Manafort Scheme Paid Lobbyists Millions With Offshore Funds

Updated on
  • Firms received $2 million from Manafort, Gates entities: U.S.
  • Podesta Group and Mercury disclosed work for Ukraine center

Ex-Trump Adviser Pleaded Guilty in Mueller Probe

Two Washington lobbying firms that aided former Trump campaign chairman Paul Manafort’s clandestine influence campaign on behalf of Ukraine’s deposed president were paid more than $2 million through offshore accounts tied to Manafort and his business partner, according to prosecutors.

Identified in Monday’s indictment of Manafort and Rick Gates only as Company A and Company B, the firms were hired to lobby in the U.S. for Ukraine and the country’s former president, Viktor Yanukovych, who is an ally of Russia’s Vladimir Putin.

"At the direction of Manafort and Gates, Company A and Company B engaged in extensive lobbying," according to the indictment. "They lobbied multiple members of Congress and their staffs about Ukraine sanctions, the validity of Ukraine elections, and the propriety of Yanukovych’s imprisoning his presidential rival."

The indictment doesn’t name the lobbying firms. However, two prominent Washington firms -- Podesta Group Inc. and Mercury Public Affairs LLC -- disclosed in an April filing with the Justice Department that they worked for the European Centre for a Modern Ukraine, which the indictment said is a mouthpiece for Yanukovych. 

The indictment said the Centre for a Modern Ukraine was "the nominal client" for Company A and B, when in fact the firms were paid through offshore accounts associated with entities owned or controlled by Manafort and Gates. Manafort and Gates selected the lobbying firms in February 2012 and the center signed contracts with the firms without ever meeting either one, according to the indictment.

Indictments Unsealed

The details of the lobbying firms’ work and compensation were made public in the indictments unsealed Monday against Manafort and Gates, who were charged in Special Counsel Robert Mueller’s probe into Russia’s interference in the 2016 election. They were accused of hiding foreign accounts from the U.S., failing to disclose their work for a foreign government and misrepresenting their work to authorities as recently as 2017, according to the indictment.

The Podesta Group said in a statement that it complied with disclosure requirements based on in-house and external legal advice and that it has cooperated with the special counsel’s office. The Podesta Group’s work for the center, which attested that it was not funded or directed by a foreign government or political party, was in support of Ukraine’s admission to the European Union, according to the statement.

Politico reported earlier that the firm’s founder, Tony Podesta, announced he is stepping down from his firm because of the Mueller investigation during a firm-wide meeting Monday. Podesta didn’t immediately respond to phone calls and emails seeking comment.

Representatives of Mercury didn’t return calls and emails seeking comment.

‘False-Talking Points’

Between 2012 and 2014, the lobbying firms were paid more than $2 million from the accounts, prosecutors said. To cover up their connections with those firms, Gates developed "false talking points" he gave to Company B, according to the indictment. 

The details of the lobbying firms’ work and compensation were made public in the indictment unsealed Monday against Manafort and Gates, who were charged in Special Counsel Robert Mueller’s probe into Russia’s interference in the 2016 election. They were accused of hiding foreign accounts from the U.S., failing to disclose their work for a foreign government and misrepresenting their work to authorities as recently as 2017, according to the indictment.

Manafort and Gates directed Company A and B on lobbying during weekly calls, received detailed oral and written reports from the firms about their work, and "congratulated and reprimanded" the firms, prosecutors said.

Belated Disclosures

Rather than disclose their activities under the Foreign Agents Registration Act, or FARA, the two firms initially registered in 2012 under the Lobbying Disclosure Act, which requires far less detailed disclosures. FARA requires representatives of foreign governments, political parties and foreign-government controlled organizations to disclose detailed information about their activities, including each contact they make with a government official.

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In April, the Podesta Group and Mercury filed belated FARA disclosures with the Justice Department outlining their work with the European Centre for a Modern Ukraine. In those filings, Podesta and Mercury said that they were unaware their work was for the Ukrainian government. The disclosures covered the period from April 2012 through April 2014.

Using identical language in those filings, both firms said that the European Centre for a Modern Ukraine had provided "written certification" that it was not controlled or financed by a foreign government or political party. According to Monday’s indictment, the center was created in 2012 and used by Manafort, Gates and others to conduct a public relations campaign in the U.S. and Europe on behalf of the Yanukovych regime.

Intense Lobbying

The FARA filings document the intense lobbying campaign undertaken on behalf of the center. The Podesta Group disclosed 130 days on which it contacted members of Congress and their aides or executive branch officials, plus dozens of contacts with research groups and media organizations. Mercury disclosed 60 meetings related to Ukraine, including three in March 2013 that were also attended by Manafort.

The Podesta Group, led by Tony Podesta, the brother of Hillary Clinton’s campaign chairman, John Podesta, was paid $1.2 million for its work for Ukraine, according to its FARA filings. Mercury’s lobbying effort was led by Vin Weber, a former Republican member of Congress. The firm disclosed payments of $1.3 million for its Ukraine work. Podesta and Weber each signed the contracts with the Ukrainian center, the FARA filings show. 

Podesta is stepping down from his firm because of the Mueller investigation, according to Politico. He announced his decision during a firm-wide meeting Monday, Politico reported. Podesta didn’t immediately respond to phone calls and emails seeking comment.

The Brussels-based center was founded by three members of parliament from the pro-Kremlin Party of Regions. It disclosed to the European Union that its total budget from November 2012 to November 2013 was 10,000 euros ($11,634). During that period, Podesta and Mercury disclosed receiving payments from the center totaling $893,000, according to their FARA filings.

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