All the President’s Men…
FBI Director James Comey revealed on March 20th there is an ongoing counterintelligence investigation related to coordination with Russia and the Trump campaign during the 2016 elections. The White House downplayed the role of the personalities referenced during the hearing. One White House official portrayed a campaign in perpetual disarray attracting “marginalia,” but as The New Yorker notes, many within the White House may be just as clueless as the public when it comes to coordination between Russia and the Trump campaign. There continues to be a pattern of misleading the public, and fellow members of the administration, about the extent of contacts between Trump surrogates and Russian operatives. This has already cost Michael Flynn his job as NSA.
In the case of Paul Manafort, the White House’s argument that he was a marginal figure is unconvincing. Manafort was brought onto the Trump campaign in an effort to professionalize operations in early 2016. His official/unofficial role — the campaign was a mess by all accounts — was initially focused on prevailing in a deadlocked convention. Someone with Manafort’s skillset was a logical choice to settle backroom deals to sway delegates. He was no stranger to Trump, however, having lobbied for real estate and gambling businesses as early as the 1980s (NPR). That NPR story from July 2016, when Manafort was the de facto campaign manager, stated that he was the only aide that would refer to Trump as ‘Donald’ in meetings — he was a “peer,” and a longtime resident of Trump Tower.
many within the White House may be just as clueless as the public when it comes to … Russia and the Trump campaign
Manafort’s ties to Trump and his associates were extensive and long lasting. He partnered with longtime Trump friend Roger Stone in lobbying and public relations dating back to the 1980s. Manafort was referred to the Trump campaign by a major contributor, also a friend of the president, Thomas Barrack (WSJ). By the summer of 2016, Manafort was acting as campaign manager. However, he stepped down officially from the Trump campaign in August, 2016, after The New York Times revealed allegations of numerous payments from the corrupt regime of former Ukrainian President Viktor Yanukovych.
The Wall Street Journal and The Daily Beast reported that Manafort remained influential within the campaign and the Trump transition team throughout the remainder of 2016. The Wall Street Journal reported in February that Manafort was in contact with Trump almost immediately after his resignation and even discussed the Steele Dossier. After Manafort’s resignation, his former partner in Ukraine, Rick Gates, remained on the campaign as well. The Washington Post recently described Gates as “entrenched” within the administration’s agenda advocacy shop.
The New York Times story from August recounted a substantial ledger that included 22 transactions worth $12.7 million dollars from Yanukovych’s party to Manafort. A former Ukrainian official, quoted in the story, said it would be unreasonable for Manafort to have not suspected wrongdoing. Manafort’s activities lobbying for the Yanukovych administration would have potentially required registering as a foreign agent under the Foreign Agent Registration Act. Registration, as we saw with Flynn recently, requires the disclosure of compensation and the origins of that money — so it is plausible to speculate that Manafort has sought to avoid scrutiny by not registering even though he may have been legally compelled to do so. Enforcement of this statute is sporadic and this is not the first time Manafort seems to have skirted the process — interestingly Comey would not discuss this in March. We will return to Manafort’s finances with the conclusion of this post.
The Associated Press reported on March 22nd that Manafort had engineered a plan to exert a wide-ranging public relations campaign beginning in June 2005 to promote the Putin regime. Manafort’s plan was presented to Oleg Deripaska, one of the most regime-connected oligarchs in Russia, and was enacted under an annual $10 million contract. The memo cited by the AP has Manafort expressly writing that the plan would be for the “benefit of the Putin Government.” This 2005 campaign for Putin closely mirrors the efforts Manafort conducted ten years later for the Yanukovych government — and in both instances he neglected to register as a foreign agent, a potential felony.
The memo cited by the AP has Manafort expressly writing that the plan would be for the “benefit of the Putin Government.”
Deripaska had a diverse and complicated relationship with Manafort and his team. Manafort has been involved in public relations work for the oligarch dating back to 2000, according to Mother Jones. In 2007 and 2008, Manafort struck a deal with the oligarch to invest millions of dollars in Eastern European companies in order to harness economies of scale. Gates, a Manafort mainstay from their firm’s work in Eastern Europe, who remains part of Trump’s White House team, also was a key participant in the financial arrangements with Deripaska, according to Bloomberg.
These deals involved advisory payments to Manafort, in part to manage offshore accounts for tax purposes. While the potential deals were discussed at close to $100 million, there was only one actual acquisition, Black Sea Cable, for $18.9 million. According to court filings on behalf of Deripaska, Manafort received $7.3 million during the two years they were in business together as investors. Prior to the 2016 presidential election, the relationship between Deripaska and Manafort was apparently contentious with court proceedings in the Cayman Islands. Their investment enterprise faltered at the same time of the financial crisis.
Deripaska was bailed out during the crisis by the Russian government, through the state-controlled (or shall we say, influenced) VEB bank, which has the Russian prime minister as a board member. This means that during the financial crisis, when Vladimir Putin was prime minister, he was on the board of VEB. The current chairman of the bank is a former FSB officer and Putin associate. Deripaska was also a prominent backer of Yanukovych. As reported by, The New York Times, Michael Flynn and Jared Kushner met with Sergey Kislyak, the Russian ambassador, in December, 2016. The Times portrays Flynn as the leader of the Trump transition team’s efforts at rapprochement with Russia. Recall that Flynn’s communications with Kislyak were disclosed some time ago, and Flynn’s handling of these incidents lead to his resignation.
We now know that Flynn was working on closer ties with Russia and had facilitated meetings with Kislyak and Kushner. Near the end of March, The Wall Street Journal reported that Kushner tasked an aide to follow-up with Kislyak. At that meeting, Kislyak and Kushner’s aide laid the groundwork for the president’s son-in-law to meet Sergei Gorkov, the former FSB officer who was now chairman of VEB. In March of 2016, the former deputy of VEB’s New York office admitted to acting as a foreign agent without notifying the US government and was sentenced to 30 months in prison. His plea deal avoided trial on additional charges of espionage.
Business Insider expands upon the narrative reported in the Journal: Gorkov was recommended to head VEB in early 2016 at the behest of his boss, Herman Gref of Sberbank — another prominent state-controlled bank. Sberbank and VEB act as vehicles of financial leverage and influence for the Kremlin, ultimately under the direction of Putin. In 2013, Gref arranged for Donald Trump to meet some of Russia’s most prominent businessmen during the Miss Universe pageant in Moscow. On a related note, longtime Trump lawyer Marc Kasowitz is representing a Sberbank subsidiary in a lawsuit related to Gref in New York (More from BuzzFeed). The White House’s explanation for not disclosing the meetings with Kislyak and Gorkov was that the meetings were not improper and did not reach any substance. While there is no indication in reports that anything improper transpired, the lack of disclosure is deeply troubling. Moreover, VEB is listed under sanctions by the US Treasury Department related to Russia’s invasion of Ukraine in 2014.
The rush to deny anything improper has tripped up Trump surrogates in the past. After his resignation last summer as a formal member of Trump’s campaign, Manafort issued a categorical denial that he had any connections — direct or indirect — with the government of Russia or Vladimir Putin. Based on the memos obtained form the Associated Press in March, we know this was incorrect. As Manafort seems willing to lie about this matter, one would have to question the veracity of his assertion that he had no knowledge of Russian intelligence operatives (plural!) he was in contact with in 2016 (See The New Yorker for references to Manafort and intercepts with Russian intelligence). As of late March, we now know that Kushner and Flynn were meeting with Kislyak and that Kushner took a follow-up meeting with an ex-FSB operative now running one of Putin’s main financial instruments of power.
Manafort’s notorious client list also has been well-documented in the press. He rehabilitated the political career of Yanukovich after his machinations sparked the Orange Revolution in Ukraine. Manafort was initially brought into the Orange Revolution’s maelstrom by Donestk based oligarch Rinat Akhmetov. Akhmetov has faced allegations of involvement in organized crime and Yanukovych’s party was seen as similarly compromised. Akhmetov’s steel company, the largest in the country, had its assets frozen by Viktor Yushchenko’s government in early 2005, right before he called on Manafort to burnish oligarch images.
Manafort engineered a speedy reimaging of the Yanukovych and his party. He claims to have pushed Yanukovych to be more sympathetic and appealing to the West, but there is not much indication that advice was every followed — if it was actually offered. And, if this advice was offered it was probably on a superficial level only. Manafort worked with Yanukovych for a decade, supported in part by another oligarch, Dmytro Firtash. Firtash is a Ukrainian industrialist with ties to Gazprom and beginning in 2010 received massive credit lines from a Putin-influenced banks, according to Reuters. Gazprombank, the principle creditor to Firtash, was listed under Ukraine related sanctions by the US Treasury Department in 2014. The Gazprom conglomerate was one of Putin’s initial vehicles for seizing wealth and power from the first generation of Russian oligarchs, in particular by bringing about the effective end of independent news media in the country more than a decade ago.
After Yanukovych’s fall and the subsequent invasion by clandestine (except for the geotagging and bloggers) Russian forces, Manafort continued to work for the connected interests of the oligarchs. He rebranded the former ruler’s political party once again. According to Politico, Manafort had some outstanding debts owed to him by his clients and has been using a longtime associate, Konstantin Kilimnik, to help collect these debts. Kilimnik has claimed to be a former member of Russian Military Intelligence. Unnamed individuals in Politico’s story stated that Kilimnik, Manafort and an unnamed oligarch remained in contact. Politico subsequently reported that Kilimnik traveled twice (at least) to the United States to meet with Manafort. The New York Times story from August on Yanukovych’s ledger indicated that Manafort’s firm remained officially open — or at least was not closed — in Ukraine up until that time as well. Manafort’s financial ambitions have at least one more tie to the oligarch empire in Eastern Europe: prior to the financial crisis, Manafort entered into a business relationship with Firtash, to renovate the Drake hotel. One of Fred Trump’s real estate brokers was also involved in the deal.
Firtash, as mentioned above, struck a remarkably profitable deal with Gazprom to provide Ukraine with gas in the 2010’s. Gazprom is widely believed to be a political and economic tool of Putin’s regime. Firtash is deeply enmeshed in the carbon politics of Ukraine and has Yulia Tymoshenko as his principal rival. Tymoshenko canceled the lucrative Firtash-Gazprom gas deal after the Orange Revolution shifted power from the industrial oligarchs who were more connected to Putin and Russia.
Firtash has claimed that these generous deals were struck to enable economic development in Ukraine under a sympathetic leader in Yanukovich. However, the offshore nature of these business dealings would deprive Russia and Ukraine of tax benefits, as Reuters has noted. Tymoshenko is the source of allegations that Firtash teamed up with Manafort to redevelop the Drake Hotel to facilitate money laundering. Firtash is in legal limbo as of now. He is essentially stuck in Austria as that country’s courts decides whether to extradite him to Spain or the United States on several unrelated charges. In late February, the two extradition claims were well established, but not much has come of either at least on the public record.
As was reported by the Washington Post prior to the GOP convention, the Trump campaign sought to soften the GOP’s foreign policy platform regarding support of Ukraine against Russian backed separatists. Manafort continues to deny any role in this. J.D. Gordon, who ran Trump’s foreign policy shop during the campaign, has recently contradicted his previous statements on the campaign’s role in this change. He now acknowledges that Trump sought to soften the platform. The Daily Beast reported on the platform change last summer, which included Manafort’s and Gordon’s participation in the discussion. Gordon’s amended account was reported to CNN, as recounted by Business Insider.
Ukraine has sought testimony from Manafort from his time in the Yanukovych regime. CNN reported in Mid-March that there have been multiple requests for assistance over the last two years. The investigation in Ukraine is not pursuing charges against foreign citizens, and has sought to only have Manafort testify, particularly regarding a more than $1 million payment to a New York City based law firm apparently at Manafort’s recommendation. The sum would far exceed the allowed amount under Ukrainian law to be allocated without competitive bidding. This fee was for a favorable assessment, on legal grounds, of Yanukovych’s jailing of Tymoshenko — part of the public relations campaign Manafort was leading on behalf of the then president of Ukraine. As the CNN story reports, the FBI was also contemplating an investigation of Manafort’s business ties in Ukraine — an investigation that has commenced according to this report and others.
The Manafort saga has also produced some stranger reports, which I will only discuss briefly. Several news stories have discussed the hacking of his daughter’s cell phone, apparently from Ukrainian based hackers. Her text messages have been posted online, and Manafort has confirmed that some — not necessarily all — are authentic. I’m imposing my WikiLeaks Rule on discussing these messages in only a limited context, due to the nature of their acquisition and the inability to verify their authenticity. Additional documents have also surfaced connecting Manafort to potentially illicit appropriations of money during the Yanukovych regime. These allegations are from a Ukrainian lawmaker, and while they match one of the transactions referenced in the infamous ledger, this lawmaker apparently also texted Manafort’s daughter. Manafort said this was an attempt at blackmail. There have also been allegations of harassment, break-ins, and other illegal activities targeting individuals connected to the DNC who investigated Manafort during the campaign as well (see Newsweek for more on that).
Manafort clearly has not been honest when it comes to his contacts in Ukraine and Russia and his motivations. We have already seen Flynn resign for dishonesty. Why they have decided to mislead the public is a question we cannot answer. But, it does not look good. Both are apparently under investigation along with Roger Stone and Carter Page. All but Flynn have made it known that they are willing to testify. On March 28th, Deripaska also said he would testify. Whether he is going to appear as a Putin crony or as a Manafort foe, if he is one, we can also not say for certain.
Manafort is also under investigation for his financial dealings in Ukraine as well the counterintelligence probe. Treasury officials have been looking into Manafort’s financial transactions in Cyprus, at least, in relation to his business dealings in Eastern Europe, according to the Associated Press. He may also be facing charges under the Foreign Agent Registration Act for his work in Ukraine. His property dealings in the United States continue to attract scrutiny, most recently from WNYC. Various offshore companies purchased properties over the years, often corresponding with aforementioned big pay days, and have transferred these properties at no cost to Manafort. Manafort has then taken out significant loans on the properties, sometimes at putative interest rates, see the blog 377 for more on the financing of these deals. According to WNYC, some experts see the hallmarks of money-laundering in these deals. Given the significant contracts and relationships over the years with the likes of Akhmetov, Deripaska, and Firtash 10% interest rates are difficult to explain.
These and many other questions hang like a cloud over the Trump White House.
