There’s no question that the board fee, five figures a month, appealed to me. It wasn’t out of line with compensation given to board members at some Fortune 500 companies, but I wasn’t used to such a handsome sum for that kind of work. My position on the board of the World Food Program USA was voluntary, and Amtrak had only paid my expenses.
Yet the fee came at an especially fortuitous juncture. I was spending so much time with Beau and his urgent medical needs that my business was being neglected. I’m not saying I would not have taken Burisma’s offer if Beau hadn’t gotten sick—the money helped.
“This is private industry—of course you’re getting paid,” Kwasniewski said to me at one point, addressing whatever dissonance I might have felt between idealism and generous compensation.
He added, “You can get paid by the Russians or the people who are fighting them.”
I was interested but cautious.
I did my due diligence. When dealing with international businesses, the line between the good guys and bad guys can get murky. Most companies outside the U.S. operate in a gray area when it comes to markets and the rules they have to abide by. U.S. companies adhere to the Foreign Corrupt Practices Act, which applies U.S. law to any American corporate entity in its domestic and international operations. It’s why a company like, say, ExxonMobil can’t simply bribe the president of Papua New Guinea for drilling rights. Enforcement for companies elsewhere is less stringent.
I brought Burisma to Boies Schiller Flexner, the New York–based law firm where I was of counsel. With offices around the country and in London, Boies Schiller is as savvy internationally as any firm in the world, and they wanted to see whether Burisma was legit or plagued with corruption before taking them on.
Burisma showed me a report done by Kroll, a leading corporate investigations firm and publisher of a widely read annual assessment called the Global Fraud and Risk Report. While the report gave the company a clean bill of financial health, it was a year and a half old. That concerned me.
Boies Schiller then hired Nardello & Co., another global investigator. Founded by a former federal prosecutor, Nardello specializes in looking into foreign companies for bribery and other corrupt practices. They poked into Burisma’s operations to make sure its assets were legitimately held and that the international community viewed it as a trustworthy enterprise. That’s how it would win the support of allies and wary investors, and how it would continue to expand.
Burisma checked all the important boxes. There were questions about the propriety of awarding contracts to a company Zlochevsky owned while he was Ukraine’s ecology and natural resources minister. That’s the kind of situation where things can get gray. But the reality is that there weren’t many viable privately owned natural gas companies in Ukraine, like Burisma, at the time. The vast majority of production was state owned, but Burisma also had a much higher efficiency rate than the state.
(I should note that none of the investigators knew of a probe into Zlochevsky that had just gotten under way in the United Kingdom. Officials there froze Zlochevsky’s London bank accounts containing $23 million while they looked into money-laundering allegations. The UK’s Serious Fraud Office eventually unfroze the assets in early 2015 and dropped the case three years later.)
Like many others outside the region, I still didn’t fully comprehend how far and deep the tentacles of Russian corruption had reached in Ukraine. It astounds me to this day how involved Russia is in everything. It’s hard to disassociate anyone in the region who has had success in any way with the innately dirty hands of Russia.
In my investigation before joining the board, I looked at whether or not Zlochevsky was a known criminal. I looked at whether or not he operated a business that was transparent and coherently linked to Western norms of corporate governance. I did not drill down to determine whether or not Zlochevsky acquired his wealth fairly during the decades of kleptocracy and corruption that dated back to when Ukraine was a former republic of the Soviet Union.
In Zlochevsky, I saw someone who was attempting to break with Russian influence, whether out of self-interest or some form of patriotism. I know it was driven by much more than self-preservation. He was looking to the West at a critical time, when there was a need for this company, in particular, to exist independently and out of reach of Putin and the clutches of the Russian kleptocracy.
Putin wants Ukraine for four very well-defined reasons: he wants natural resources, specifically natural gas; he wants the port in Crimea; he wants a land bridge between the Far East and Europe; and he wants a buffer between Russia and NATO to increase his sphere of influence.
The reason Russia wanted to hijack Burisma was stupid-simple: natural gas. John McCain said it best: “Russia is a gas station masquerading as a country.” Without oil and gas, the Russian economy, in terms of GDP, would rank just ahead of that of Illinois among the fifty states. Putin’s power comes from his control over natural assets, particularly energy—along with Russia’s estimated 6,800 nuclear warheads.
It would be easy to look at Zlochevsky and say that he’s part of the problem. But you have to start somewhere. It was a time of crisis in Ukraine. No matter how imperfect the entity I was asked to champion, I knew one thing, which Kwasniewski had underscored so forcefully: Burisma was opposed to the direct interests of the most dangerous person in the world—Vladimir Putin.
If I was going to pick a side—and if I was going to get paid to pick a side—I’d choose the same way again, rather than back the person President Trump has sided with.
After gathering all that background, Boies Schiller recommended that Burisma go even further in following Western standards of corporate transparency and governance and that it look to diversify, in partnership with
