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by John Helmer, Moscow

@bears_with

Malcolm Turnbull is the most intelligent man ever to become Australian prime minister, and to have left office more stupid than he began. Among the governments south of the Equator, this is without precedent. Since Turnbull served as head of government for only three years, 2015 to 2018, when he was 61 to 64 years of age, he has set the medical record for non-traumatic early-onset senescence in the cerebrum; that’s the part of the brain responsible for learning. He didn’t; he can’t.

This week Turnbull has published a book of selections from his life aimed at refreshing his credentials to retake the political power he lost to rivals. His display of the symptoms that caused him to lose it is undiminished.

The Russia story Turnbull tells starts with Sukhoi Log, one of Russia’s richest gold deposits and in Turnbull’s time the largest undeveloped goldmine in the world. Between 1993 and 1997 Turnbull made several million dollars for himself trading in and out of the stockmarket on appearances that he and his partners had obtained the Russian Government’s right to mine the gold. In the end the Russian Government cancelled the licence, but not before Turnbull had taken his profit.

Polyus Gold investor presentation of exploration drilling at Sukhoi Log.

At the time, Russia was presenting the world with the most thoroughly explored of mineral provinces , geological exploration and resource calculations already carried out, logged, and paid for by the Soviet state, neatly archived in ministry files which were being opened for inspection as fast as those in charge could manage. To miners, this was one of the world’s greatest gold rushes – in troy ounces and dollar value bigger than the 19th century rushes of California and Australia combined.

When Boris Yeltsin and his henchmen, Yegor Gaidar, acting prime minister, and Anatoly Chubais, chief of privatisation of state assets, dismantled the Soviet state, they released this capital for open exploitation to all-comers. Naturally, they all came, Turnbull included.

For Russian gold, every major international goldminer arrived, along with dozens of junior miners. South Africans, Canadians, Americans, and Australians led the way; the stock exchanges of Johannesburg, Toronto, Sydney, and London financed their gold fever. The fastest way to make money was to acquire a licence right to explore, with an option to mine, and to sell shares in the venture holding that paper. This was the unique asset the Russian mining sector presented – the geology and mineralogy, and in some cases the mine engineering had already been carried out. This meant that, no matter that the gold price was drifting downwards from $400 per ounce, the cost of Russian extraction was so low, the grades of metal per tonne so high, and the indicated reserves so large, the profitability looked better than anywhere else in the world.

HISTORY OF THE GOLD PRICE THROUGH THE RUSSIAN GOLD RUSH, 1990-2020

Source: https://www.infomine.com/

What was required was the cash to start mine development. Stock exchange fortunes were made on the speculation of foreign investors that a Russian Government paper was the key to the map of El Dorado.

Into this line of business Turnbull came, hired at first as investment banker – that means money raiser – by Ian MacNee, an Australian entrepreneur who started with a small Sydney-listed company called Central Mining, which Turnbull turned into Star Technology Systems and Star Mining. They negotiated and sign-posted an asset paper trail for Sukhoi Log, starting with the partially privatized Russian proprietor Lenzoloto (“Lena [River] Gold”), the Irkutsk regional administration, the federal Ministry of Natural Resources and its licensing bureau, and finally the Russian Prime Ministry.

For state assets at the time there were no clear, enforceable rules for licensing, bidding, investment, and the like. They did not come while Yeltsin, Gaidar and Chubais ran Russia. They came after Vladimir Putin took over in the year 2000. So in the early 1990s, in order to obtain the licences and development rights in the competitive free-for-all for Sukhoi Log and other gold prospects, MacNee, Turnbull and their Australian and British associates negotiated with Yeltsin; Gaidar; Prime Minister Victor Chernomyrdin; Boris Yatskevich, the chief mine licensing official in Moscow; members of the Russian State Duma; Governor of Irkutsk region Yury Noshikov; the local authorities close to the mine site, and the new owners of Lenzoloto. In that quest they out-manoeuvered rivals from Canada, South Africa, the US and London. This was MacNee’s and Turnbull’s achievement. It was short-lived.

Left to right: Ian MacNee, chief executive of Central Mining, aka Star Mining, first licensee of the Sukhoi Log gold deposit; President Boris Yeltsin (photographed together in 1992); Yury Noshikov, Governor of Irkutsk, 1991-97; Boris Yatskevich, Deputy Chairman of the State Committee on Geology and Mineral Resources, 1992-93; then First Deputy Minister of Natural Resources and Minister until his dismissal by President Putin in 2001.

MacNee’s and Star Mining’s initial success was to win Gaidar’s signature on Lenzoloto’s and Star’s combined mining right. With that in the bag, Turnbull marketed Star Mining shares to put money in the bag. In that process, he and his investment company earned an estimated $7 million in 1995-1996. This was lawful according to Australian, international and Russian law at the time.

In his book, Turnbull remembers that MacNee’s mine right comprised a 37.5% shareholding in Lenzoloto for which he was committed to paying US$250 million — “funds he didn’t have”. To raise the money, Turnbull “was frequently in Moscow and Irkutsk trying to get Star’s interests authoritatively confirmed…It was impossible not to be caught up in the wave of optimism. Surely, with so much in the way of resources, all you needed to do was ‘add freedom’ to create new fortunes for the swift and prosperity for all.”

The enterprise was also backed by the Australian Government in Canberra, and by its embassy in Moscow, which gave Turnbull one of its Russian-speaking diplomats to act as interpreter. In the Soviet period Australia had been of no political consequence; from the Russian point of view, an imperial backwater, first of the British, then of the Americans. The Russian gold rush changed this, and Australian businessmen led the way. “We secured one legal approval after another,” Turnbull now writes. “Learned jurists confirmed Star and Lenzoloto’s entitlements under Russian law. But as we surmounted one obstacle, new ones kept being thrown up.”

In 1997, Turnbull acknowledges now, Star and the Australians “were double-crossed by the Russians… the licences were effectively cancelled without compensation”. That’s not what happened. The double-crosser in the first instance was Yatskevich in Moscow, but behind him were the Canadian goldminers, Placer Dome and Barrick Gold. They outbid the Australians, and moved into pole position for the mine right, with backing from Yatskevich. In time, though, they too lost their paper and it was decided in Moscow that Sukhoi Log would be withdrawn from international competition and reserved as a strategic national resource for Russians. By then, Russian miners had developed access to the same stock markets as the foreigners had used. MacNee and Turnbull were surplus to requirement. For the history, as it ran, this is the archive. The Australian end of the story can be followed from Panama Papers disclosures in 2016.

Turnbull claims to have learned his Russian “lessons…[to] serve me well. In developing countries, you have to get the deals right at the beginning; you cannot rely on the law to help you.” Some foreign mining companies, both majors and juniors in terms of their capital, have succeeded in Russian goldmining, and some investment banks. But Turnbull failed. He didn’t learn what the others learned.

He concludes: “remarkably, more than two decades on, the Sukhoi Log project remains undeveloped….With gold at record highs, it says a lot about the dysfunction of Russia that such a valuable resource has been unexploited for so long.” This is mistaken in the facts on the ground; in the mine licence records in Moscow; and in the stockmarkets of Moscow and London. To see just how mistaken, read the current report on the Sukhoi Log works, issued by Polyus Gold in February 2020. On current estimation of 63 million ounces, it ranks the second largest gold reserve in the mining world. The Russians have held on to it; Turnbull and his Australians lost it.

The lesson of that is simple: it is what is known for short as economic nationalism. A resource as large and valuable as Sukhoi Log, first discovered and capitalised by the Soviet state, is a strategic asset of the Russian state; this is now part of Russian law. It will not be sold risk-free and at bargain price to foreigners, neither of the small Turnbull type, nor of the multinational variety. In retrospect, Turnbull is now claiming to have learned a lesson about the “dysfunction of Russia”; instead, he’s proving the dysfunction is his.

When he was in Russia, Turnbull showed more intellectual curiosity and respect than he retells now. Russian art, including Soviet art attracted him. So did Russian women. Nothing dysfunctional about either, he used to say then. He offered sizeable sums to purchase the falling Soviet monuments of Stalin, Lenin, and Dzerzhinsky which, Turnbull said at the time, he wanted to reinstall in the paddocks of his family farm north of Sydney. But desperate for cash as the Moscow municipal government and the federal culture ministry were, none was ever sold for export. Instead, Turnbull accepted a carved wooden head of Lenin twice life size and a large medallion to celebrate the birth of Dzerzhinsky, founder of the Cheka.

According to real estate and Australian press reports, Turnbull buried his father and mother on the farm. He put it up for sale last June.

By the time Turnbull had become prime minister, he now says he was learning his Russian lessons, not from investment bankers and stock brokers, but from intelligence agents; one in particular named Duncan Lewis. Lewis was a spetznaz soldier who rose to major-general rank before retiring and becoming chief of the Australian Security Intelligence Organization (ASIO) between 2014 and 2019. Lewis is currently a salesman for Thales, the French weapons and electronic warfare manufacturer.

Turnbull has defended Lewis in private and public. “There are some people who like to write about terrorism,” Turnbull said in December 2015. “There are some people who like to express theories about terrorism – theories about religions and so forth. That’s fine, they’re entitled to do that. Duncan Lewis has actually fought against terrorism. He has led soldiers against terrorism. He is defending Australia today. He knows what he’s talking about.”

Malaysia Airlines Flight MH17 was destroyed in the air over eastern Ukraine on July 17, 2014, and in the months and years of investigation which have followed – three of them under Turnbull as prime minister – Lewis told Turnbull what the available evidence showed. In public Turnbull has repeated that the Russians in general, and President Putin particular, were to blame. In private, Turnbull knew the evidence was so weak, he and his ministers concluded they could not legally offer additional payments to the Australian victims’ families to which they were entitled under an Australian statute on terrorist attacks. That story was reported here.

Even now in his memoir Turnbull reports the downing of MH17 as “presumably by Russian-backed separatists”. Turnbull was once a courtroom lawyer; the term “presumably” is a lawyer’s innuendo. If he used it in court, it would be occasion for cross-examination, followed by dismissal of the charges. In his book Turnbull wants the benefit of appearing to be telling the truth when he knows that to be false. That makes two lies.

At the time of the MH17 incident, Turnbull was plotting a shoot-down of his own. That was the destruction of then-Prime Minister Tony Abbott. It took Turnbull another year, and on September 15, 2015, by a margin of 10 votes among his political party MPs, Turnbull replaced Abbott as prime minister. In the process Turnbull, using a son-in-law, leaked top-secret cabinet documents showing that Abbott was planning to send Australian troops for an invasion of eastern Ukraine, alongside Dutch and other NATO forces. Turnbull calculated the leak to damage Abbott; he repeats his intention in the book. Abbott, he writes, “looked anything but prime ministerial.” Turnbull adds: “Abbott’s original idea was so obviously risky. An Australian armed contingent would be overwhelmed and captured; we’d then be begging Putin to help us get them released for years.”

This is a fabrication, not only of what happened to the MH17, but that Abbott was alone among Australian, Dutch and NATO officials in planning their invasion. In the event, it was Germany which vetoed the NATO action. Turnbull adds another lie to his retelling of the story. “It took American intervention to finally talk [Abbott] out of it.” This attempt to ingratiate the Obama Administration omits to reveal it was “American intervention” which started the lie that Putin supplied the separatists with the anti-aircraft missile which struck MH17. This is another lie Turnbull has kept repeating.

Left to right: Sergei Oreshkin, father of an MH17 victim, with Turnbull in May 2016; Duncan Lewis, ASIO chief, with Turnbull, in 2017. Turnbull was campaigning in the May 2016 election when the photo opportunity was rigged for him to comfort Oreshkin. Later General Lewis rigged a leak to local reporters to confirm that Turnbull had agreed to new powers of investigation and surveillance against Chinese, Russians and others as part of “a major national security priority shift in Washington, which recently singled out Russia and China as posing key strategic security concerns, as well as in Australia, where agencies are focused on Chinese government operations.”

President Putin has visited Australia twice – in September 2007 and in November 2014. Turnbull is on record for having met Putin four times – in 2007; in Antalya, Turkey, in November 2015; in Manila, Philippines, a few days later; and at Hangzhou, China, in September 2016.

President Putin with Prime Minister Turnbull at the APEC summit meeting in Manila, Philippines, on November 17, 2015 .

The Australian media were told that at their November 2015 meetings the two of them discussed Syria. Turnbull now says he was asking himself “what are we fighting for?” His first answer was Washington’s one – “to end the murderous tyranny of Bashar al-Assad and provide support and encouragement to his opponents.”

Putin, according to Turnbull, “had a simple point to make: ‘Why are you and your friends in the West making the same mistake you made in Iraq? Saddam was a monster, sure. But what has come after is much worse. You pushed him over without any idea of what you would replace him with, and then you did the same in Libya – another disaster. And if it had not been for Russia, you would have done the same in Syria.’” Putin was explicitly treating Australia and Turnbull as a proxy of the US.

“Uneasily”, Turnbull now admits, “I felt he was making too much sense, so I asked Putin how he saw a final settlement in Syria. Would a partition work, as many were suggesting at the time? ‘Assad will prevail. It’s just a question of time. And then there will need to be some kind of federal solution – power sharing similar to Lebanon perhaps.’ He trailed off; perhaps he was unclear as everyone else.”

Turnbull was unclear; General Lewis was unclear. They soldiered on against Assad; the Australian Air Force and special forces still do. But Putin wasn’t unclear – and the situation Turnbull reports Putin forecasting five years ago has come to pass today. Turnbull cannot admit this. Instead, he asks a rhetorical question Putin had already answered. “So why was he there? Was it just to prove that Russia was a global player, as [German Chancellor Angela] Merkel had told me in Berlin?”

Turnbull is playing Smart Alec. His attempts at explaining himself run for 698 pages. According to the index, he has met 20 heads of government or state. For almost all of them he expresses himself satisfied with his reciprocal personal equality; and over some, especially President Donald Trump, Turnbull thinks he’s the intellectual superior. But Putin has proved to be exceptional. Just how that was, Turnbull recorded from their first meeting in 2007, when Turnbull was a junior minister. The Australia prime minister introduced Turnbull to Putin, saying “in his business career Mr Turnbull spent some time working in Siberia.” Turnbull reports what happened next: “A thin smile crossed Putin’s lips, and he leant forward to me, asking in a soft voice, ‘Really? What crimes did you commit?’

Thus, for the first time – also for the last time the way Turnbull thinks in retrospect — did Turnbull meet his match.

by Editor - Tuesday, April 21st, 2020