Thursday, November 15, 2018

Is Russia's nuclear corporation (ROSATOM) the largest criminal organization in the universe? If not, it's close.

November 15th, 2018

Dear Readers,

Rosatom (formerly known as the Federal Agency on Atomic Energy, and now also known as the Rosatom State Nuclear Energy Corporation, the State Atomic Energy Corporation Rosatom, or the Rosatom State Corporation (1)), is the state-controlled Russian nuclear energy company that builds nuclear reactors (including icebreakers and -- upcoming -- floating power reactors, several of which are under construction at this time (2018)) (2). Rosatom also mines, refines, enriches and reprocesses uranium, and -- big surprise here -- makes Russia's nuclear weapons. Established in 2007, its headquarters are in Moscow. Rosatom currently has over a quarter of a million employees (3).

Rosatom is the world's largest exporter of nuclear technology, with roughly 60% of the current market (4). Rosatom is building, operating or has approval for approximately three dozen reactors in Bangladesh, Belarus, China, Egypt, Finland, Hungary, India, Iran, Turkey and elsewhere (5). Expected service life for their current large power reactor series, the AES-2006, is a minimum of 60 years (6). In 60 years one reactor will produce approximately six million pounds of high level nuclear waste.

It is reasonable to assume that most, if not all of Rosatom's foreign and domestic (Russia) reactors are approved through the payment of bribes. The resulting costs are usually far higher than they would be otherwise.

For example, in Bangladesh, where a "deep-rooted and widespread corruption culture" exists, all types of power plants cost far more than elsewhere in the world. One study estimated the average price of a power plant in Bangladesh was double the global average. Russia is building two units in Bangladesh (Rooppur 1 & 2), due to go online in 2030, currently estimated to cost 45% more than the same style of plant would cost in Russia (7).

In Saudi Arabia, where "corruption is widespread" (8): "Two committees in the US House of Representatives are investigating efforts by former US National Security Advisor Mike Flynn to enlist Russia's Rosatom in a deal to deliver nuclear reactors to Saudi Arabia" (9). Mr. Flynn recently pled guilty to lying to the FBI about his contacts with Russian officials and faces up to five years in prison (10). Rosatom doesn't yet have a deal in Saudi Arabia, but is on the "short list" to build the first two reactors there (11). (Apparently, solar and oil are not considered viable options for the sun-rich and oil-rich nation.)

Another country plagued by corruption -- and building and operating Rosatom reactors -- is China. China and Rosatom recently (June, 2018) signed "the biggest package of contracts in the history of the two countries' nuclear partnership" (12) to build four "Gen III+" VVER-1200 units as well as a CFR-600 fast reactor pilot project, and to supply Radioisotope Thermoelectric Generators and Radionuclide Heater Units for China's "lunar exploration program" (13). The space nuclear units will use Plutonium-238, one of the most toxic substances known, nearly 300 times *more* toxic than weapons-grade plutonium-239 (Pu-238's decay cycle is correspondingly less than Pu-239's 24,100 year half-life).

How corrupt is China? "At least 12 senior-level NEA [National Energy Administration] officials have been investigated or charged with corruption in the past decade, including two directors and four deputy directors" (14). The NEA agency is only one decade old! In 2010 the former head of China's main nuclear energy company was jailed for life over bribes (15). At the current pace, China will be the leading producer of nuclear energy by 2030 (16). China will thus also be the leading producer of nuclear waste. After Fukushima, China decided to place most of its new nuclear reactors along its coast, not at interior sites, presumably so that if/when there are meltdowns, most of the radiation will be spread globally, with a much smaller proportion poisoning China itself.

In 2017 Rosatom signed a "Memorandum of Understanding" with the nuclear power division of Brazil's state-owned energy companies (Eletrobras and an affiliate of Eletrobras), with the plan of building at least two reactors there (17). Brazil is now governed by a far right-wing racist president, Jair Bolsonaro, considered by many (for example, his son) to be "just like Trump" (18). Bolsonaro ran on an "anti-corruption" platform; however his campaign was accused of fraud, spreading fake news, and violating campaign finance laws (19).

Recently Rosatom signed deals with Egypt to build the first nuclear power plants in North Africa. Russia will provide 85% of the projected $21+ Billion cost. Four 1200 Megawatt reactors will be located about 100 miles south of Cairo (20). The cost of Russia's loan to Egypt could swell to over $70 Billion during the 35-year life of the loan, and cost overruns are typical with all Rosatom deals (21).

In India, where Rosatom has contracted to build a dozen reactors (22), India's former chief regulator was concerned that substandard parts were being supplied by Rosatom subsidiary Zio-Podolsk, after one of Z-P's directors was arrested on charges of corruption, fraud, and supplying "cheap Ukrainian steel blanks and steam generators" for the reactors at Kudankulam (23).

In Finland, Rosatom took over partial ownership of the Hanhikivi 1 reactor after financial problems nearly sunk the project before it even began. It is "the biggest investment project in Finland" (24). Construction is expected to start in 2020. Originally claiming the project would cost around $5 Billion, current estimates put the total cost nearing double that, with completion optimistically expected in 2024 (25). Doubling (or worse) of the cost of nuclear reactors is so frequent it can't be accidental -- therefore it should be considered a form of corruption.

One deal that Rosatom tried to make apparently fell through -- a $76 Billion scam to build ten nuclear reactors in South Africa. The arrangement "reeked of corruption" and would have represented 1/4 of South Africa's GDP (26).

Rosatom makes deals that involve loaning massive sums of money to cash-poor countries, and requiring payback even if the projects are not completed on time (or ever). Most of the financial arrangements are kept secret and -- as can be seen from the above examples and many others -- most probably involve corruption, mismanagement, bribes, and other scandals. Once a deal is in place, the Russian government uses the arrangement to exercise political pressure, stopping construction until the country bends to their demands or -- as in the case in 2014 in Ukraine -- threatening to cut off nuclear fuel supplies for their Soviet-built reactors (27).

And even in countries without a Rosatom nuclear power plant deal, Rosatom corruption runs deep. According to a New York Times article from 2015, Rosatom "had taken over a Canadian company with uranium-mining stakes stretching from Central Asia to the American West" (28). The sale gave Rosatom control of 1/5th of all U.S. uranium capacity in a deal signed off by then-Secretary of State Hillary Clinton, who's Clinton Foundation then received over $2.35 million in donations from four family members of the Russian company known as Uranium One (which became a fully-owned Rosatom subsidiary in 2013). Tens of millions more dollars were donated to the Clinton Foundation by "a constellation of people with ties to Uranium One or UrAsia" (UrAsia merged with Uranium One in 2007). These donations were not properly disclosed in a timely manner, despite Hillary Clinton's signing of a Memorandum of Understanding agreeing to do so (29).

Rosatom pushes nuclear technology in all forms, including having built more than 120 "research" reactors around the world, representing nearly half of all research reactors (30). So-called "research" reactors, more often than not, merely train reactor operators for future jobs in industry, and many are fueled with uranium enriched to up to 20% U-235, instead of the 4% to 5% enrichment for most power reactors. Such enriched fuel is more easily converted to bomb material.

In an undated page at Rosatom's web site, they claim to have adopted an anti-corruption and anti-embezzlement program which "has already contributed to building a corruption-free environment within ROSATOM" (31).

Maybe.

But meanwhile, Russian president Vladimir Putin, through his security forces and rabid supporters, continues to assassinate political opponents, reporters, whistleblowers, lawyers, and former security agents, even those who have left the country and sought asylum in Western democracies.

Ace Hoffman
Carlsbad, California

Update (Dec 3, 2018): According to World Nuclear News, Rosatom and Argentina announced the signing of a joint venture to build new nuclear power plants, including land-based power reactors, floating power reactors, so-called "small" reactors and so-called "research" reactors, and to "implement joint projects in third-world countries."  Meanwhile Wikipedia describes "a long history of serious corruption" in Argentina (32), and Forbes describes recent problems as a "corruption paradigm," with a "public works club" of corrupt individuals. (33)

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Sources:
======================================================

(1):
https://en.wikipedia.org/wiki/Rosatom
(2):
http://www.world-nuclear.org/information-library/country-profiles/countries-o-s/russia-nuclear-power.aspx
(3):
http://www.rosatom.ru/upload/iblock/f6e/f6eb142a59cc7b93cb8a254ee7dd11a4.pdf (pg. 104) Also see op. cit. (1).
(4):
https://www.japantimes.co.jp/opinion/2017/07/27/commentary/world-commentary/russia-unrivaled-nuclear-power-plant-exports/
(5):
https://en.wikipedia.org/wiki/Rosatom
and
https://www.defenseone.com/ideas/2018/07/china-and-russia-look-dominate-global-nuclear-power/149642/
(6):
http://www.world-nuclear.org/information-library/country-profiles/countries-o-s/russia-nuclear-power.aspx
The AES-2006 is also referred to as the VVER-1200. See:
http://www.rosatom.ru/upload/iblock/0be/0be1220af25741375138ecd1afb18743.pdf
(7):
Study by the School of Engineering, Cardiff University, United Kingdom:
https://www.frontiersin.org/articles/10.3389/fenrg.2018.00008/full
(8):
https://en.wikipedia.org/wiki/Politics_of_Saudi_Arabia#Corruption
(9):
https://www.wiseinternational.org/nuclear-monitor/854/saudi-arabia-going-nuclear
(10):
https://www.politico.com/story/2018/09/19/michael-flynn-sentencing-mueller-830724
(11):
https://aawsat.com/english/home/article/1176271/saudi-russian-agreements-result-two-nuclear-reactors-2018
(12):
https://www.rosatom.ru/en/press-centre/news/russia-china-sign-several-major-nuclear-contracts-in-nuclear-sphere-/
(13):
ibid.
(14):
https://www.reuters.com/article/us-china-corruption-energy-factbox/factbox-catching-tigers-and-hidden-flies-in-chinas-energy-sector-idUSKCN1M1120
(15):
https://www.bbc.com/news/world-asia-pacific-11794199
(16):
https://carnegieendowment.org/2018/05/14/future-of-nuclear-power-in-china-pub-76311
(17):
https://www.rosatom.ru/en/press-centre/news/rosatom-and-brazilian-state-owned-companies-sign-a-memorandum-of-understanding-to-cooperate-in-the-n/
(18):
https://www.washingtonpost.com/world/the_americas/just-like-trump-bolsonaro-leads-brazils-presidential-race-with-right-wing-populist-pitch/2018/10/04/c4ba3728-c65c-11e8-9c0f-2ffaf6d422aa_story.html?utm_term=.62d33c2672e6
(19):
https://www.france24.com/en/20181019-brazil-election-far-right-bolsonaro-accused-criminal-network-campaign-finance
(20):
https://www.rt.com/business/424343-rosatom-russia-egypt-contracts/
(21):
http://bellona.org/news/nuclear-issues/2017-05-is-rosatom-selling-debt-and-dependence-to-its-overseas-customers
(22):
https://in.reuters.com/article/india-russia/russia-signs-pact-for-six-nuclear-reactors-on-new-site-in-india-idINKCN1MF11M
(23)
http://www.dianuke.org/is-koodankulam-unsafe-russian-supplier-arrested-for-corruption-and-substandard-equipment/
(24):
http://fennovoima.fi/en/hanhikivi-1
(25):
https://www.reuters.com/article/finland-nuclear-russia/finlands-hanhikivi-1-reactor-on-track-unaffected-by-sanctions-rosatom-idUSL8N1QY4B0
See also:
https://ecdru.files.wordpress.com/2017/04/russian-nuc-ind-overviewrgb.pdf
(26):
op. cit. (23)
(27):
op. cit. (21)
(28):
https://www.nytimes.com/2015/04/24/us/cash-flowed-to-clinton-foundation-as-russians-pressed-for-control-of-uranium-company.html
(29):
ibid.
(30):
https://www.rosatom.ru/en/about-us/anti-corruption-policy/
(31):
https://www.rosatom.ru/en/press-centre/news/rosatom-signs-the-contract-for-nuclear-technology-center-construction-in-bolivia/

Update:
(32):
https://en.wikipedia.org/wiki/Corruption_in_Argentina

(33):
https://www.forbes.com/sites/afontevecchia/2018/08/30/at-least-us36-billion-has-evaporated-in-argentina-the-corruption-paradigm/#9928804d50a3



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