A Canadian Mogul, Clinton and a Kazakh Pact

APFrank Giustra speaking at a Clinton Foundation news conference in New York last June as Bill Clinton looks on.
NEW YORK -- Late on Sept. 6, 2005, a private plane carrying Canadian mining financier Frank Giustra touched down in Almaty. Several hundred kilometers to the west a fortune awaited: highly coveted deposits of uranium that could fuel nuclear reactors around the world. And Giustra was in hot pursuit of an exclusive deal to tap them.

Unlike more established competitors, Giustra was a newcomer to uranium mining in Kazakhstan. But what his fledgling company lacked in experience, it made up for in connections. Accompanying Giustra on his luxuriously appointed MD-87 jet that day was former U.S. President Bill Clinton.

Upon landing on the first stop of a three-country philanthropic tour, the two men were whisked off to share a sumptuous midnight banquet with Kazakh President Nursultan Nazarbayev. The Kazakh leader walked away from the table with a propaganda coup, after Clinton expressed enthusiastic support for his bid to head the Organization for Security and Cooperation in Europe, which monitors elections and supports democracy. Clinton's public declaration undercut both U.S. foreign policy and sharp criticism of Kazakhstan's poor human rights record.

Corporate records show that within two days, Giustra also came up a winner when his company signed preliminary agreements giving it the right to buy into three uranium projects controlled by Kazakhstan's state-owned uranium agency, Kazatomprom.

The monster deal stunned the mining industry, turning an unknown shell company into one of the world's largest uranium producers.

Just months after the Kazakh pact was finalized, Clinton's charitable foundation received its own windfall: a $31.3 million donation from Giustra. The gift helped secure Giustra a place in Clinton's inner circle. Giustra was invited to accompany Clinton to Almaty just as the financier was trying to seal a deal he had been negotiating for months.

In separate written responses, both men said Giustra traveled with Clinton to Kazakhstan, India and China to see firsthand the philanthropic work done by his foundation. A spokesman for the former president said he knew that Giustra had mining interests in Kazakhstan but was unaware of "any particular efforts" and did nothing to help. Giustra said he was there as an "observer only" and there was "no discussion" of the deal with Nazarbayev or Clinton.

But Moukhtar Dzhakishev, president of Kazatomprom, said in an interview that Giustra did discuss it, directly with the Kazakh president and that his friendship with Clinton "of course made an impression." Dzhakishev added that Kazatomprom chose Giustra's company based solely on the merits of its offer.

After The New York Times told Giustra that others said he had discussed the deal with Nazarbayev, Giustra responded that he "may well have mentioned my general interest in the Kazakhstan mining business to him, but I did not discuss the ongoing" efforts. Giustra said that while his friendship with Clinton "may have elevated my profile in the news media, it has not directly affected any of my business transactions."

Mining colleagues and analysts agree it has not hurt. Neil MacDonald, the chief executive of a Canadian merchant bank that specializes in mining deals, said Giustra's financial success was partly due to a "fantastic network" crowned by Clinton. "That's a very solid relationship for him," MacDonald said.

Giustra made his fortune in mining ventures as a broker on the Vancouver Stock Exchange. He turned a $20 million shell company into a powerhouse that, after a $2.4 billion merger with Goldcorp, became Canada's second-largest gold firm. Meeting Clinton and learning about his foundation "changed my life," Giustra told The Vancouver Sun.

The two men were introduced in June 2005 at a fundraiser for tsunami victims at Giustra's Vancouver home and hit it off right away. Soon the dapper Canadian was a regular at the former president's side as they flew around the world aboard Giustra's plane.

Philanthropy may have become his passion, but Giustra, now 50, was still hunting for ways to make money.

Exploding demand for energy had helped revitalize the nuclear power industry, and uranium was about to become a hot commodity. In late 2004, Giustra started putting together UrAsia Energy. Kazakhstan, which has about one-fifth of the world's uranium reserves, was the place to be. But with plenty of suitors, Kazatomprom could be picky about its partners.

"Everyone was asking Kazatomprom to the dance," said Fadi Shadid, an analyst covering the uranium industry for Friedman Billings Ramsey. "A second-tier junior player like UrAsia -- you'd need all the help you could get."

The Cameco Corporation, the world's largest uranium producer, was already a partner of Kazatomprom. But when Cameco expressed interest in the properties Giustra was already eying, the government's response was lukewarm. "The signals we were getting was, you've got your hands full," said Gerald Grandey, Cameco president.

For Cameco, it took five years to "build the right connections" in Kazakhstan, he said. UrAsia did not have that luxury. Profitability depended on striking before the price of uranium soared.

"Timing was everything," said Sergei Kurzin, a Russian-born businessman whose London-based company was brought into the deal by UrAsia because of his connections in Kazakhstan. Even with those connections, Kurzin said, it took four months to arrange a meeting with Kazatomprom.

In August 2005, records show, the company sent an engineering consultant to Kazakhstan to assess the uranium properties. Less than four weeks later, Giustra arrived with Bill Clinton.

Dzhakishev, the Kazatomprom chief, said an aide to Nazarbayev informed him that Giustra talked with Nazarbayev about the deal during the visit. "And when our president asked Giustra, 'What do you do?' he said, 'I'm trying to do business with Kazatomprom,'" Dzhakishev said. He said Nazarbayev replied, "Very good, go to it."