A Bermuda company has denied funneling Russian money to environmental groups after being named by two key House Republicans in a letter calling for a probe into foreign funding of anti-fracking advocacy.
Roderick M. Forrest, attorney for Klein Ltd., described as “completely false and irresponsible” accusations that Klein has acted as a conduit to move tens of millions from Russia to liberal U.S. foundations that in turn fund opponents of hydraulic fracturing.
“Our firm has represented Klein since its inception, and we can state categorically that at no point did this philanthropic organization receive or expend funds from Russian sources or Russian-connected sources and Klein has no Russian connection whatsoever,” said Mr. Forrest in a Tuesday email to The Washington Times.
Klein was singled out in the representatives’ June 29 letter urging Treasury Secretary Steven Mnuchin to investigate whether Russian oligarchs have used shell companies to fund environmental activism.
“Klein is a Bermuda based company apparently established to act only as a pass through for foreign funds,” said the letter, signed by House Science, Space and Technology Chairman Lamar Smith and Energy Subcommittee Chairman Randy Weber.
The U.S. fossil-fuel boom, driven by technologies like hydraulic fracturing, increasingly presents a threat to Russia’s stranglehold on oil and natural gas exports to Eastern Europe. Last month, U.S. producers shipped for the first time liquefied natural gas from a Louisiana export terminal to Poland.
“Poland just took a symbolic step forward in wresting itself from Russia’s energy dominance,” said Foreign Policy magazine in a June 8 post.
Craig Richardson, president of the Energy & Environmental Legal Institute, said a federal investigation was needed to track the “potential role in washing Russian oil and gas money and getting it into the hands of major U.S. anti-fracking environmental organizations.”
“Russia’s concerns about U.S. fracking efforts are obvious as they compete with the U.S. on the world market and it appears that Sea Change Foundation as a pass-through entity for U.S. environmental groups provided them with a perfect vehicle,” said Mr. Richardson in an email.
The Republicans referred to a December 2015 report by Big Green Radicals, a project of the free-market Environmental Policy Alliance, which pointed to documents showing that Klein was formed by two Wakefield Quin employees, Nicholas Hoskins and Marlies Smith, with “extensive ties to investments in the Russia energy sector.”
Mr. Hoskins and Mr. Forrest “held directorship positions in the ‘IPOC Group,’ owned by Russian minister of telecommunications and longtime [Russian President Vladimir] Putin friend Leonid Reiman, which was the subject of a 2008 money laundering case,” according to the report, “From Russia With Love?”
Klein gave a total of $23 million in 2010 and 2011 to the Sea Change Foundation in San Francisco, which has funded the Sierra Club, National Resources Defense Council and League of Conservation Voters.
Whether such an arrangement would violate U.S. law is unclear. Private U.S. foundations may accept foreign contributions — Sea Change listed the Klein donations on its IRS Form 990 — but House Republicans raised the possibility of legal liability.
“This scheme potentially violates federal statutes pertaining to agents of foreign governments or those lobbying on behalf of domestic and foreign interests,” said the House letter. “The U.S. Treasury Department is well positioned to track the international money flowing into the U.S.”
Environmental groups have decried the House Republicans’ call for a probe, with the Sierra Club blasting the effort as “pathetic” in a statement to E&E News.
“This is false,” said LCV spokesman David Willett in an email. “We have no connections to Russia and have been an effective advocate for environmental protection for over 45 years. This seems like nothing more than an attempt at distraction away from the Trump campaign’s well-publicized interactions with Russian interests to influence the election.”
Mr. Forrest also rejected the suggestion of impropriety. “Attorneys, law firms, financial institutions and all other companies based in Bermuda operate under a regulatory and anti-money laundering regime which applies standards which are amongst the highest in the world,” he said.
“The illicit movement of funds, in the nature alleged, falls well below such standards and any informed party would understand that, not only is there no substance or truth to such allegations, but that they are an attempt to damage the reputation of the Bermuda-based individuals and businesses named,” Mr. Forrest said.
Meanwhile, alliance research director Will Coggin accused Wakefield Quin of engaging in other shady dealings, saying Mr. Forrest was also a director of the “phony” Puma Foundation “registered at Wakefield Quin’s address that was held in contempt of U.S. federal court and tied to a convicted fraudster.”
The 2010 contempt judgment came in connection with the prosecution of Wall Street raider Paul Bilzerian, who was found guilty in 1989 on charges of fraud, conspiracy and making false statements to securities investigators.
“The firm’s denials carry no credibility whatsoever,” said Mr. Coggin in an email. “An investigation is needed to shed light on the shadowy spider web of foreign agents, entities and money.”