Manafort trial ex­poses seedy re­al­i­ties of Ukrainian politics

Kyiv Post - - National - BY JOSH KOVENSKY [email protected]

Af­ter the 2014 EuroMaidan Rev­o­lu­tion sent his for­mer boss flee­ing to Rus­sia, Amer­i­can po­lit­i­cal con­sul­tant Paul Manafort — who raked in $65 mil­lion from ex-Ukrainian Pres­i­dent Vik­tor Yanukovych's Party of Re­gions — Manafort was both­ered by one ques­tion: Why didn’t he have enough money?

One Manafort as­so­ciate fran­ti­cally tried to have for­mer Party of Re­gions king­maker Ser­hiy Lovochkin wire $500,000 to Manafort "to calm Paul down.”

When his 2014 tax bill came in, Manafort pan­icked, call­ing a half-mil­lion dol­lar in­crease a “dis­as­ter” and writ­ing “WTF?”

Grub­bing for cash would prove to be a theme for Manafort, U. S. Pres­i­dent Don­ald J. Trump's for­mer cam­paign man­ager. He is on trial in North­ern Vir­ginia this week on mul­ti­ple fed­eral fraud charges that he con­cealed mil­lions in pro­ceeds from his po­lit­i­cal con­sult­ing busi­ness from U.S. tax au­thor­i­ties and laun­dered the cash into Amer­ica through lux­ury pur­chases.

But doc­u­ments, emails, and tes­ti­mony from his for­mer part­ner, Rick Gates, has left Manafort and his for­mer Ukrainian back­ers scram­bling as the cover was lifted from the opaque and dirty world of Ukrainian po­lit­i­cal fi­nanc­ing,

“If non-reg­is­tered money was used for the pay­ment, then this can be qual­i­fied as tax eva­sion,” said for­mer spe­cial in­ves­ti­ga­tions unit chief pros­e­cu­tor Ser­hiy Gor­batyuk. “If an in­ves­ti­ga­tion es­tab­lishes that the money for the pay­ment was stolen, then it could also be em­bez­zle­ment.”

Yanukovych’s for­mer back­ers, in­clud­ing for­mer pres­i­den­tial chief of staff Lovochkin and bil­lion­aire oli­garch Ri­nat Akhme­tov, rushed to deny Gates' claims that they were among the Ukrainian ty­coons who fi­nanced the Manafort op­er­a­tion.

“The state­ments made by Mr. Gates over the course of the court hear­ings to­tally un­der­mine the cred­i­bil­ity of Mr. Gates as a trusted wit­ness,” a Lovochkin spokes­woman told the Kyiv Post, while Akhme­tov spokes­woman Kateryna Ostroushko de­nied that Akhme­tov's SCM fi­nanced Manafort’s work in Ukraine.

Gates tes­ti­fied to a scheme that saw six Ukrainian oli­garchs and politi­cians — Lovochkin, Akhme­tov, Sergey Tigipko, Borys Kolesnikov, Vic­tor Pinchuk and An­driy Klyuyev — pay Manafort mil­lions of dol­lars through Cyprus-lo­cated off­shores in ex­change for “build­ing the Party of Re­gions.”

Manafort ben­e­fited hand­somely from the ar­range­ment, us­ing the funds to buy lux­ury items like a $15,000 os­trich leather jacket and al­legedly laun­der­ing mil­lions of dol­lars through U.S. real es­tate pur­chases.

When fed­eral pros­e­cu­tor Greg An­dres asked Gates what the Ukrainian side ex­pected to re­ceive for their ‘in­vest­ment,’ the an­swer was clear:

“They ben­e­fited fi­nan­cially through con­tracts or own­er­ship of cer­tain com­pa­nies or per­cent­ages of com­pa­nies,” Gates said.

Manafort is be­ing pros­e­cuted by U. S. Spe­cial Coun­sel Robert Mueller, who was tasked with in­ves­ti­gat­ing Rus­sian med­dling in the 2016 U.S. pres­i­den­tial elec­tion and any re­lated crimes.

Most of the oli­garchs and politi­cians named by Gates as pay­ing Manafort is­sued blan­ket de­nials to the Kyiv Post.

Manafort faces a max­i­mum sen­tence of 305 years in prison, if con­victed and not sub­se­quently par­doned. Ju­rors could go to de­lib­er­a­tions as early as next Fri­day.

A sec­ond trial in Washington DC will test claims that Manafort failed to reg­is­ter as a lob­by­ist for Ukraine.

Gates takes the stand

Gates joined Manafort in Ukraine in 2007, help­ing to re­build the Party of Re­gions as a po­lit­i­cal force af­ter its dis­as­trous fall in 2004, when the Orange Rev­o­lu­tion and the Ukrainian Supreme Court can­celled a rigged pres­i­den­tial elec­tion in Yanukovych's fa­vor that year. In a revote on Dec. 26, 2004, Vik­tor Yushchenko won the pres­i­dency.

Af­ter the Orange Rev­o­lu­tion, Yanukovych and his back­ers were left in the po­lit­i­cal wilder­ness. In re­sponse, Gates said, Akhme­tov and oth­ers hired Manafort to help cat­a­pult them back into power.

Call­ing Manafort “one of the most, you know, po­lit­i­cally bril­liant strate­gists I’ve ever worked with,” Gates tes­ti­fied that Akhme­tov had tasked Manafort with help­ing cre­ate the Party of Re­gions.

“The re­la­tion­ship was such that Mr. Manafort, in essence, brought [Yanukovych] back from the prover­bial po­lit­i­cal dead,” Gates said.

Manafort’s com­pany — DMP In­ter­na­tional — brought on a team of around a dozen peo­ple for the Party of Re­gions con­tracts. That in­cluded Phil Grif­fin and Kon­stantin Kil­imnik, a for­mer Rus­sian mil­i­tary in­tel­li­gence (GRU) of­fi­cer who worked as Manafort’s trans­la­tor.

Gates also tes­ti­fied that Vladimir Sivkovych, a for­mer Ukrainian politico, also worked at DMP’s Kyiv of­fice. Sivkovych fled to Moscow amid ac­cu­sa­tions that he or­ga­nized a vi­o­lent dis­per­sal of EuroMaidan Rev­o­lu­tion pro­test­ers on Nov. 30, 2013.

Six Ukraini­ans and one Rus­sian — met­als tycoon Oleg Deri­paska — stand ac­cused as fi­nanc­ing Manafort’s work.

Manafort and Gates set up sev­eral Cyprus-based off­shore ac­counts through a local law firm.

The Ukraini­ans would send them money within Cyprus from their own off­shores. Pros­e­cu­tors al­lege that Manafort con­cealed the in­come from U.S. tax au­thor­i­ties, and then laun­dered it back into the U.S. through di­rect debit pay­ments on lux­ury pur­chases.

Gates tes­ti­fied that the Cyprus pay­ments were struc­tured via di­rect meet­ings with “the rel­e­vant lead­ers of the party.”

“They would craft a bud­get for the po­lit­i­cal cam­paign for any given year,” Gates said. “They would agree to an amount and typ­i­cally agree to a pay­ment struc­ture.”

A cer­tain di­vi­sion of la­bor ap­pears to have emerged among the dif­fer­ent oli­garchs.

Tigipko

Tigipko, for ex­am­ple, was tasked with fi­nanc­ing the Party of Re­gions’ lob­by­ing ef­forts for the Euro­pean Union and the U.S., Gates tes­ti­fied, through a Cyprus firm he con­trolled called Dresler Hold­ings.

Gov­ern­ment ex­hibits show Dresler pay­ing an off­shore con­trolled by Manafort $5.3 mil­lion in 2012.

At the time, the Yanukovych ad­min­is­tra­tion had set up a Brus­sels­based non­govern­men­tal or­ga­ni­za­tion called the Euro­pean Cen­tre for a Mod­ern Ukraine. That com­pany or­ga­nized a lob­by­ing cam­paign in Washington D.C. and across Euro­pean cap­i­tals in part through a group called the “Haps­burg Group.”

Com­posed of for­mer Aus­trian Chan­cel­lor Al­fred Gusen­bauer, for­mer Pol­ish Pres­i­dent Alexan­der Kwas­niewski, and for­mer Ital­ian Prime Min­is­ter Ro­mano Prodi, the group had one main task: To con­vince West­ern pol­i­cy­mak­ers that the Yanukovych ad­min­is­tra­tion’s pros­e­cu­tion of for­mer Prime Min­is­ter Yu­lia Ty­moshenko was not po­lit­i­cal, and that it shouldn’t in­ter­fere with Ukraine join­ing Euro­pean in­sti­tu­tions.

One for­mer Manafort as­so­ciate who re­quested anonymity to speak freely spec­u­lated that Tigipko’s role in fi­nanc­ing the lob­by­ing ef­fort was in ex­change “for other ben­e­fits he could gain from Yanukovych.”

Oleg Voloshyn, a for­mer For­eign Af­fairs Min­istry spokesman, noted that Tigipko had been “charged with rais­ing par­lia­men­tary sup­port for pro-EU leg­is­la­tion needed for visa lib­er­al­iza­tion and [the po­lit­i­cal and eco­nomic As­so­ci­a­tion Agree­ment].”

A Tigipko spokesman is­sued a blan­ket de­nial.

“In­for­ma­tion about the trans­fer of money for con­sult­ing, lob­by­ing, and other ser­vices to the ac­counts of off­shore com­pa­nies does not cor­re­spond to re­al­ity,” he said in a state­ment. “We also call to your at­ten­tion that the com­pany Dresler Hold­ings never be­longed and does not be­long to Sergey Tigipko.”

Lovochkin

Gates said that Lovochkin, the for­mer head of the Yanukovych's Pres­i­den­tial Ad­min­is­tra­tion, played the largest role in pay­ing Manafort.

U.S. gov­ern­ment ex­hibits show off­shores linked to Lovochkin fun­nelling $42,042,307 to Manafort from 2010 to 2013 — around two-thirds of the to­tal that Manafort is doc­u­mented to have re­ceived for his Party of Re­gions work.

Gates tes­ti­fied that Akhme­tov and Lovochkin part­nered af­ter the 2014 EuroMaidan Rev­o­lu­tion to fi­nance the cre­ation of Op­po­si­tion Bloc, for which Manafort was paid an ad­di­tional $5 mil­lion.

Lovochkin flatly de­nied the al­le­ga­tions.

“Mr. Gates's state­ments re­gard­ing Ser­hiy Lovochkin are com­pletely un­true. Mr. Lovochkin has never fi­nanced or pro­vided loans to Mr. Manafort or Mr. Gates,” his press ser­vice wrote in a state­ment. “The rea­son­ing be­hind Mr. Gates's state­ments is not within our knowl­edge."

Kolesnikov

Borys Kolesnikov, Ukraine’s for­mer in­fra­struc­ture min­is­ter, ap­pears in tes­ti­mony and state­ments from pros­e­cu­tors as ini­tially ad­vis­ing Manafort and Gates to use the Cypriot pay­ment struc­ture.

In sum, gov­ern­ment ex­hibits show Kolesnikov pay­ing $8,716,184 to Manafort be­tween 2010 and 2013 through a se­ries of Cypriot off­shores.

Kolesnikov also is­sued a cat­e­gor­i­cal de­nial of Gates’s tes­ti­mony.

“I was never a client of Paul Manafort and never sent him a sin­gle hryv­nia or dol­lar,” he wrote in a state­ment.

Klyuyev

An­driy Klyuyev, a for­mer sec­re­tary of Ukraine’s Na­tional Se­cu­rity Coun­cil and the brief, fi­nal head of Yanukovych’s Pres­i­den­tial Ad­min­is­tra­tion, ap­pears in Gates’ tes­ti­mony as well.

Gates told the jury that Klyuyev was re­spon­si­ble for fi­nanc­ing “polling work” as well as “po­lit­i­cal cam­paigns” for the Party of Re­gions. Gov­ern­ment ex­hibits show pay­ments of $4,190,111 for the work, through a com­pany called Novirex Sales LLP.

Klyuyev could not be reached for com­ment. A for­mer busi­ness as­so­ciate and at­tor­ney for him, Rein­hard Proksch, did not re­ply to mul­ti­ple re­quests for com­ment.

Pinchuk

Pros­e­cu­tors, sup­ported by tes­ti­mony from Gates, said that Manafort re­ceived $5 mil­lion from bil­lion­aire oli­garch Pinchuk through a Cypriot com­pany called Ply­mouth Con­sul­tants Limited.

Pinchuk has eked out a role for him­self as a savvy po­si­tioner in Ukrainian politics. He mar­ried the daugh­ter of for­mer Pres­i­dent Leonid Kuchma, and found ways to chan­nel money to both can­di­dates be­fore the 2016 pres­i­den­tial elec­tion.

Gates tes­ti­fied that the money came for work on a “le­gal project.”

A Pinchuk spokes­woman did not re­ply to mul­ti­ple re­quests for com­ment.

Cyprus cash, Kyiv spin

Af­ter Yanukovych fled to Rus­sia amid the 2014 EuroMaidan Rev­o­lu­tion, Manafort was left with­out clients.

He ap­par­ently be­gan to scram­ble for new work to cover cash short­falls left by a life of lux­ury. At one point, he turned to­wards the fledg­ling cam­paign of cur­rent Ukrainian Pres­i­dent Petro Poroshenko.

Bloc Petro Poroshenko mem­ber of par­lia­ment Ihor Hryniv told Ukrainian me­dia that Manafort had “tried to of­fer his ser­vices,”

but that the en­gage­ment in­volved noth­ing more than a “three-hour con­ver­sa­tion.”

Manafort ended up work­ing for Op­po­si­tion Bloc in 2014, cor­re­spond­ing with both Akhme­tov and Ly­ovochkin over strat­egy for the party. In many ways, it was a re­peat of Manafort’s po­si­tion 10 years be­fore, when Akhme­tov asked him to build a po­lit­i­cal party in the af­ter­math of the Orange Rev­o­lu­tion.

But this time the FBI had be­gun to take a look.

In the sum­mer of 2014, amid an FBI probe into as­sets al­legedly stolen by Yanukovych, Gates flew to France to “no­tify” Ly­ovochkin that he and Manafort would meet with in­ves­ti­ga­tors. Gates tes­ti­fied that he wanted to re­ceive more in­for­ma­tion about the Cyprus pay­ment struc­tures be­fore the FBI in­ter­view took place.

Gates said that he and Manafort told FBI agents about some of the Cyprus ac­counts and off­shores used in the pay­ment schemes.

And in­ex­pli­ca­bly, the al­le­ga­tions — and ad­mis­sions — that Manafort and Gates made to U.S. in­ves­ti­ga­tors went un­touched un­til 2017.

Ball in Ukraine’s court

Ex­hibits filed by pros­e­cu­tors, as well as Gates’s tes­ti­mony, ap­pear to lead to a litany of wrong­do­ing by some of Ukraine’s most pow­er­ful fig­ures.

One com­pany that Gates linked to Ly­ovochkin — Tel­mar In­vest­ments — does not ap­pear on his of­fi­cial as­set dec­la­ra­tion, for ex­am­ple.

“Mr. Lovochkin has never owned a com­pany named Tel­mar In­vest­ments,” his spokes­woman said in a state­ment. “In ac­cor­dance with Ukrainian leg­is­la­tion Mr. Lovochkin has de­clared all his prop­erty and as­sets and this in­for­ma­tion is pub­licly avail­able.”

When asked about the mat­ter, a spokes­woman for the Na­tional Agency on Cor­rup­tion Pre­ven­tion de­clined to say whether the agency would look into the new in­for­ma­tion.

“This is a mat­ter for the Gen­eral Pros­e­cu­tor’s Of­fice,” she said.

Yury Bezschasny, act­ing head of the pros­e­cu­tor's spe­cial in­ves­ti­ga­tions di­vi­sion, said that he could only use doc­u­ments re­ceived via of­fi­cial le­gal re­quests, which have so far gone unan­swered.

“We need of­fi­cial re­sponses and doc­u­ments from the Amer­i­cans,” Bezschasny said. “The name Lovochkin on a doc­u­ment alone is not enough for us to draw an con­clu­sion.”

Na­tional Anti-Cor­rup­tion Bureau of Ukraine spokes­woman Daryna Manzhura did not re­ply to re­peated re­quests for com­ment.

NABU, which con­firmed that Manafort fig­ured into an in­vesti- gation into Party of Re­gions “black ac­count­ing” be­fore the 2016 U.S. pres­i­den­tial elec­tion, is­sued a state­ment in May 2018 say­ing that it “is not au­tho­rized to con­duct an of­fi­cial in­ves­ti­ga­tion into Paul Manafort’s in­volve­ment in re­ceiv­ing funds from the Party of Re­gions.”

Gor­batyuk, the for­mer spe­cial in­ves­ti­ga­tions pros­e­cu­tor, doubted that any in­ves­ti­ga­tion would reach a con­clu­sion.

“Even if a crim­i­nal case is reg­is­tered, that doesn’t mean that it will ac­tu­ally be in­ves­ti­gated,” he said. When asked what the like­li­hood of a real case would be based on the al­le­ga­tions, he replied, “low.”

Paul Manafort, for­mer ad­viser to U.S. Pres­i­dent Don­ald J. Trump and ex-Ukrainian Pres­i­dent Vik­tor Yanukovych, ar­rives for a hear­ing at U,S. District Court on June 15, 2018 in Washington, DC. Manafort is on trial in Alexandria, Vir­ginia, for bank fraud and tax eva­sion. He faces an­other trial in Washington, D.C., in Septem­ber on charges of money laun­der­ing and fail­ing to reg­is­ter as a for­eign agent. (AFP)

Rick Gates, for­mer cam­paign of­fi­cial for U.S. Pres­i­dent Don­ald J. Trump, leaves U.S. fed­eral court on Dec. 11, 2017, in Washington, D.C. (AFP)

For­mer Pres­i­dent Vik­tor Yanukovych (L), then law­maker and leader of the Party of Re­gions, talks to bil­lion­aire oli­garch Ri­nat Akhme­tov, then also a law­maker, in par­lia­ment in July 2006, four years be­fore his elec­tion as pres­i­dent. (UNIAN)

Ukrainian jour­nal­ist and mem­ber of par­lia­ment Sergii Leshchenko holds pages show­ing al­leged sig­na­tures for pay­ments to Paul Manafort from il­le­gal ac­counts of for­mer Ukrainian Pres­i­dent Vik­tor Yanukovych, who em­ployed Manafort for nearly a decade. Leshchenko's dis­play took place dur­ing a press con­fer­ence in Kyiv on Aug. 19, 2016. (AFP)

For­mer FBI Di­rec­tor Robert Mueller, spe­cial coun­sel on the Rus­sian in­ves­ti­ga­tion, leaves fol­low­ing a meet­ing with mem­bers of the US Se­nate Ju­di­ciary Com­mit­tee at the US Capi­tol in Washington, DC on June 21, 2017.(AFP)

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