‘Trade of Our Lives’: After Mueller, UBS Banker Faces Questions

(Bloomberg) -- The email from Moscow was tantalizing: the deal with the Kremlin, the banker wrote, could be “the trade of our lives.’’

More than a decade later, that message, and others like it, lie at the center of a legal drama that’s starting to unfold Monday in a London court.

The case involves Robert Foresman, now a vice chairman at Switzerland’s UBS Group AG – and, it turns out, a fleeting figure in Robert Mueller’s investigation into Russian interference in the 2016 U.S. presidential election.

Last October, the special counsel’s team interviewed Foresman, who worked for more than a decade as a banker in Russia, about the Kremlin’s efforts to get Donald Trump elected.

Now, Foresman is headed to court over another source of Russian intrigue: Yukos Oil Co., once the crown jewel of the nation’s energy industry.

The Kremlin dismantled Yukos in what its founder, the oligarch Mikhail Khodorkovsky, called revenge for him challenging President Vladimir Putin. Most of Yukos’s assets were sold to Rosneft PJSC, then a smaller state-owned company, in auctions Yukos investors claimed were rigged.

Foresman is one of five people facing claims for damages and losses over their roles in the 2007 auction of Yukos’s foreign assets, according to a suit filed by entities representing Yukos’s former shareholders. Foresman "is contesting those court proceedings vigorously and refutes any suggestion of wrongdoing,’’ his lawyer, Abra Bompas, said in an emailed statement.

The allegations are a winding tale that stretches from the Netherlands to Slovakia and Russia. Yukos shareholders immediately disputed the auction in Dutch courts. Finally, in January 2019, the Dutch Supreme Court ruled that takeover was illegal. The London trial represents the first time high-profile Western bankers have been brought center stage in the legal drama.

Filings in the case provide a glimpse into Foresman’s ties with the Kremlin. They also show how he allegedly sought to use those connections to serve Putin’s goals while trying to make hundreds of millions of dollars for his firm and his partners.

Foresman played a key role in a Kremlin effort to mask Rosneft’s attempted takeover of Yukos assets by involving foreigners to make the auctions look legitimate, according to court documents in the upcoming trial.

At the time, Foresman was a banker at Renaissance Capital, a Moscow-based investment firm taking part in a consortium to buy the assets. The group called the deal “Project Surplus’’ and “Project Big Easy.’’

In one email describing the plan, Foresman told his colleagues that the deal would help the Kremlin and Rosneft while simultaneously earning them a big payday. He said he believed that Renaissance Capital, or RenCap, was uniquely positioned for the deal, according to an email included in the claim filed by entities representing Yukos.

“I have reason to believe that [RenCap], and only [RenCap], can pull off the trade of our lives,’’ Foresman wrote in an email dated Feb. 21, 2007. “We could pull off something that makes us a huge profit, makes top global investors very happy, materially mitigates Rosneft’s litigation risk (and lifts the share price therefore) and allows Kremlin to show that the auction of Y assets is not rigged but rather competitive. And only we have the distribution and political navigation skills to pull this off.’’

Foresman worked on some of the biggest privatization and energy deals in Russia at a string of western banks, building ties to Putin’s inner circle.

In 2001, he joined Dresdner Kleinwort Wasserstein, where he worked closely with Matthias Warnig, a former officer in East Germany’s Stasi secret police and a friend of Putin. From 2006 to 2009, Foresman served as deputy chairman of Renaissance Capital. He then moved to Barclays Plc as head of Russia where he stayed until joining UBS in 2016.

Foresman’s high-level Kremlin contacts came to the fore in Mueller’s 400-page report, which described the banker’s unsuccessful efforts to meet with Trump during the U.S. presidential campaign. Foresman was looking to pass along an invitation from Kremlin officials for Trump to speak at Putin’s flagship International Economic Forum. In an effort to get a meeting, Foresman sent emails to Trump’s personal assistant, Rhona Graff, in March 2016, describing how he had once helped set up a “private channel’’ between Putin and former President George W. Bush.

The report also described a meeting Foresman had in December 2016 with incoming National Security Adviser Michael Flynn to discuss Russia as he sought to get a job in the Trump administration. Foresman later met in Moscow with Sergey Gorkov, then head of Russian state-owned Vnesheconombank, shortly before Gorkov traveled to New York to meet Jared Kushner, Trump’s son-in-law.

Court filings shed new light on Foresman’s role in the Yukos auction. The claim, citing emails from Foresman and others, alleges he helped a group of investors act as a front for Rosneft, which wanted to buy a strategic asset owned by Yukos Finance, a Dutch registered subsidiary.

In addition to Foresman, and U.S. businessman named Stephen Lynch, Yukos investors are suing Stephen Jennings, then chairman of Renaissance Capital; Robert Reid, a Renaissance Capital lawyer; and Richard Dietz, the founder of VR Capital Group Ltd., a fund manager. All have denied wrongdoing.

The complex deal involved Lynch taking over an investment vehicle called Promnefstroy from Rosneft to buy Yukos Finance at the auction, according to the claim. Yukos Finance had substantial cash as well as a 49% stake in a company that owned part of an oil pipeline that connected Russia to Slovakia, which the Russian government considered a strategic asset.

Prior to the auction, Rosneft lent $316 million to Promnefstroy and signed an agreement stipulating that Promnefstroy would later transfer Yukos Finance’s stake in the Slovak oil pipeline to a buyer chosen by Rosneft at a set price. On Aug. 15, 2007, Promnefstroy bought Yukos Finance for a pre-agreed $310 million bid at an auction controlled by Rosneft, according to the complaint. Lynch didn’t respond to requests for comment.

Foresman believed the consortium had the support of representatives of Yukos management prior to the auction, according to his written statement released Monday. The consortium estimated the surplus assets of Yukos Finance could be worth $550 million once claims against the company had been settled, according to a written statement by Jennings.

Court documents released at the start of the trial also reveal a bigger role played by Warnig, Putin’s close friend, in Renaissance Capital and the Yukos deal. Before the auction, Foresman and Warnig had dinner together with their wives, according to Foresman’s written statement. Warnig then told Foresman that Rosneft was interested in the consortium’s proposal to take part in the auction and that he should contact Rashid Sharipov, a Rosneft lawyer, about the deal, according to the statement.

At the end of 2007 or beginning of 2008, Warnig was given "a small and secret shareholding" in Renaissance Group and a paid consulting role, according to the statement from Jennings. Warnig declined to comment when asked about the shareholding.

--With assistance from Kaye Wiggins.

To contact the reporter on this story: Stephanie Baker in London at stebaker@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Christopher Elser, Gregory L. White

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