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Russian-born businessman Igor Fruman leaves after his arraignment at the United States Courthouse in the Manhattan borough of New York City, U.S., October 23, 2019.  REUTERS/Jefferson Siegel

Giuliani associates leveraged GOP access to get Ukraine gas deal

KYIV, Ukraine (AP) — In a back corner of the swank H Bar in Houston, near a huge photo of Brigitte Bardot with a dangling cigarette and a deck of cards, two Russian-speaking men offered a Ukrainian gas executive what seemed like an outrageous business proposal.

Andrew Favorov, the No. 2 at Ukraine’s state-run gas company Naftogaz, says he sat on a red leather bench seat and listened wide-eyed as the men boasted of their connections to President Donald Trump and proposed a deal to sell large quantities of liquified natural gas from Texas to Ukraine.

But first, Favorov says, they told him they would have to remove two obstacles: Favorov’s boss and the U.S. ambassador in Kyiv, the Ukrainian capital.

Favorov says he hardly took the proposal at the early March meeting seriously. The men, who sported open shirts showing off thick gold chains at a conference where most wore business attire, had zero experience in the gas business. And it wasn’t plausible to Favorov that they would be able to oust his boss, never mind remove a U.S. ambassador.

What he didn’t know as he sipped whiskey that evening was that high-ranking officials in the Ukrainian government were already taking steps to topple his boss, Naftogaz CEO Andriy Kobolyev. And two months later, Trump recalled U.S. Ambassador Marie Yovanovitch, a career diplomat with a reputation as an anti-corruption crusader.

The gas deal sought by Lev Parnas and Igor Fruman never came to pass. But their efforts to profit from contacts with GOP luminaries is now part of a broad federal criminal investigation into the two men and their close associate, Rudy Giuliani, Trump’s personal attorney.

The Associated Press reported some details in October of the brash pitch that Parnas and Fruman made to Favorov in Houston. But in a recent series of interviews with the AP in Kyiv, Favorov painted a more complete picture of his dealings with Giuliani’s associates.

READ MORE: Trump impeachment vote caps weeks of bitter tension

His tale, corroborated by interviews with other key witnesses, reveals that the pair continued to pursue a deal for months. The campaign culminated in May, at a meeting at the Trump International Hotel in Washington that included a lobbyist with deep ties to U.S. Energy Secretary Rick Perry and a Republican fundraiser from Texas close to Donald Trump Jr. Three people with direct knowledge of that meeting described it to the AP on condition of anonymity because some of the players are under federal investigation.

The maneuvering over Naftogaz came at the same time that Giuliani, with the help of Parnas and Fruman, were trying to get Yovanovitch out of the way and persuade Ukraine’s leaders to launch an investigation of former Vice President Joe Biden and his son Hunter’s work with Burisma, a rival Ukrainian gas company.

To achieve those ends, they sought to eliminate the safeguards put in place over the last decade at the urging of American and European diplomats to help insulate Naftogaz from the corruption rife in the former Soviet bloc.

The story illustrates an essential backdrop of both the impeachment drama roiling U.S. politics and the criminal investigation of Giuliani and his associates: the decades-long tug of war between Russia and the West over Ukraine, in which geopolitical influence, natural resources and corruption are major themes.

Yovanovitch is now a key witness in the impeachment inquiry, and federal prosecutors investigating Giuliani have interviewed both Favorov and Kobolyev. Parnas and Fruman were arrested Oct. 9 at an airport outside Washington carrying one-way tickets to Europe and are charged with conspiracy, making false statements and falsification of records in a case centered on alleged campaign finance violations.

It was about seven years ago that Favorov says he first crossed paths with Fruman, who owned the luxurious Otrada Hotel in Odessa, a Ukranian city famous for its opulent Black Sea resorts. Favorov, who ran a gas trading company, was there for a retreat and became friendly with the hotel owner, and the two men have kept in sporadic touch ever since.

After Naftogaz announced early this year that Favorov had been appointed its No. 2, he says Fruman, who had emigrated to the United States years earlier, called to chat about the U.S. natural gas business and tout his connections to the Trump administration. Favorov, a dual U.S.-Russian citizen based in Kyiv, had heard that his acquaintance was involved in Republican politics in Florida. Favorov recalls suggesting they meet up at an energy industry conference he was attending in Houston.

“Good,” he says Fruman told him. “I want to introduce you to someone.”

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