Russian gas firm linked to Weldon probe courted others.

Byline: Thomas Ginsberg

Oct. 22--A Russian gas company under FBI investigation for its links to U.S. Rep. Curt Weldon has courted him and other U.S. politicians in recent years as it expands from Russia's rough-and-tumble energy industry into a new market: the United States. The 14-year-old Itera Group, run and partly owned by a former Soviet cycling champion, Igor V. Makarov, has acquired or created a large number of U.S. real estate firms, U.S. energy and gas-exploration companies, and even the U.S. distributorship of "Ivanabitch" brand vodka. Its core business, however, remains the production and distribution of natural gas, a lucrative but highly regulated industry in which the friendship of politicians is considered crucial in any country, according to experts in the U.S. and Russian energy business. Employees of Itera's Florida-based subsidiaries and related companies have contributed at least $41,000 to federal candidates or campaign committees over the last decade, according to campaign disclosures. Weldon got $10,000 for his election campaigns and an additional $5,500 for his political action committee. Those contributions were second only to U.S. Rep. Corrine Brown (D., Fla.), whose district includes Jacksonville, home since 2003 to Itera's U.S. subsidiary, Itera International Energy Corp. She has received $18,200. Itera also helped Weldon's daughter, Karen, and his former campaign manager, Charles Sexton Jr., launch a consulting business in 2002 by becoming their first client for $500,000, according to information obtained and published in 2004 by The Inquirer and other newspapers.The company, as well, contributed $60,000 in 2003 to the Freedoms Foundation, a Valley Forge nonprofit educational group near Weldon's district, for a student-exchange program proposed by Karen Weldon, according to the group's director, Aaron Siegel. Siegel said Itera had given no further grants. After his daughter's consulting business and several Itera locations were raided by the FBI on Monday, Weldon acknowledged that he was under investigation but declined to discuss the Russian business deals under scrutiny. "In the end, I think you will find that there was nothing done that was wrong," Weldon told reporters. "I haven't helped get my daughter anything." Itera made its move into the United States as questions arose in Russia over its dealings with the state-dominated energy behemoth Gazprom, corporate filings show. Itera had grown into a multibillion-dollar gas company in just a few years after the Soviet collapse through barter and asset-transfer deals with Gazprom, and investors began wondering whether Gazprom executives were secretly benefiting -- an allegation that Makarov has vociferously denied. "Itera won the deals by some kind of personal agreement," said Mikhail Korchemkin, a former University of Pennsylvania lecturer and now Malvern-based analyst of the East European gas industry. But whether Gazprom executives were benefiting, "nobody knows." Itera did not respond to questions Friday about its business activities, and it declined to answer questions about the FBI investigation.

U.S. officials said that in response to the complaints in early 2002, U.S. officials froze a $868,000 development grant to Itera, demanding more information on the Gazprom dispute and the company's ownership. One of Itera's responses was to call on its contacts in Washington.

Brown, the Florida congressional representative, has known Itera officials "for over 10 years. When they came here, they did seek out the congresswoman and introduced themselves. Most companies do likewise" when they move into her district, said Ronnie Simmons, Brown's chief of staff. "She was there for their ribbon cutting." One executive, Lazar Finker of Jacksonville, met with Brown in her Jacksonville office to request help in the issues over Gazprom, according to Brown's office.

"We didn't do anything. We had no authority over Gazprom," Simmons said. Weldon apparently was more amenable. According to his own public statements in 2002, Brown had asked him to meet Itera officials. He, in turn, tried to intercede with the U.S. Trade and Development Agency and later hosted a dinner for Makarov. Itera around the same time signed its contract with his daughter. Itera's goal was not simply restoring the grant, which was minuscule compared with its estimated $3 billion in revenue at the time, according to Korchemkin, the industry analyst. The issue was its reputation and future business. "Itera may have thought they needed U.S. governmental links to position themselves as an American firm in Russia. Curt Weldon may have wanted to feel himself more important in the U.S.-Russia business relations," Korchemkin said. Today, Itera is the third- or fourth-biggest natural gas company in the former Soviet Union, with revenue estimated about $5 billion, the analysts said. But in the face of Gazprom's dominance, its prospects are dwindling there and growing elsewhere, including the United States, where gas companies are maneuvering for a hoped-for boom in Liquified Natural Gas, said Kent Moors, a Duquesne University professor and private consultant on post-Soviet markets. "That's where you need the lobbyists. Because there are billions and billions of dollars to be made from the downstream consequences of LNG coming to North America," Moors said. While still run and apparently owned mostly by Russians, Itera's parent holding company, Itera Group N.V., is now based in Dutch Antilles, a Caribbean tax haven. It has three main subsidiaries: Itera International Energy of Jacksonville; Kayton Corp. N.V. of the Dutch Antilles; and Itera Holding B.V. of Amsterdam.

Since 2004, Itera's Jacksonville-based subsidiary has acquired full or partial control of at least two U.S. energy companies: Grayson Hill Energy L.L.C. of Raleigh, Ill., and Dune Energy Corp., of Houston, according to corporate filings. Through them, Itera has expanded into natural gas production and distribution in the South and Midwest.

Like other companies flush with cash, Itera has made forays into other businesses. Its real estate companies include Itera Timberland and Development Strategies L.L.C., which is developing exclusive residential acreages across the Southeast. Its subsidiary Eaglestar Intertrade Ltd., which owned a Ponte Vedra Beach, Fla., mansion raided by the FBI, describes itself as a "marketing research and public opinion polling firm." Itera's International Spirits L.L.C. is the marketer of "Ivanabitch" vodka in the United States, in a stab for the designer vodka market. Its Web site says the vodka is named for "Dimiti Ivanabitch -- yes, there really existed such a person (we're almost positive)."

During its U.S. expansion in recent years, Itera has continued to support U.S. politicians. In the last six months, board members and executives of its companies have given $12,000 to Weldon and Brown.

Among the contributors were Finker and his wife, Raissa M. Frenkel, a Russian-born Itera board member and co-owner. Together they gave $4,000 to the candidates. Neither is registered to vote in Florida, where they live, according to Florida state voter registration records. It could not be determined if they are naturalized citizens. Noncitizens are barred both from voting and giving to political candidates. Others receiving campaign contributions from Itera officials in the last five years were U.S. Sens. Carl Levin (D., Mich.) and Saxby Chambliss (R., Ga.). Finker is listed as giving $5,500 from 2002 to 2004 to Weldon's political action committee, the Committee for a United Republican Team (CURT PAC). Contact staff writer Thomas Ginsberg at 215-854-4177 or tginsberg@phillynews.com.

Copyright (c) 2006, The Philadelphia Inquirer

Distributed by McClatchy-Tribune Business

News.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

TICKER SYMBOL(S): RTS:GSPBEX

Russian gas firm linked to Weldon probe courted others.

Byline: Thomas Ginsberg

Oct. 22--A Russian gas company under FBI investigation for its links to U.S. Rep. Curt Weldon has courted him and other U.S. politicians in recent years as it expands from Russia's rough-and-tumble energy industry into a new market: the United States. The 14-year-old Itera Group, run and partly owned by a former Soviet cycling champion, Igor V. Makarov, has acquired or created a large number of U.S. real estate firms, U.S. energy and gas-exploration companies, and even the U.S. distributorship of "Ivanabitch" brand vodka. Its core business, however, remains the production and distribution of natural gas, a lucrative but highly regulated industry in which the friendship of politicians is considered crucial in any country, according to experts in the U.S. and Russian energy business. Employees of Itera's Florida-based subsidiaries and related companies have contributed at least $41,000 to federal candidates or campaign committees over the last decade, according to campaign disclosures. Weldon got $10,000 for his election campaigns and an additional $5,500 for his political action committee. Those contributions were second only to U.S. Rep. Corrine Brown (D., Fla.), whose district includes Jacksonville, home since 2003 to Itera's U.S. subsidiary, Itera International Energy Corp. She has received $18,200. Itera also helped Weldon's daughter, Karen, and his former campaign manager, Charles Sexton Jr., launch a consulting business in 2002 by becoming their first client for $500,000, according to information obtained and published in 2004 by The Inquirer and other newspapers.The company, as well, contributed $60,000 in 2003 to the Freedoms Foundation, a Valley Forge nonprofit educational group near Weldon's district, for a student-exchange program proposed by Karen Weldon, according to the group's director, Aaron Siegel. Siegel said Itera had given no further grants. After his daughter's consulting business and several Itera locations were raided by the FBI on Monday, Weldon acknowledged that he was under investigation but declined to discuss the Russian business deals under scrutiny. "In the end, I think you will find that there was nothing done that was wrong," Weldon told reporters. "I haven't helped get my daughter anything." Itera made its move into the United States as questions arose in Russia over its dealings with the state-dominated energy behemoth Gazprom, corporate filings show. Itera had grown into a multibillion-dollar gas company in just a few years after the Soviet collapse through barter and asset-transfer deals with Gazprom, and investors began wondering whether Gazprom executives were secretly benefiting -- an allegation that Makarov has vociferously denied. "Itera won the deals by some kind of personal agreement," said Mikhail Korchemkin, a former University of Pennsylvania lecturer and now Malvern-based analyst of the East European gas industry. But whether Gazprom executives were benefiting, "nobody knows." Itera did not respond to questions Friday about its business activities, and it declined to answer questions about the FBI investigation.

U.S. officials said that in response to the complaints in early 2002, U.S. officials froze a $868,000 development grant to Itera, demanding more information on the Gazprom dispute and the company's ownership. One of Itera's responses was to call on its contacts in Washington.

Brown, the Florida congressional representative, has known Itera officials "for over 10 years. When they came here, they did seek out the congresswoman and introduced themselves. Most companies do likewise" when they move into her district, said Ronnie Simmons, Brown's chief of staff. "She was there for their ribbon cutting." One executive, Lazar Finker of Jacksonville, met with Brown in her Jacksonville office to request help in the issues over Gazprom, according to Brown's office.

"We didn't do anything. We had no authority over Gazprom," Simmons said. Weldon apparently was more amenable. According to his own public statements in 2002, Brown had asked him to meet Itera officials. He, in turn, tried to intercede with the U.S. Trade and Development Agency and later hosted a dinner for Makarov. Itera around the same time signed its contract with his daughter. Itera's goal was not simply restoring the grant, which was minuscule compared with its estimated $3 billion in revenue at the time, according to Korchemkin, the industry analyst. The issue was its reputation and future business. "Itera may have thought they needed U.S. governmental links to position themselves as an American firm in Russia. Curt Weldon may have wanted to feel himself more important in the U.S.-Russia business relations," Korchemkin said. Today, Itera is the third- or fourth-biggest natural gas company in the former Soviet Union, with revenue estimated about $5 billion, the analysts said. But in the face of Gazprom's dominance, its prospects are dwindling there and growing elsewhere, including the United States, where gas companies are maneuvering for a hoped-for boom in Liquified Natural Gas, said Kent Moors, a Duquesne University professor and private consultant on post-Soviet markets. "That's where you need the lobbyists. Because there are billions and billions of dollars to be made from the downstream consequences of LNG coming to North America," Moors said. While still run and apparently owned mostly by Russians, Itera's parent holding company, Itera Group N.V., is now based in Dutch Antilles, a Caribbean tax haven. It has three main subsidiaries: Itera International Energy of Jacksonville; Kayton Corp. N.V. of the Dutch Antilles; and Itera Holding B.V. of Amsterdam.

Since 2004, Itera's Jacksonville-based subsidiary has acquired full or partial control of at least two U.S. energy companies: Grayson Hill Energy L.L.C. of Raleigh, Ill., and Dune Energy Corp., of Houston, according to corporate filings. Through them, Itera has expanded into natural gas production and distribution in the South and Midwest.

Like other companies flush with cash, Itera has made forays into other businesses. Its real estate companies include Itera Timberland and Development Strategies L.L.C., which is developing exclusive residential acreages across the Southeast. Its subsidiary Eaglestar Intertrade Ltd., which owned a Ponte Vedra Beach, Fla., mansion raided by the FBI, describes itself as a "marketing research and public opinion polling firm." Itera's International Spirits L.L.C. is the marketer of "Ivanabitch" vodka in the United States, in a stab for the designer vodka market. Its Web site says the vodka is named for "Dimiti Ivanabitch -- yes, there really existed such a person (we're almost positive)."

During its U.S. expansion in recent years, Itera has continued to support U.S. politicians. In the last six months, board members and executives of its companies have given $12,000 to Weldon and Brown.

Among the contributors were Finker and his wife, Raissa M. Frenkel, a Russian-born Itera board member and co-owner. Together they gave $4,000 to the candidates. Neither is registered to vote in Florida, where they live, according to Florida state voter registration records. It could not be determined if they are naturalized citizens. Noncitizens are barred both from voting and giving to political candidates. Others receiving campaign contributions from Itera officials in the last five years were U.S. Sens. Carl Levin (D., Mich.) and Saxby Chambliss (R., Ga.). Finker is listed as giving $5,500 from 2002 to 2004 to Weldon's political action committee, the Committee for a United Republican Team (CURT PAC). Contact staff writer Thomas Ginsberg at 215-854-4177 or tginsberg@phillynews.com.

Copyright (c) 2006, The Philadelphia Inquirer

Distributed by McClatchy-Tribune Business

News.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

TICKER SYMBOL(S): RTS:GSPBEX

Russian gas firm linked to Weldon probe courted others.

Byline: Thomas Ginsberg

Oct. 22--A Russian gas company under FBI investigation for its links to U.S. Rep. Curt Weldon has courted him and other U.S. politicians in recent years as it expands from Russia's rough-and-tumble energy industry into a new market: the United States. The 14-year-old Itera Group, run and partly owned by a former Soviet cycling champion, Igor V. Makarov, has acquired or created a large number of U.S. real estate firms, U.S. energy and gas-exploration companies, and even the U.S. distributorship of "Ivanabitch" brand vodka. Its core business, however, remains the production and distribution of natural gas, a lucrative but highly regulated industry in which the friendship of politicians is considered crucial in any country, according to experts in the U.S. and Russian energy business. Employees of Itera's Florida-based subsidiaries and related companies have contributed at least $41,000 to federal candidates or campaign committees over the last decade, according to campaign disclosures. Weldon got $10,000 for his election campaigns and an additional $5,500 for his political action committee. Those contributions were second only to U.S. Rep. Corrine Brown (D., Fla.), whose district includes Jacksonville, home since 2003 to Itera's U.S. subsidiary, Itera International Energy Corp. She has received $18,200. Itera also helped Weldon's daughter, Karen, and his former campaign manager, Charles Sexton Jr., launch a consulting business in 2002 by becoming their first client for $500,000, according to information obtained and published in 2004 by The Inquirer and other newspapers.The company, as well, contributed $60,000 in 2003 to the Freedoms Foundation, a Valley Forge nonprofit educational group near Weldon's district, for a student-exchange program proposed by Karen Weldon, according to the group's director, Aaron Siegel. Siegel said Itera had given no further grants. After his daughter's consulting business and several Itera locations were raided by the FBI on Monday, Weldon acknowledged that he was under investigation but declined to discuss the Russian business deals under scrutiny. "In the end, I think you will find that there was nothing done that was wrong," Weldon told reporters. "I haven't helped get my daughter anything." Itera made its move into the United States as questions arose in Russia over its dealings with the state-dominated energy behemoth Gazprom, corporate filings show. Itera had grown into a multibillion-dollar gas company in just a few years after the Soviet collapse through barter and asset-transfer deals with Gazprom, and investors began wondering whether Gazprom executives were secretly benefiting -- an allegation that Makarov has vociferously denied. "Itera won the deals by some kind of personal agreement," said Mikhail Korchemkin, a former University of Pennsylvania lecturer and now Malvern-based analyst of the East European gas industry. But whether Gazprom executives were benefiting, "nobody knows." Itera did not respond to questions Friday about its business activities, and it declined to answer questions about the FBI investigation.

U.S. officials said that in response to the complaints in early 2002, U.S. officials froze a $868,000 development grant to Itera, demanding more information on the Gazprom dispute and the company's ownership. One of Itera's responses was to call on its contacts in Washington.

Brown, the Florida congressional representative, has known Itera officials "for over 10 years. When they came here, they did seek out the congresswoman and introduced themselves. Most companies do likewise" when they move into her district, said Ronnie Simmons, Brown's chief of staff. "She was there for their ribbon cutting." One executive, Lazar Finker of Jacksonville, met with Brown in her Jacksonville office to request help in the issues over Gazprom, according to Brown's office.

"We didn't do anything. We had no authority over Gazprom," Simmons said. Weldon apparently was more amenable. According to his own public statements in 2002, Brown had asked him to meet Itera officials. He, in turn, tried to intercede with the U.S. Trade and Development Agency and later hosted a dinner for Makarov. Itera around the same time signed its contract with his daughter. Itera's goal was not simply restoring the grant, which was minuscule compared with its estimated $3 billion in revenue at the time, according to Korchemkin, the industry analyst. The issue was its reputation and future business. "Itera may have thought they needed U.S. governmental links to position themselves as an American firm in Russia. Curt Weldon may have wanted to feel himself more important in the U.S.-Russia business relations," Korchemkin said. Today, Itera is the third- or fourth-biggest natural gas company in the former Soviet Union, with revenue estimated about $5 billion, the analysts said. But in the face of Gazprom's dominance, its prospects are dwindling there and growing elsewhere, including the United States, where gas companies are maneuvering for a hoped-for boom in Liquified Natural Gas, said Kent Moors, a Duquesne University professor and private consultant on post-Soviet markets. "That's where you need the lobbyists. Because there are billions and billions of dollars to be made from the downstream consequences of LNG coming to North America," Moors said. While still run and apparently owned mostly by Russians, Itera's parent holding company, Itera Group N.V., is now based in Dutch Antilles, a Caribbean tax haven. It has three main subsidiaries: Itera International Energy of Jacksonville; Kayton Corp. N.V. of the Dutch Antilles; and Itera Holding B.V. of Amsterdam.

Since 2004, Itera's Jacksonville-based subsidiary has acquired full or partial control of at least two U.S. energy companies: Grayson Hill Energy L.L.C. of Raleigh, Ill., and Dune Energy Corp., of Houston, according to corporate filings. Through them, Itera has expanded into natural gas production and distribution in the South and Midwest.

Like other companies flush with cash, Itera has made forays into other businesses. Its real estate companies include Itera Timberland and Development Strategies L.L.C., which is developing exclusive residential acreages across the Southeast. Its subsidiary Eaglestar Intertrade Ltd., which owned a Ponte Vedra Beach, Fla., mansion raided by the FBI, describes itself as a "marketing research and public opinion polling firm." Itera's International Spirits L.L.C. is the marketer of "Ivanabitch" vodka in the United States, in a stab for the designer vodka market. Its Web site says the vodka is named for "Dimiti Ivanabitch -- yes, there really existed such a person (we're almost positive)."

During its U.S. expansion in recent years, Itera has continued to support U.S. politicians. In the last six months, board members and executives of its companies have given $12,000 to Weldon and Brown.

Among the contributors were Finker and his wife, Raissa M. Frenkel, a Russian-born Itera board member and co-owner. Together they gave $4,000 to the candidates. Neither is registered to vote in Florida, where they live, according to Florida state voter registration records. It could not be determined if they are naturalized citizens. Noncitizens are barred both from voting and giving to political candidates. Others receiving campaign contributions from Itera officials in the last five years were U.S. Sens. Carl Levin (D., Mich.) and Saxby Chambliss (R., Ga.). Finker is listed as giving $5,500 from 2002 to 2004 to Weldon's political action committee, the Committee for a United Republican Team (CURT PAC). Contact staff writer Thomas Ginsberg at 215-854-4177 or tginsberg@phillynews.com.

Copyright (c) 2006, The Philadelphia Inquirer

Distributed by McClatchy-Tribune Business

News.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

TICKER SYMBOL(S): RTS:GSPBEX