The Manafort indictment scored some damage already this morning, but in a surprising direction. Politico reports this afternoon that Tony Podesta will step down from the influential Podesta Group lobbying shop after becoming a target of Robert Mueller’s investigation. The indictment itself suggests that Podesta may be in serious trouble:
Democratic power lobbyist Tony Podesta, founder of the Podesta Group, is stepping down from the lobbying shop that bears his name after coming under investigation by Special Prosecutor Robert Mueller.
Podesta announced his decision during a firm-wide meeting Monday morning and is alerting clients of his impending departure. …
The investigation into Podesta and his firm grew out of investigators’ examination of Manafort’s finances. Manafort organized a PR campaign on behalf of a nonprofit called the European Centre for a Modern Ukraine. Podesta Group was one of several firms that were paid to do work on the PR campaign to promote Ukraine in the U.S.
Podesta Group filed paperwork with the Justice Department in April stating that it had done work for the European Centre for a Modern Ukraine that also benefited the same Ukrainian political party that Manafort once advised. Podesta Group said at the time it believed its client was a European think tank untethered to a political party.
To understand this development, read the Manafort-Gates indictment — specifically, allegations about Company A and Company B in paragraphs 20-26. During the time that Manafort allegedly conducted massive money laundering, tax evasion, and unregistered foreign lobbying, the indictment alleges that he had some significant help from two unnamed firms. Both worked with Manafort to shield his lobbying and attempted to influence the president in 2012, according to the indictment. Which firms might have had access to Barack Obama, as well as Congress? Hmmmm:
- As part of the scheme, in February 2012, MANAFORT and GATES solicited two Washington, C., firms (Company A and Company B) to lobby in the United States on behalf of Yanukovych, the Party of Regions, and the Government of Ukraine. For instance, GATES wrote to Company A that it would be “representing the Government of Ukraine in [Washington,] DC.”
- MANAFORT repeatedly communicated in person and in writing with Yanukovych, and GATES passed on directions to Company A and Company B. For instance, MANAFORT wrote Yanukovych a memorandum dated April 8, 2012, in which he provided Yanukovych an update on the lobbying firms’ activities “since the inception of the project a few weeks ago. It is my intention to provide you with a weekly update moving forward.” Toward the end of that first year, in November 2012, GATES wrote to Company A and Company B that the firms needed to prepare an assessment of their past and prospective lobbying efforts so the “President” could be briefed by “Paul” “on what Ukraine has done well and what it can do better as we move into 2013.”
- At the direction of MANAFORT and GATES, Company A and Company B engaged in extensive lobbying. Among other things, 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, Yulia Tymoshenko (who had served as Ukraine President prior to Yanukovych). MANAFORT and GATES also lobbied in connection with the roll out of a report concerning the Tymoshenko trial commissioned by the Government of Ukraine. MANAFORT and GATES used one of their offshore accounts to funnel $4 million to pay secretly for the report.
We already have some answers to at least one of the companies involved with Manafort. As CNN reported in May, the Podesta Group had hidden its lobbying efforts with Manafort on behalf of pro-Russian Ukrainian politicians:
One of Washington’s most powerful lobbying firms did not disclose the wide extent of its lucrative political work for a Ukrainian group tied to both onetime Trump adviser Paul Manafort and to pro-Russian politicians, new records show.
The firm, the Podesta Group, said nothing in a 2012 lobbying report to Congress about at least 32 meetings, emails and other communications it had with the State Department, at a time when Secretary of State Hillary Clinton was scrutinizing Ukraine’s upcoming election, records show. …
The firm is run by Tony Podesta, whose brother, John, is a longtime adviser to Clinton and was chairman of her 2016 presidential campaign. John Podesta was a senior counselor to President Barack Obama in 2014 and had previously been lobbying partners with his brother. He is not currently affiliated with his brother’s firm.
The Podesta Group was representing a Ukrainian nonprofit, the European Centre for a Modern Ukraine, as it sought to counter the Obama administration’s critical stance toward Ukraine’s pro-Russia government and Congress’ growing annoyance with Ukraine’s leaders.
In addition to its undisclosed contacts with the State Department, the Podesta Group did not disclose some contacts it had between 2012 and 2014 with Vice President Joe Biden’s office, the National Security Council and Congressional offices, the records show.
A week ago, NBC New York reported that the Podesta Group had become a focus of Mueller’s investigation, although the connection had not yet been explained:
Tony Podesta and the Podesta Group are now the subjects of a federal investigation being led by Special Counsel Robert Mueller, three sources with knowledge of the matter told NBC News.
The probe of Podesta and his Democratic-leaning lobbying firm grew out of Mueller’s inquiry into the finances of former Trump campaign chairman Paul Manafort, according to the sources. As special counsel, Mueller has been tasked with investigating possible collusion between the Trump campaign and Russia.
The other lobbying firm identified by generic placeholders may be Mercury LLC, headed by former GOP congressman Vin Weber. Mother Jones explained the connections last week:
Prior to joining the Trump campaign, Manafort provided consulting and lobbying work for a number of authoritarian figures. Those included Yanukovich’s Party of Regions, for whom Manafort helped set up a nonprofit organization called the European Centre for a Modern Ukraine. Through that organization, Manafort hired the Podesta Group and Mercury LLC to do public relations and lobbying work aimed at shielding Yanukovych from international condemnation for actions such as jailing political rivals.
This summer, the Podesta Group received multiple subpoenas from Mueller related to their work with Manafort, Mother Jones confirmed. The subpoenas focus on the origin of payments that the firm received through Manafort. Mueller also required that both Tony Podesta and Vin Weber, the former GOP congressman who heads Mercury, appear personally before a grand jury Mueller has convened in Washington, the New York Timesreported. CNN reported last month that both firms were under Justice Department investigation from 2014 to 2016 in connection with a probe into Manafort’s lobbying and other activities. That report said the investigation was briefly halted but that the FBI ultimately renewed its focus on Manafort as part of the broader investigation into possible collaboration between the Trump campaign and Russia. The Podesta Group has said it is cooperating with the Justice Department.
Manafort was ousted as chairman of the Trump campaign in August 2016 after the Associated Press reported on his work for Yanukovych and others. FARA requires firms to register their work for a foreign company or other entity if the work primarily benefits a foreign government or foreign political party. Podesta, Mercury, and Manafort’s firm, DMP International, did not initially register under FARA because their work was nominally for the European Centre for a Modern Ukraine, a nonprofit organization. But as Mueller’s investigators scrutinized his work, Manafort retroactively filed paperwork saying his lobbying on behalf of the organization benefited Yanukovych’s party. Both Podesta and Mercury also filed retroactively. In its filing, the Podesta Group claimed the Centre’s executive director had provided the firm with written certification that “none of the activities of the Centre are directly or indirectly supervised, directed, controlled, financed, or subsidized in whole or in major part by a government of a foreign country or a foreign political party.” Mercury made an identical assertion.
The retroactive filings suggest the firms no longer accept the accuracy of the written certifications they received and now assume the Centre was controlled by Yanukovych’s Party of Regions. Neither firm appears to have conducted significant due diligence to check the veracity of the certification it relied on.
Dan Friedman’s report suggests that both Podesta Group and Mercury have cooperated with federal investigators and were unaware of Manafort’s connections to pro-Russian powers in Ukraine. If they are indeed the Company A and B in the indictment, however, the text suggests otherwise. The indictment alleges that A and B cooperated in the money-laundering scheme, and then didn’t tell investigators about it. In fact, Manafort and Gates worked with both by preparing talking points for their two partners to evade enforcement of the law:
- To minimize public disclosure of their lobbying campaign, MANAFORT and GATES ananged for the Centre to be the nominal client of Company A and Company B, even though in fact the Centre was under the ultimate direction of the Government of Ukraine, Yanukovych, and the Party of Regions. For instance, MANAFORT and GATES selected Company A and Company B, and only thereafter did the Centre sign contracts with the lobbying firms without ever meeting either company. Company A and Company B were paid for their services not by their nominal client, the Centre, but solely through off-shore accounts associated with the MANAFORT-GATES entities, namely Bletilla Ventures Limited (in Cyprus) and Jeunet Ltd. and Global Endeavour Inc.(in Grenadines). In total, Company A and Company B were paid more than $2 million from these accounts between 2012 and 2014.
- To conceal the scheme, MANAFORT and GATES developed a false and misleading cover story that would distance themselves and the Government of Ukraine, Yanukovych, and the Party of Regions from the Centre, Company A, and Company B. For instance, in the wake of extensive press reports on MANAFORT and his connections with Ukraine, on August 16, 2016, GATES communicated false talking points to Company B in writing, including:
- Q: “Can you describe your initial contact with [Company B] and the lobbying goals he discussed with them?” A: “We provided an introduction between the [Centre] and [Company B/Company A] in 2012. The [Centre] was seeking to retain representation in Washington, DC to support the mission of the NGO.”
- A: “Our [MANAFORT and GATES’] task was to assist the [Centre] find representation in Washington, but at no time did our firm or members provide any direct lobbying support.”
- A: “The structure of the arrangement between the [Centre] and [Company A and Company B] was worked out by the two parties.”
- Q: “Can you say where the funding from for [sic] the [Centre] came from? (this amounted to well over a million dollars between 2012 and 2014).” A: “This is a question better asked of the [Centre] who contracted with the two firms.”
- Q: “Can you describe the lobbying work specifically undertaken by [Company B] on behalf of the Party of Regions/the [Centre]?” A: “This is a question better asked to Company B and/or the [Centre] as the agreement was between the parties. Our firm did not play a role in the structure, nor were we registered lobbyists.”
Company B through a principal replied to GATES the same day that “there’s a lot of email traffic that has you much more involved than this suggests[.] We will not disclose that but heaven knows what former employees of [Company B] or [Company A] might say.”
- In September 2016, after numerous recent press reports concerning MANAFORT, the Department of Justice informed MANAFORT, GATES, and DMI that it sought to determine whether they had acted as agents of a foreign principal under the Foreign Agents Registration Act (FARA), without registering. In November 2016 and February 2017, MANAFORT, GATES, and DMI caused false and misleading letters to be submitted to the Department of Justice, which mirrored the false cover story set out above. The letters, both of which were approved by MANAFORT and GATES before they were submitted, represented, among other things, that:
- DMI’s “efforts on behalf of the Party of Regions” “did not include meetings or outreach within the U.S.”;
- MANAFORT and GATES did not “recall meeting with or conducting outreach to S. government officials or U.S. media outlets on behalf of the [Centre], nor do they recall being party to, arranging, or facilitating any such communications. Rather, it is the recollection and understanding of Messrs. Gates and Manafort that such communications would have been facilitated and conducted by the [Centre’s] U.S. consultants, as directed by the [Centre]. … “;
- MANAFORT and GATES had merely served as a means of introduction of Company A and Company B to the Centre and provided the Centre with a list of “potential U.S.-based consultants-including [Company A] and [CompanyB]-for the[Centre’s] reference and further consideration.”
- DMI “does not retain communications beyond thirty days” and as a result of this policy, a “search has returned no responsive documents.” The November 2016 letter attached a one-page, undated document that purported to be a DMI “Email Retention Policy.”
- In fact, MANAFORT and GATES had: selected Company A and Company B; engaged in weekly scheduled calls and frequent emails with Company A and Company B to provide them directions as to specific lobbying steps that should be taken; sought and received detailed oral and written reports from these firms on the lobbying work they had performed; communicated with Yanukovych to brief him on their lobbying efforts; both congratulated and reprimanded Company A and Company B on their lobbying work; communicated directly with United States officials in connection with this work; and paid the lobbying firms over $2 million from offshore accounts they controlled, among other things. In addition, court-authorized searches of MANAFORT and GATES’ DMI email accounts and MANAFORT’s Virginia residence in July 2017 revealed numerous documents, including documents related to lobbying, which were more than thirty-days old at the time of the November 2016 letter to the Department of Justice.
That doesn’t sound as though investigators believe that Manafort pulled the wool over the eyes of the Podesta Group and Mercury, if those are indeed Company A and B. Furthermore, on the charge of conspiracy, the indictment leaves room for other conspirators to be named later (emphasis mine, via Jeryl Bier):
- From in or about and between 2006 and 2017, both dates being approximate and inclusive, in the District of Columbia and elsewhere, the defendants PAUL J. MANAFORT, JR., and RICHARD W. GATES III, together with others, knowingly and intentionally conspired to defraud the United States by impeding, impairing, obstructing, and defeating the lawful governmental functions of a government agency, namely the Department of Justice and the Department of the Treasury, and to commit offenses against the United States, to wit, the violations of law charged in Counts Three through Six and Ten through Twelve.
In this indictment, the special counsel alleges that Company A and Company B knew full well what Manafort and Gates were doing in their lobbying, and conspired to keep the lobbying from being properly reported. If those are Podesta Group and Mercury, they should be very worried about being next on the indictment list for violations of the Foreign Agent and Registration Act (FARA). Sean Davis says that they appear to be the only two firms connected to Manafort:
Federal records show two firms doing work on behalf of Manafort’s Ukraine front group beginning in April of 2012: Podesta and Mercury. pic.twitter.com/WCxL0i4BXK
— Sean Davis (@seanmdav) October 30, 2017
If so, this raises very interesting questions for Barack Obama and Hillary Clinton. Tony Podesta has run the Podesta Group for the most part since founding it with his brother John, but John ran the Hillary Clinton campaign in 2015-16 and served as Obama’s chief of staff between January 2014 and February 2015. Just how far did Manafort’s lobbying reach, and who exactly acted as its conduits?