hynes said Perry "recommended the names of some widely respected individuals in the American energy sector, including government experts" at the Energy Department. But, she said Perry "did not recommend these individuals be placed on any board."

Nonetheless, the circulation of the names of Bleyzer and Bensh as possible Naftogaz appointments led to speculation that Naftogaz was considering removing from the supervisory board a former Obama administration official named Amos J. Hochstein. Hochstein had worked with Biden on his Ukraine efforts as vice president.

That imbued the discussion about the board appointments with political overtones at a time when Democrats were beginning to build an impeachment case around the actions of Trump and his team to press Ukraine to investigate Biden and his son, who had served on the board of a private Ukrainian gas company.

Adding to the complexity of the situation: When Zelenskiy dispatched one of his top aides to Washington in July to meet with members of Congress and the Trump administration, and to try to connect with Giuliani, some of the meetings on Capitol Hill were arranged by a Naftogaz lobbyist, and attended by a Naftogaz official.

Naftogaz, until just a few years ago a money-losing monopoly stained by corruption, has been substantially overhauled in recent years to survive without Russian gas and to compete in the European Union market.

To comply with European Union regulations and be able to sell Ukrainian gas to the bloc's energy-hungry countries, the company has been weaning itself off subsidies and spinning off its gas-transmission operations into a new entity with a guaranteed income of at least $2 billion a year.

Naftogaz officials said that this company, which will come into existence in January, and Naftogaz's operations storing gas underground could attract American investments, and that they were at the heart of what the U.S. administration was interested in.

Naftogaz officials said the American interest was sufficient that Sondland held further discussions about the planned spinoff of the transmission operations in Brussels.

This article originally appeared in The New York Times.

© 2019 The New York Times Company


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