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Wednesday, April 23, 2014         

NEW YORK TIMES


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Trade Dispute Centers on Ukrainian Executive With Ties to Clintons

By New York Times

AMY CHOZICK

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Bill and Hillary Rodham Clinton have built a sprawling network of powerful friends around the globe, one that could aid Hillary Clinton's chances were she to seek the presidency. But those relationships often come with intersecting interests and political complications; few people illustrate that more vividly than the Ukrainian oligarch Victor Pinchuk.

A steel magnate and major contributor to the former president's foundation, Pinchuk was in frequent contact with Hillary Clinton's State Department, at meetings arranged by a Clinton political operative turned lobbyist, Douglas E. Schoen.

And now Pinchuk is at the center of a trade dispute that places him at odds with steelworkers in Pennsylvania and Ohio, precisely the kind of union workers Hillary Clinton would need to appeal to in a presidential campaign.

Pinchuk's relationship to the Clintons became the subject of scrutiny last summer when U.S. steelmakers filed a case alleging that Pinchuk's company, Interpipe Ltd., and firms from eight other countries had illegally dumped a type of steel tube used in natural gas extraction, an industry whose growth has provided one of the few bright spots in the U.S. manufacturing sector.

The Commerce Department is expected to issue a preliminary ruling in the case as early as Thursday. If it decides that dumping occurred, it could impose duties on Interpipe's steel imports, which, analysts say, would push the indebted company deeper into financial crisis.

The situation has taken on new urgency for Interpipe, given the political crisis in Ukraine, which has led to a virtual block on imports of its steel products to Russia. Interpipe had hoped to make up for lost revenue with increased sales in the United States.

Spokesmen for the Clintons declined to comment on the relationship. Nick Merrill, a spokesman for Hillary Clinton, said that from Jan. 21, 2009, to Feb. 1, 2013, her entire tenure as secretary of state, Pinchuk was never on her schedule.

Pinchuk, 53, is one of Ukraine's only oligarchs to have deep ties to Washington. Many of the country's richest businessmen are suspected of having links to organized crime and do not have visas to the United States, much less a relationship with a former and potentially future U.S. president.

Still, Pinchuk's image is not without blemish: His father-in-law is Leonid Kuchma, who was president of Ukraine from 1994 to 2005 and led a government criticized for corruption, nepotism and the murder of dissident journalists. As president, Kuchma privatized a huge state steel factory and sold it to Pinchuk's consortium for $800 million, which competitors said was a laughably low price.

Since 2006, Pinchuk has donated roughly $13.1 million to the Bill, Hillary & Chelsea Clinton Foundation. Bill Clinton attends Pinchuk's annual conferences in the resort city of Yalta, Ukraine, and Pinchuk attended the former president's 65th birthday party in Los Angeles.

He was first introduced to Bill Clinton in 2004 by Schoen, a New York-based pollster who has advised both Clintons. Pinchuk immediately began building a friendship with the former president and enthusiastically donating to Clinton's causes, including an HIV program that was later expanded into Ukraine.

Schoen had been on a $40,000-per-month retainer as an adviser to Pinchuk since 2000. In 2011, Schoen, who had never previously done any lobbying, registered as a lobbyist for him to set up meetings with Washington officials to discuss the political crisis in Ukraine.

The meetings Schoen scheduled were almost exclusively with senior officials at Hillary Clinton's State Department.

Schoen arranged roughly a dozen meetings with State Department officials between September 2011 and November 2012 on behalf of or with Pinchuk. At times those meetings overlapped with Pinchuk's other involvements with the Clintons. For instance, in 2012, Pinchuk took a break from the Clinton Global Initiative to meet upstairs in a hotel suite with Melanne Verveer, a close aide to Hillary Clinton and ambassador at large for global women's issues at the State Department.

There is no evidence that Pinchuk or Schoen discussed anything other than the political crisis in Ukraine with the State Department, or that any U.S. officials tried to influence the trade case.

"My lobbying work for Mr. Pinchuk was undertaken and designed solely and specifically to resolve an ongoing crisis in Ukraine that rages to this day, and had absolutely nothing to do with commerce, mercantile activity or business," Schoen said.

Verveer, a Ukrainian-American who served as Hillary Clinton's chief of staff in the White House, also said she and Pinchuk discussed democratization in Ukraine, "a subject I have cared about for many, many years."

The Clintons have been vocal advocates of Pinchuk's long-held cause of strengthening Ukraine's ties to Europe and the United States. In September, Bill and Hillary Clinton made a quick trip to Yalta to attend the Yalta European Strategy meeting, a conference Pinchuk hosts each year at Livadia Palace, the last Russian czar's summer retreat on the Black Sea.

Pinchuk moderated a talk at the event with Bill Clinton and former Prime Minister Tony Blair of Britain and introduced Hillary Clinton, whom he called a "real, real megastar" before she delivered a keynote address about strengthening Ukraine's economic ties to the West.

Hillary Clinton roused the crowd when she praised Ukraine's "excellent chocolate," a reference to the Ukrainian products the Kremlin had banned.

"Our relationship is about philanthropy, about Ukraine," Pinchuk said in an interview.

"If I discussed my business it would totally destroy my relationship and they would think I have some other hidden interest," he added.

Pinchuk said he did talk about the anti-dumping suit with John F. Tefft and Geoffrey R. Pyatt, the former and current U.S. ambassadors to Ukraine.

In November, around the time analysts from Fitch downgraded Interpipe, citing the anti-dumping suit and the company's missing a $106 million debt payment, Pyatt visited a new Interpipe factory in the industrial town of Dnepropetrovsk, Ukraine. He told reporters he was "deeply impressed" with the eco-friendly meteorological mill.

While the U.S. steel companies complain that Interpipe and others are threatening a rare vibrant part of manufacturing here by flooding the market with cheaper steel products, foreign steelmakers say such moves ultimately hurt U.S. manufacturing by making its materials more expensive.

And free trade advocates say the proposed duties would be counter to the State Department's broad policy position that Ukraine should have increased economic ties with the West.

"It's quite absurd that when Russia pursues trade sanctions against Ukraine" the United States objects, but the Commerce Department is considering similar duties, said Anders Aslund, an economist with the Peter G. Peterson Institute for International Economics, where Pinchuk sits on the board.






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