Kyiv Post

Manafort trial exposes seedy realities of Ukrainian politics

- BY JOSH KOVENSKY KOVENSKY@KYIVPOST.COM

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)
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)
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)
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)
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)
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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