Fact Check: Spokesman for Trump SEC Nominee Offers False Denial on Clayton’s Russian Ties
FALSE CLAIM: Clayton Has Always Been “On the Opposite Side of Russia”
“A spokesman for [Trump SEC nominee Jay Clayton] said, ‘In both business and litigation, Jay has been on the opposite side of Russia in resolving disputes.’” [Ben Protess and Matthew Goldstein, “Trump’s S.E.C. Nominee Disclosure Offers Rare Glimpse of Clients and Conflicts,” New York Times, March 8, 2017]
FACT: Clayton Has Made Millions of Dollars as a Partner at Sullivan & Cromwell Through His “Partnership Share” of Income From the Firm’s Activities
- As a partner at Sullivan & Cromwell, Clayton receives a “partnership share” of income from the firm’s activities. According to his recently filed financial disclosure, in the preceding 12 months this amounted to $7,623,900. [“Executive Branch Personnel Public Financial Disclosure Report for Walter Joseph Clayton,” US Office of Government Ethics, January 24, 2017]
FACT: Clayton’s Law Firm Has Advised Numerous Entities Doing Business in Russia as Well as Entities Connected to The Russian Government
Sullivan & Cromwell LLP, where Clayton has worked since 1993 and is currently a partner, has advised numerous entities including companies doing business with Russian oligarchs and the Russian government, on financial and oil and gas projects.
- Sullivan & Cromwell has advised on numerous oil and gas projects in Russia. It has been counsel to “the consortium, which includes KazMunayGas and the Russian Federation, in the financing of the Caspian Pipeline Consortium Project (Kazakhstan/Russia),” and it has advised in Russia and Kazakhstan “Tengizchevroil LLP (TCO) in its $16 billion project financing to fund the $42.5 billion expansion and modification of its upstream operations” in Kazakhstan. TCO is a “partnership comprising affiliates of Chevron, ExxonMobil, KazMunayGas, the Kazakh state oil company, and Lukoil. S&C has advised TCO on numerous other financings since 2004” as well. [“Experience in the Oil & Gas Industry,” Sullivan & Cromwell LLP, 2016, accessed March 8, 2017]
- Sullivan & Cromwell worked on the “CPC pipeline consortium,” which was a “$500 million expansion financing (Russia/Kazakhstan),” and for the “sponsors” on the “South Stream gas pipeline project (Russia/Turkey/Bulgaria).” The South Stream project is “a massive pipeline designed to bring gas from Russia to southern and central Europe.” Sullivan & Cromwell did not state the sponsors it represents, but “South Stream AG was the company created to build and manage the project, which is 50 percent owned by Gazprom, 20 percent by Italy’s ENI, and 15 percent each by France’s EDF and Germany’s Wintershall.” [“Lawyers,” sullcrom.com and “Project Finance Group of the Year: Sullivan & Cromwell,” Law360.com, January 26, 2015 and “Why Putin pulled the plug on South Stream project,” RT.com, December 3, 2014]
- “After a secret meeting between Bulgaria’s prime minister and the head of Gazprom, pipeline contracts were given to a company controlled by a member of Mr. Putin’s inner circle and politically connected Bulgarian companies. In Russia, Mr. Putin has at times used Russia’s state-owned banks for his own ends; they helped underwrite the Sochi Olympics, for instance. In Bulgaria, a subsidiary of one of those banks, VTB, showered the country with politically strategic investments as Mr. Putin pushed the government to move forward on South Stream.” [Jim Yardley and Jo Becker “How Putin Forged a Pipeline Deal That Derailed,” New York Times, December 30, 2014]
FACT: Clayton’s Law Firm Represented Bank in “Russian Money Laundering Scheme.”
- Sullivan & Cromwell partner Samuel Seymour was the attorney of record for Deutsche Bank on a consent order related to the bank’s role in a $10 billion “Russian money laundering scheme.” In January 2017, the New York State Department of Financial Services levied a $425 million fine against Deutsche Bank for its involvement in brokering “offsetting trades” that were “highly suggestive of financial crime.” Clients in Deutsche Bank’s Moscow office requested purchases of Russian blue chip stocks, in rubles, and once obtained, the London desk would sell the “identical Russian blue chip stock in the same quantity and at the same price through Deutsche Bank’s London branch.” Beyond having no financial reason for the trades, “a number” of the selling counterparties were in places like Cyprus, a well-known haven for hiding Russian money. The clients often lost money on these trades due to fees. [“Consent Order,” In the Matter of NY Deutsche Bank AG and Deutsche Bank AG New York Branch, January 30, 2017; Jethro Mullen, “Deutsche Bank Fined for $10 Billion Russian Money-Laundering Scheme,” CNN Money, January 31, 2017; Elliot Glover, ” White & Case and Sullivan & Cromwell Advise Deutsche Bank over Money Laundering Claims,” Student Lawyer, February 10, 2017; and Luke Harding, “Revealed: The $2bn Offshore Trail That Leads to Vladimir Putin,” Guardian, April 3, 2016.]
- It should be noted that The Trump Organization has enormous debt “with Deutsche Bank, which loaned it more than $364 million in recent years and more than $3 billion since the 1990s.” [Kevin G. Hall, “Exclusive: Trump Commerce Pick Wilbur Ross Faces New Russia Questions,” McClatchy, February 16, 2017]
FACT: Lawyers at Clayton’s Law Firm Are No Strangers to Russia
- Sullivan & Cromwell lawyers Mariya (Popova) Osadchaya and Maria Slobodchikova have been admitted to the bar in Russia. [“Lawyers,” Sullivan & Cromwell LLP, 2014, accessed March 4, 2017]
- Erik Lindauer, who is of counsel at Sullivan & Cromwell, “spent an extended period working in Moscow with American and Russian bankers as the legal advisor to the Government Securities Working Group of the Russian-American Bankers Forum,” and Sullivan & Cromwell partner Marc DeLeeuw “represented The Bank of New York in investigations and civil actions concerning the Bank’s business with certain Russian customers.” [“Lawyers,” Sullivan & Cromwell LLP, 2014, accessed March 4, 2017]
- Sullivan & Cromwell partner Vanessa K. Blackmore advised on “IPOs/Listings” and “Rights Issues/Secondary Offerings” Mail.ru Group Limited, which is one of Russia’s largest Internet company, and on “IPOs/Listings” United Company RUSAL, which is a large Russian aluminum company. The president of United Company RUSAL is oligarch Oleg Deripaska. [“Lawyers,” Sullivan & Cromwell LLP, 2014, accessed March 4, 2017]
- Primorsk International Shipping Ltd., which was “owned by Apington Investments Ltd., a British Virgin Islands holding company” that was “controlled by Russian shipping executive Alexander Kirilichev,” in 2016 sold “its nine-ship tanker fleet to the largest shipping company in Russia for $215 million, completing the transfer of all its assets in a Chapter 11 auction.” The buyer was the highest bidder. “‘We’re satisfied with the results and feel that it is the best practical outcome in light of the current market environment,’ Andrew Dietderich of Sullivan Cromwell LLP, representing the debtors, said.” [Vince Sullivan, “Primorsk To Sell Tanker Fleet To Russian Firm For $215M,” Law360, July 5, 2016; and Patrick Fitzgerald, “Arctic Oil Shipper Primorsk International Files for Bankruptcy,” Wall Street Journal, January 18, 2016.]
FACT: Clayton’s Law Firm Advised Goldman Sachs on Business in Russia
- In 2013, Sullivan & Cromwell advised “Goldman Sachs as financial advisor to Metro Group on the sale of its hypermarket retail operations in Poland, Romania, Russia and Ukraine to Auchan SA for approximately €1.08 billion.” [“Our Frankfurt Office,” Sullivan & Cromwell LLP, 2014, accessed March 4, 2017]