Arrest of Rosatom‘۪s U.S. Representative Could Lead to Greater Scrutiny of Russian Nuclear Reactor and Fuel Sales

On October 29, 2014, Vadim Mikerin, a Russian national that serves as General Director of TENAM USA, a US. subsidiary of Rosatom subsidiary JSC Techsnabexport (TENEX), was taken into custody and charged ‘‘‘with conspiring to commit extortion in connection with a scheme to obtain contracts from a Russian company without having to compete for the contracts.‘  The charges were announced by the United States Attorney for the District of Maryland Rod J. Rosenstein; John R. Hartman, Deputy Inspector General for Investigations, Office of Inspector General at the U.S. Department of Energy; and Assistant Director in Charge Andrew G. McCabe of the Federal Bureau of Investigation.

Specifically, Mikerin was alleged to have conspired to provide U.S.-based contractors with lucrative contracts for shipping Russian uranium to the U.S. without having to compete for those contracts, reportedly in exchange for kickback payments totaling $1,692,995 during the period 1996 to 2013.  These shipments were largely in connection with a bilateral U.S.-Russia agreement, called the Megatons-for-Megawatts agreement or the ‘‘‘Russia‑U.S. Highly Enriched Uranium Purchase Agreement.‘  This agreement involved down-blending highly enriched uranium taken from Russian nuclear weapons for use as fuel by U.S. nuclear utility providers.

The arrest of Mr. Mikerin is of outsized importance because of its potential effects.  Perhaps the most noteworthy is the allergic reaction of Rosatom to the wrong type of American attention to transactions that it seeks to keep off the political radar screen, namely its nuclear fuel sales to the United States.  The existence of such sales have reportedly helped politically legitimatize Rosatom‘s much larger sales efforts with respect to nuclear reactors and electricity to a number of smaller NATO member states, as well as other key neighbors (e.g., Hungary, Slovakia, Finland, and possibly, soon, the Czech Republic).

The scrutiny by foreign countries of Rosatom bids for a wide range of engagements in the nuclear industry (ranging from reactor construction projects to the sale of nuclear fuel) has been, on occasion, countered or neutralized by Moscow pointing to its nuclear fuel supplier relationships in the United States.  The Mikerin arrest by U.S. authorities could awaken American media, Congressional and NGOs to what some consider an inconsistency in U.S. policy, specifically, the risk that the continued importation of Rosatom nuclear fuel into the US is undermining efforts to ensure proper security-minded diligence concerning Rosatom‘s foreign bids.