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The Strange Case of Super CEO Marsha Lazareva

Why are Washington's who's who doing everything possible to exonerate this Russian national accused of embezzlement?

Even as President Trump denies US military hackers have been carrying out cyberattacks on Russia’s electrical grid, and Moscow accuses Washington of trying to provoke a war with Iran, the American, British, and Russian political establishments all seem to have found a small sliver of common ground in an unexpected place—unfortunately, for very strange, if not suspicious reasons.

For several months now, a bevy of powerful Americans and Britons have joined forces with the Russian government over the fate of one woman: Russian national Marsha Lazareva, who was managing director of the Kuwait & Gulf Link Investments (KGLI). Lazareva and co-defendant Saeed Dashti were found guilty of misuse of public funds in May, 2018 by the Kuwaiti Plenary court. Although this verdict was later annulled by Kuwait’s Court of Appeal, Lazareva’s case is ongoing with an upcoming court appearance.

Lazareva—who was educated at President Trump’s alma mater, the Wharton School of Business—was first arrested along with Dashti in 2017 after being accused of embezzling from the Kuwait Port Authority. In the ensuing drama, Marsha Lazareva claims to have faced sexism and anti-Russian racism during Kuwaiti court proceedings. She also claims that her defense counsel did not have proper access to documents explaining details of the accusations against her.

Lazareva’s legal team, for its part, insists she was held illegally in contravention of international law (additional response by her team to this story, below).They also claim the proceedings that landed her in jail were a thinly-supported show trial based on forged documents. Victoria Toensing, who is part of Lazareva’s counsel, wrote an op-ed in September of 2018 for Daily Caller saying that Kuwait was engaging in “ruthless intimidation tactics” based on “bizarre and unfounded” accusations.

Lazareva was charged while managing director of KGL Investments (KGLI), while her co-defendant Saeed Dashti was serving as Chairman of KGL the defense contractor. The two companies are not legally linked but court records state that Dashti indeed served on the KGLI board. Previous reporting by the Project on Government Oversight was met with opposition by KGL’s lawyers, who characterize attempts to link KGL and KGLI as a smear campaign According to POGO:

A spokesperson for KGL told POGO that, “Notwithstanding the name, KGL Investments is neither owned nor controlled by any of the KGL group of companies. No KGL entity is a party to the legal proceedings in Kuwait ...

However, KGL Investments, KGL, and many of its subsidiaries are co-located in the same office building and directed, in part, by KGL’s just-indicted chairman, who is also a director of KGLI, according to court papers. The indictment says that a portion of the embezzled funds was channeled to KGL component companies.

In addition, a credible 2012 news story from the Philippines also names Lazareva, who was meeting with the country’s president, as vice chairman and managing director of KGL Group. Furthermore, Lazareva’s own bio makes quite clear that her involvement with KGL predates KGLI (the investment company):

Ms. Lazareva moved to Kuwait in 2004 where she headed Strategic Development for KGL Group. During this time, she helped the Board of Directors to reorganize the Group through acquisitions, divestments, spin offs and creation of new businesses, one of which was KGL Logistics Company which is producing profits of tens of millions USD since its establishment.

In late 2006, she founded KGL Investment Company, an alternative investment firm specializing in private equity investments in emerging markets. One of the Company’s products, The Port Fund has shown a successful performance of 20% IRR since its establishment in 2007.

The private equity and venture capital firm KGLI “seeks to make investments in companies that offer air, sea, and land freight forwarding, project logistics, port management, stevedoring, warehousing and distribution and logistics infrastructure,” while the defense contractor KGL holds upwards of $1 billion in sensitive contracts from the U.S. military, despite having been accused by critics, including Sen. Marco Rubio, of maintaining illegal ties to the Iranian government in contravention of U.S. and international sanctions.

In addition to being accused of still doing business with Iran, KGL has been the subject of formal inquiries from U.S. Senator Claire McCaskill because of accusations it helped facilitate and encourage “systematic leaking of sealed and privileged federal court documents and other sensitive material to KGL’s Washington lawyers by the Defense Logistics Agency (DLA), the DoD component that oversees KGL’s US military contracts.”

The nature and scope of KGL’s military contracts

KGL has been one of the largest logistics supply companies working with the U.S. military in the Middle East for over twenty years, and has also worked with other large bodies such as the United Nations on logistics contracts. More specifics of KGL’s contractual relationship with the U.S. military and Department of Defense reveal deep and significant ties. Reuters reported in 2018 on KGL co-winning a contract, set to run for up to seven years and worth $230, million to provide car rentals to the U.S. military.

Further reporting from 2018 details extensive contracting of KGL by the Defense Logistics Agency to “carry out logistics and distribution operations for U.S. troops throughout the Gulf region.” To cut through the euphemistic language here, the contract, worth about $700 million and projected to hit $1.4 billion by 2022, sees KGL agreeing to import, store and distribute food products from the U.S. and “other local sources” to over 20,000 U.S. troops stationed in Kuwait, Iraq and Jordan.

Clearly, the connections of KGL to American military presence in the Middle East make the company important to the US Department of Defense and the defense industry. As accusations have rolled in against KGL the military and DOD’s response has been consistent: “Spokespersons at CENTCOM, the Department of Defense, and the US Army’s Contracting Command all declined to comment.”

A concerted campaign to free Lazareva

Marsha Lazareva, for her part, was recently let out on bail from Kuwaiti prison after 470 days, while Dashti remains behind bars. Forbes reported Lazareva was able to post the entire $36.3 million dollar bail.

Recent revelations indicate the enormous wads of cash KGLI has spent on lobbying to get her out; publicly available US lobbying records for the first quarter of 2019 alone show $2.7 million going to the lobbying effort in the US to spring Lazareva from jail and unfreeze the company’s assets. Glowing media attention on Marsha Lazareva’s case decrying the injustices against her has also abounded, especially in the Middle East.

The laundry list of Lazareva’s backers includes a number of well-connected individuals from the Republican establishment in the U.S.: former FBI Director Louis Freeh, President George W. Bush’s brother Neil Bush, former Florida Attorney General Pam Bondi, former Veterans Affairs Secretary Jim Nicholson, Scott Douglas (the former finance director for Senate Majority Leader Mitch McConnell), and former Republican Rep. Ed Royce, to name but a few. In the UK, the effort has roped in Tony Blair’s wife Cherie and Lord Alex Carlisle, as well as Boris Yeltsin’s daughter Tatyana Yumasheva. Needless to say, the Russian government is fully on board, telling Kuwait they want Marsha Lazareva out of prison and cleared of charges.

The details of American lobbying on Lazareva’s behalf are revealing for their scope and for the breadth of Washington’s who’s-who involved, including prestigious firms Ballard Partners and Crowell & Moring, and upwards of a dozen lobbyists in the U.S. working hard to clear Lazareva’s name and to get people to pay attention to the case on her behalf.

More about Lazareva’s case

Specifically, according to POGO, “the [2017] indictment says Dashti and Lazareva transferred large sums of investors’ money to their own private accounts and to a variety of KGL subsidiaries or related companies between 2007 and 2015. They did this, court documents say, partly using a network of financial institutions including the Hong Kong and Shanghai Banking Corporation (HSBC) and one of its branches in the Cayman Islands. The bank also has branches in the United States, Kuwait, Asia, and other parts of the world. It’s unclear whether any of the allegedly embezzled funds passed at some point through the American financial system, which could trigger a US investigation.”

The initial case accusing Lazareva of stealing from the Port Fund goes back to 2012, while the claim that Lazareva embezzled from the Kuwait Port Authority began in 2015. The Port Fund money, equaling some $500 million, was frozen in Dubai, impeding Lazareva from paying back investors with profit. Those funds were released by Dubai authorities, with the blessing of Kuwaiti officials, back to the Port Fund in February.

Attacking America’s allies

When Neil Bush traveled to Kuwait this May prior to Marsha Lazareva’s release, he gave a cringe-worthy statement to media, expressing his hope that “Kuwait would continue to shine as a member of civilized nations in terms of its human rights record and its judicial process.” Perhaps any day now Bush will say the same about Saudi Arabia or the United Arab Emirates, protesting their prison conditions and human rights violations. Don’t hold your breath.

As Bush himself put it, “the tricky thing, honestly, is not to be seen as intervening in Kuwaiti internal affairs.” Rather than heed his own advice, however, Bush seems to have done just that: interfere directly in Kuwaiti affairs—insulting the government’s integrity and justice system for the sake of personal gain. This is political hypocrisy of the highest order, and typical of how some politicians and power-brokers are willing to put money above national security and vital alliances.

Lazareva’s individual legal case aside, what’s most interesting is the spectacle of prominent American establishment figures accepting gargantuan lobbying contracts to undermine and attack one of America’s important allies, Kuwait, at a time of high tension in the Persian Gulf.

As Adam Zagorin of POGO noted, the 2017 indictments of Lazareva and Dashti lead to questions about the relationship between KGLI and KGL, which have faced numerous “accusations of potentially illicit flows of cash from Russia, Iran, and Syria,” which, “raise troubling questions about the American military’s heavy reliance on the firm” from 2007 to 2017.

Extensive links with Iran – America’s supposed number one enemy

As Senator Rubio noted in 2018, testimony gathered under oath indicates KGL may have been contravening the sanctions against Iran, illegally selling lucrative aircraft parts, and engaging in money laundering and fraud. According to the Kuwait Port Authority, KGL illegally trespassed, fell behind on debts and falsified important financial documents. The port authority blacklisted KGL in 2017 and will no longer do business with the company or any of its affiliates.

As Zagorin detailsKGL’s alleged wrongdoing goes back years, to when it reportedly created a “ghost structure” to bypass U.S. sanctions against Iran. Specifically, KGL’s relationship with the Islamic Republic of Iran Shipping Lines (IRISL) and affiliates like Valfajr—which was already sanctioned in 2008 for assisting Iran’s nuclear program and missile development—have been under intense scrutiny. Indeed, KGL has already been investigated for years by the FBI and the Pentagon’s Defense Criminal Investigative Service; it’s unclear whether these probes are still ongoing.

If KGL has been working behind US sanctions to do business with Iran as both indictments and former employees allege, shouldn’t America cut ties immediately? Or could it be that some of the public posturing about Iran is more rhetoric than real alarm?

Strange bedfellows

All the same, it’s surreal, particularly in the face of the current political stand-off with Russia, to watch figures like Neil Bush and Ed Royce stand arm-in-arm with Moscow over the fate of a suspect individual working for a deeply-compromised company with years of still-unresolved legal allegations. Bush insisted an Arabian Business interview that the Trump administration has taken an active interest in the case. “To see these countries working together, you know, kind of gives us a little bit of hope in these crazy times,” he said.

Despite all their protestations and high-handed denunciations of Russian malfeasance, it turns out that the Washington establishment is perfectly happy to echo Russian Foreign Minister Sergei Lavrov’s demands that Lazareva be cleared —for the right price.

Paul Brian is a freelance journalist. He has reported for the BBC, Reuters, and Foreign Policy, and contributed to The Week, The Federalist, and others. You can follow him on Twitter @paulrbrian or visit his website www.paulrbrian.com.

[Editor’s Note: The bond amount posted by Lazareva has been changed to reflect the accurate amount.

The story has also been updated to reflect the differences between KGL Investments and KGL and their correct relation to each other, the embezzlement case in Kuwait, and to U.S. military contracting. Details were also added to reflect the funds released relating to the original charges.]

**Statement from Lazareva’s defense team:

This piece contains a number of significant factual inaccuracies and misleading statements.

Marsha Lazareva is an innocent woman who was falsely incarcerated in Kuwait for over a year, separated from her four-year-old son, a United States citizen. Ms. Lazareva was convicted based on the testimony of a single witness, who has since been convicted of forging the documents used as evidence against her. A Kuwait court has already overturned and vacated her conviction in that case.

Ms. Lazareva’s supporters are armed with expert reports from a former FBI agent and forensic auditor that clearly refute the charges on which her conviction was subsequently vacated, and casting dispersions on their motivations is misleading.

Regarding the charges of embezzlement, no ruling has ever been made in that case, and the credibility of the charges was eroded in February when all of the funds in question were released by the financial institution that had held them for over a year, and all investors we’re repaid with a substantial profit.

The firm for which Lazareva serves as CEO is KGL Investment, an investment company. While that firm shares a name with a logistics company called Kuwait & Gulf Link Transport Company, or KGL, they are entirely distinct corporate entities. KGL Investment has never held a single U.S. government contract.

KGL, the logistics company, has publicly stated that they have never been charged with any wrongdoing, and that the Department of Defense looked into the alleged violation of Iran sanctions and found them to be unsubstantiated. In addition, KGL has a letter from the U.S. Department of Treasury Office of Foreign Assets Control stating that the company is not and never has been under investigation for violating Iran sanctions. A thorough response to these claims has been published here.




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