By Alexandra Ulmer and Jonathan Landay
WASHINGTON, Oct 15 (Reuters) - US President Donald Trump’s pick to lead a $201 million investment fund in the Caucasus holds major telecom and mining interests there and formerly ran a Russia-focused investment firm that touted close ties to the Kremlin, documents reviewed by Reuters show.
Konstantin Sokolov, a 51-year-old Russian-born businessman, was put in charge of the investment vehicle, now called the Trans-Caspian Enterprise Fund, in January, according
to its incorporation documents.
He holds major stakes in Armenia’s top mobile phone company Viva Armenia, and purchased Armenia’s second largest copper and molybdenum mine earlier this year after receiving a special permit from the US government to buy it, according to the Reuters reporting.
A Reuters review of public documents related to the only three other US enterprise funds now operating showed no indications that any of their heads have major investments in the countries where those funds invest.
Bo Cutter, chairman of a US enterprise fund focused on Tunisia told Reuters he had "no business interests of any kind in Tunisia," without elaborating on whether and why that might pose a problem. Cutter declined to comment on Sokolov or the Trans-Caspian fund.
Still, according to six ethics experts who reviewed the Reuters reporting, Sokolov’s business interests create a conflict of interest because his role gives him control of government money that could potentially benefit his companies.
Ann Skeet, an ethics expert at Santa Clara University, said, "I think Congress should be asking questions."
Reuters found no indication of any wrongdoing by Sokolov. US legislation governing such investment funds does not forbid directors from holding investments in regions of operation.
A representative for Sokolov’s private equity firm, IJS Investments, said the fund was prohibited from investing in any of his businesses and that Sokolov had complied with "all due diligence and security requirements."
A State Department spokesperson said the enterprise fund would comply with annual reporting requirements and independent audits "as well as with applicable grant provisions including conflict of interest requirements."
Sokolov had been among a list of 37 corporate and individual donors to Trump’s White House ballroom project distributed by the White House last year. He has also donated some $13 million to Republican political groups, according to Federal Election Commission data.
ASCENDANT IN ARMENIA
The Trans-Caspian fund is part of a broader US push to develop trade routes and investment across the South Caucasus and Central Asia, an effort that could reduce the region's reliance on Russian and Chinese infrastructure.
The Trans-Caspian fund’s board, led by Sokolov, has the power to make grants, loans and investments across Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan. Its website lists critical minerals, energy and rail infrastructure among its top investment priorities.
Sokolov has built up his business presence in Armenia rapidly in recent years.
He and a Chinese business partner, Zhe Zhang, acquired control of Viva Armenia in January 2024 from Russia's largest mobile provider, MTS, according to company statements and Armenian corporate records.
Zhang, a former Chinese Commerce Ministry diplomat, did not respond to requests for comment. Viva Armenia did not comment.
More recently, Sokolov’s Texas-based Dynamic Frontier Holdings company said it was granted legal authorization from the US Department of the Treasury's Office of Foreign Assets Control on June 1 to buy Armenia’s Teghout mine from a sanctioned state-owned Russian bank, VTB.
OFAC licenses authorize transactions that would otherwise be prohibited by US sanctions and typically take several months or years to process.
Sokolov and a representative for the Teghout mine did not respond to questions about when they first applied for a license. A representative for Teghout said licenses and approvals for the transaction were obtained through OFAC’s "standard independent regulatory process."
The US Treasury Department and VTB did not respond to requests for comment.
None of the heads of the only other active US enterprise funds - which focus on Egypt, Tunisia, and Ukraine-Moldova - appear to have significant business interests in those countries, according to a Reuters review of public documents and their official biographies.
James Harmon is chairman of the Egyptian fund, and Dennis Johnson is chairman of the Ukraine-Moldova fund. They did not respond to requests for comment.
BACKGROUND IN RUSSIA
Sokolov’s biography on his personal website highlights his modest upbringing in St. Petersburg and his dislike of the Soviet government, which he said sent his grandmother to a gulag. It says he immigrated to the United States at 21, several years after the collapse of the Soviet Union.
But his ties to Russia went on long after he left, according to a Reuters review of corporate and government records.
The businessman’s purported ties to the Russian government warrant scrutiny to ensure US interests come first in the fund’s management, said two of the ethics experts Reuters interviewed.
"I'd want a very thorough security clearance review if I were in the US government," said Richard Painter, a University of Minnesota professor who served as ethics counsel to former Republican President George W. Bush.
A 2015 promotional brochure reviewed by Reuters for the now-defunct Liechtenstein-registered Gotthard Investment Fund, a Russia-focused real estate investment operation, listed Sokolov as a fund manager and emphasized the fund’s "strong and long-lasting personal and professional trust relationships forged over the last 20 years with Moscow, St. Petersburg and Federal governments."
A former project manager with the fund, speaking to Reuters on condition of anonymity, said they recognized the brochure as authentic.
Lawyers representing Sokolov said that Sokolov "does not believe" the brochure is authentic, and that the logo on the brochure did not appear to be one used by the fund.
"Mr. Sokolov has no relationships with Russian government officials or the Russian government," his representative told Reuters, adding "he does not hold a Russian citizenship."
Reuters could not independently confirm Sokolov no longer has Russian citizenship.
Sokolov used a Russian passport for international travel as late as 2016, according to travel records reviewed by Reuters.
The White House referred requests for comment about Sokolov to the State Department. The State Department did not provide details on Sokolov’s background check or whether he had a security clearance.
When asked for comment about Sokolov, Kremlin spokesman Dmitry Peskov said: "We don’t know who you are talking about."
(Additional reporting by Lucy Papachristou in Tbilisi; Michele Kambas in Nicosia, Cyprus; Simon Lewis in Washington DC; Editing by Richard Valdmanis)
