Manafort may be guilty of more than fi­nan­cial crimes against Ukraine

Kyiv Post - - Front Page - BY JOSH KOVENSKY AND VERONIKA MELKOZEROVA KOVENSKY@KYIVPOST.COM AND MELKOZEROVA@KYIVPOST.COM

The in­dict­ments of U.S. politi­cal con­sul­tants Paul Manafort and Rick Gates re­veal a $75 mil­lion binge on lux­ury life­styles, al­legedly stolen from Ukrainian tax­pay­ers by the pair's bosses: President Vik­tor Yanukovych and the now-de­funct Party of Re­gions.

“Manafort and Gates gen­er­ated tens of mil­lions of dol­lars in in­come as a re­sult of their Ukraine work,” reads the in­dict­ment, which charges the long­time ad­vis­ers of Ukraine’s Party of Re­gions with money laun­der­ing, tax fraud and fail­ing to reg­is­ter as for­eign agents.

Oddly enough, Manafort and Gates still face no crim­i­nal charges in Ukraine.

Manafort’s name ap­pears in text mes­sages hacked from his daugh­ter’s phone in con­nec­tion with the mur­der of more than 100 pro­tes­tors dur­ing the 2014 EuroMaidan Rev­o­lu­tion that drove Yanukovych

out of power on Feb. 22, 2014.

“You know he has killed peo­ple in Ukraine? Know­ingly,” wrote his daugh­ter An­drea in a hacked text.

Ukrainian pros­e­cu­tors say they are in­ter­ested in ques­tion­ing Manafort in two in­ves­ti­ga­tions, one re­lated to em­bez­zle­ment in the Jus­tice Min­istry that im­pli­cates ex-Jus­tice Min­is­ter Olek­sandr Lavrynovych. Manafort comes up as a po­ten­tial re­cip­i­ent of $12.7 mil­lion of the $2 bil­lion in al­legedly il­le­gal pay­ments made by Yanukovych's party in the "Black Ledger." But his name has not come up in con­nec­tion with the in­ves­ti­ga­tion of the mur­ders of 100 EuroMaidan Rev­o­lu­tion demon­stra­tors.

The lav­ish life­styles of Manafort and Gates — who are pre­sumed in­no­cent and who deny the charges — leap out from the U.S. in­dict­ment: $6.4 mil­lion on homes, $900,000 for an­tique rugs, $840,000 on men’s cloth­ing and al­most $200,000 on four Range Rovers.

Manafort's wealth con­trasts with the fi­nances of the vot­ers he con­vinced to elect Yanukovych in 2010. In Ukraine, the av­er­age wa­gere­mains $300 a month and retirees live on $100 a month. Manafort now faces up to 80 years in prison, if con­victed.

The in­dict­ments were brought by the team of U. S. Spe­cial Coun­sel Robert Mueller, who is in­ves­ti­gat­ing pos­si­ble col­lu­sion be­tween the 2016 pres­i­den­tial elec­tion cam­paign team of U. S. President Don­ald J. Trump and the Rus­sian govern­ment. Manafort served as cam­paign man­ager for five months.

Trump cam­paign for­eign pol­icy ad­viser Ge­orge Pa­padopou­los pleaded guilty to ly­ing to FBI agents about his ties to Rus­sian of­fi­cials. The plea re­vealed that the Trump cam­paign knew the Rus­sians pos­sessed hacked emails from the Hil­lary Clin­ton cam­paign.

An­ders As­lund, an econ­o­mist and a se­nior fel­low at the At­lantic Coun­cil, is dis­ap­pointed that the Manafort in­dict­ment isn’t more de­tailed, how­ever.

“I’m sur­prised that the U.S. hadn’t found out about this un­til now,” As­lund told the Kyiv Post. “But the in­dict­ment is only about eco­nomic crimes. There’s noth­ing about the harm­ful ac­tiv­i­ties he did while in Ukraine.”

Even Manafort’s chil­dren were alarmed at his ac­tiv­i­ties in Ukraine, ac­cord­ing to phone texts hacked from Manafort’s daugh­ter’s iPhone in late Fe­bru­ary and re­leased on the dark web.

“His work and pay­ment in Ukraine is legally ques­tion­able,” Manafort’s daugh­ter An­drea wrote in one of the 300,000 texts leaked.

Trump "has now hired one of the world’s great­est ma­nip­u­la­tors,” she wrote in another text, while call­ing her fa­ther “abu­sive” and with­out a “moral or le­gal com­pass” in oth­ers.

Kevin Down­ing, Manafort’s at­tor­ney, main­tained his client’s in­no­cence in a state­ment, call­ing the money laun­der­ing al­le­ga­tions “ridicu­lous” and say­ing that his work for the Party of Re­gions “was seek­ing to fur­ther democ­racy and to help the Ukraini­ans come closer to the United States and to the" Euro­pean Union.

Manafort and Gates are un­der house ar­rest in the U.S., await­ing trial. Manafort, who has ap­plied for 10 pass­ports in the last 10 years, has pleaded not guilty, along with Gates.

How in­flu­en­tial?

Ac­counts dif­fer on the amount of power that Manafort wielded over Yanukovych.

The 67-year old politi­cal con­sul­tant en­tered Ukrainian pol­i­tics in 2005 through a con­tract with Sys­tem Cap­i­tal Man­age­ment, the firm be­long­ing to bil­lion­aire oli­garch Ri­nat Akhme­tov, who backed Yanukovych. SCM spokesman Evgeny Buzikin said that Manafort “helped cre­ate the group’s cor­po­rate com­mu­ni­ca­tions strat­egy.”

In 2007, at the Davos Eco­nomic Fo­rum in Switzer­land, Akhme­tov called Manafort was not just a con­sul­tant, but his “great friend.”

One former top U.S. diplo­mat, who re­quested anonymity due to a lack of au­tho­riza­tion to speak pub­licly, said that “Yanukovych got some ad­vice from Manafort on his ar­eas of ex­per­tise, which was not do­mes­tic Ukrainian pol­i­tics. It was how to talk to and how to be heard by Western au­di­ences and Western gov­ern­ments.”

Oth­ers con­tended that Manafort had more in­flu­ence. As­lund ar­gued that Manafort was “com­pletely in charge of Yanukovych,” con­trol­ling key pol­icy de­ci­sions like “ad­vis­ing Yanukovych to speak Ukrainian for the 2010 cam­paign.”

But the former U.S. diplo­mat said that while “peo­ple at se­nior lev­els in the Party of Re­gions lis­tened to him on cer­tain is­sues,” he was but one ad­viser in a team that in­cluded Ukraini­ans and Rus­sians.

“He’s clearly good at what he does,” the ex-diplo­mat added. “He was clearly a smart man with a range of ques­tion­able clients.”

The texts re­veal one ex­change which sug­gests Manafort may have played a key role in the 2014 EuroMaidan Rev­o­lu­tion by con­vinc­ing Yanukovych to or­der po­lice to mas­sacre 100 demon­stra­tors days be­fore Yanukovych fled to Rus­sia.

“Do you know whose strat­egy that was to cause that?” Manafort’s daugh­ter An­drea wrote to her sis­ter, Jes­sica, in March 2015.

She con­tin­ued: “To send those peo­ple out and get them slaugh­tered, as a tac­tic to out­rage the world and get fo­cus on Ukraine.”

“Don’t fool your­self,” she wrote. “The money we have is blood money.”

For­eign agents

The in­dict­ment al­leges that Manafort and Gates failed to reg­is­ter as for­eign agents, in part be­cause they were oper­at­ing on be­half of a Brus­sels­based non­govern­men­tal or­ga­ni­za­tion called the Euro­pean Cen­ter for a Modern Ukraine.

Call­ing the cen­ter “a mouth­piece for Yanukovych and the Party of Re­gions,” pros­e­cu­tors al­lege that Manafort and Gates had an “in­for­mal agree­ment” with the cen­ter to lobby on the Ukrainian govern­ment’s be­half.

Fed­eral pros­e­cu­tors al­lege that Manafort and Gates worked as agents of the Ukrainian govern­ment through the cen­ter but failed to reg­is­ter in the U.S. as such, a vi­o­la­tion of the For­eign Agents Reg­is­tra­tion Act. The pair hired two D.C. lob­by­ing firms — Mercury and the Podesta Group — to work on their be­half and al­legedly un­der their su­per­vi­sion.

The cen­ter doesn't seem to have reg­is­tered on the E.U.’s Trans­parency Reg­is­ter, which would de­prive it of ac­cess to top EU of­fi­cials, said Albi Alla, an at­tor­ney at Al­ber & Geiger in Brus­sels.

The cen­ter’s founder, former Ukrainian For­eign Min­is­ter Leonid Kozhara, de­clined to com­ment, but told 112 TV chan­nel on Nov. 1 that the cen­ter was cre­ated “to tell the truth about Ukraine in the Euro­pean Par­lia­ment and other E.U. in­sti­tu­tions. And the cen­ter was quite suc­cess­ful."

One of the cen­ter’s ap­par­ent func­tions was to pay U.S. jour­nal­ists and blog­gers for fa­vor­able cover­age.

A 2013 Buz­zfeed in­ves­ti­ga­tion re­vealed that the cen­ter paid U.S. blog­gers at the U.S. far-right web­site Bre­it­bart News Net­work, among other out­lets, for pos­i­tive cover­age of the rul­ing Party of Re­gions dur­ing the 2012 par­lia­men­tary elec­tions.

Lib­er­tar­ian ac­tivist Ge­orge Scov­ille al­legedly over­saw the cash trans­fer and in­vited blog­gers to a con­fer­ence with former Cen­tral Elec­tion Chief Mikhail Okhen­dovskyy, who was later found to have re­ceived from the Party of Re­gions on the "Black Ledger."

Scov­ille did not re­ply to re­quests for com­ment. Bre­it­bart editor Steve Ban­non re­placed Manafort as man­ager and chief strate­gist of the Trump cam­paign in Au­gust 2016.

Skad­den

The in­dict­ment tells a story in which

Manafort used the cen­ter to hire two U.S. lob­by­ing firms to work on be­half of the Ukrainian govern­ment.

Some of that work caused a scan­dal in 2012, when U.S. law firm Skad­den, Arps, Meagher, & Flom LLP sent a team of four lawyers to Kyiv to write a re­port on whether the Yanukovych govern­ment’s pros­e­cu­tion of politi­cal op­po­nent Yu­lia Ty­moshenko met Euro­pean stan­dards.

Skad­den at­tor­neys Gre­gory Craig and Cliff Sloan did not re­ply to emailed re­quests for com­ment for this story. Both at­tor­neys held high level po­si­tions in the Obama Ad­min­is­tra­tion — Craig as the ad­min­is­tra­tion’s first White House coun­sel, and Sloan as the State Depart­ment’s en­voy on clos­ing Guan­tanamo.

The Skad­den re­port led to a probe in Ukraine of former Jus­tice Min­is­ter Olek­sandr Lavrynovych on sus­pi­cion of em­bez­zling Hr 8.5 mil­lion ($1.06 mil­lion at the 2012 ex­change rate) to pay the firm.

Ser­hiy Vlasenko, Ty­moshenko’s at­tor­ney, told the Kyiv Post in Au­gust 2016 that the first thing he told the Skad­den team was that there was a “cor­rupt el­e­ment in your work here.”

“They said, ‘we did ev­ery­thing legally, be­cause their of­fi­cial hon­o­rar­ium was worth Hr 95,000. ($11,875 at the 2012 ex­change rate),” Vlasenko said.

But the in­dict­ment al­leges that the re­port was worth far more.

“Manafort and Gates used one of their off­shore ac­counts to fun­nel $4 mil­lion to pay se­cretly for the re­port,” pros­e­cu­tors al­lege.

Skad­den re­turned $567,000 to the Ukrainian govern­ment in June, say­ing that the money was kept for “fu­ture work” that was never done.

Fam­ily af­fair

The $75 mil­lion that Manafort and Gates al­legedly got from the Party of Re­gions for their work af­forded Manafort a lav­ish life­style in the U.S.

Manafort’s daugh­ter's texts re­veal that fi­nan­cial trans­ac­tions de­tailed in the in­dict­ment are in­ter­twined with some of the former cam­paign man­ager’s per­sonal is­sues.

Ar­gu­ments over a po­ten­tial di­vorce led Manafort’s daugh­ter to write that “he has too many skele­tons, he can’t have a pub­lic di­vorce,” while call­ing his “work and pay­ment” for the Party of Re­gions “legally ques­tion­able” in a sub­se­quent text.

“I hope dad never gets paid,” she wrote in another text, re­fer­ring to late pay­ments from the de­posed Yanukovych ad­min­is­tra­tion.

The in­dict­ment al­leges that from 2008 to 2014 Manafort wired a to­tal of $12 mil­lion to buy per­sonal items with­out pay­ing taxes on the in­come.

While still work­ing with the Party of Re­gions in 2012, Manafort bought prop­erty worth $6.4 mil­lion.

One con­do­minium at 377 Union Street in New York ap­pears in the in­dict­ment as a money laun­der­ing con­cern. The prop­erty was first owned by Manafort and his son-in­law, Jef­frey Yo­hai.

The hacked texts re­veal panic within the Manafort fam­ily about fi­nan­cial deal­ings sur­round­ing the prop­erty, as well as another in Lower Man­hat­tan.

In one text, Manafort’s daugh­ter writes of Yo­hai that it was “Dis­gust­ing that he is try­ing to lever­age a prop­erty that’s not his.”

“Dad and Jeff are busi­ness part­ners,” she added. “There’s no sneak­ing $1 mil­lion past the other one.”

An at­tor­ney for Yo­hai did not re­ply to a re­quest for com­ment.

Paul Manafort, ex- cam­paign man­ager for U.S. President Don­ald J. Trump and ex-ad­viser to Ukraine's Party of Re­gions un­der ex-President Vik­tor Yanukovych, leaves a Washington, D.C. fed­eral court­house on Oct. 30. Manafort is ac­cused of mul­ti­mil­lion-dol­lar money laun­der­ing and tax eva­sion. For a decade in Ukraine, he helped le­git­imize Yanukovych to Western­ers. Yanukovych fled power dur­ing the EuroMaidan Rev­o­lu­tion in 2014. (AFP)

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