The top political news on Friday was the unexpected resignation of Trump campaign chairman, Paul Manafort, which was the result of emerging revelations that his political consulting firm, DMP International, had orchestrated a covert Washington lobbying operation in the period 2012-2014 on behalf of Ukraine's then ruling political party, attempting to sway American public opinion in favor of the country's pro-Russian government (which was overthrown in a CIA-orchestrated coup in early 2014).
As the AP reported yesterday, the lobbying included attempts to gain positive press coverage of Ukrainian officials in The New York Times, The Wall Street Journal and The Associated Press. Another goal: undercutting American public sympathy for the imprisoned rival of Ukraine's then-president. At the time, European and American leaders were pressuring Ukraine to free her. Furthermore, under the U.S. Foreign Agents Registration Act (or FARA), US entities who lobby on behalf of foreign political leaders or political parties must provide detailed reports about their actions to the Justice Department.
The 1938 U.S. foreign agents law is intended to track efforts of foreign government's unofficial operatives in the United States. A violation is a felony and can result in up to five years in prison and a fine of up to $250,000.
The issue is that neither Paul Manafort, nor his deputy, Rick Gates, disclosed their work as foreign agents as required under federal law. "There is no question that Gates and Manafort should have registered along with the lobbying firms," said Joseph Sandler of Sandler Reiff Lamb Rosenstein & Birkenstock, a Democratic-leaning Washington law firm that advises Republican and Democratic lobbyists.
Now if this was the extent of the violations, it would be an open and shut case of potential non-disclosure of lobbying on behalf of a foreign (soon to be overthrown) government, one which could result in felony charges and potential prison time for employees of DMP International, up to and including Manafort. Which is why it is clear why Trump had to quickly get rid of Manafort as his ongoing presence was a major risk factor overhanging the entire Trump campaign, one which could even lead to incarceration and ongoing accusations of pro-Russian influence.
It also explains why as CNN reported yesterday, the FBI and DOJ prosecutors have started a probe into possible US ties to alleged corruption of the former pro-Russian president of Ukraine, including the work of Paul Manafort's firm, according to multiple US law enforcement officials. "The investigation is broad and is looking into whether US companies and the financial system were used to aid alleged corruption by the party of former president Viktor Yanukovych."
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However, where things get trickier is that in addition to Manafort and his deputy Rick Gates, other, far more prominent firms are also implicated, chief among them the Podesta Group, headed by Tony Podesta - the brother of Hillary Clinton campaign chairman John Podesta.
As reported yesterday, emails obtained by the Associated Press showed that Gates personally directed two Washington lobbying firms, Mercury LLC and the Podesta Group, between 2012 and 2014 to set up meetings between a top Ukrainian official and senators and congressmen on influential committees involving Ukrainian interests. Gates noted in the emails that the official, Ukraine's foreign minister, did not want to use his own embassy in the United States to help coordinate the visits.
The emails further illustrate how Gates worked with Mercury and the Podesta Group on behalf of Ukrainian political leaders. None of the firms, nor Manafort or Gates, disclosed their work to the Justice Department counterespionage division responsible for tracking the lobbying of foreign governments.
And this is where the plot thickens, because while the bulk of the press has so far spun the entire Ukraine lobbying scandal, which led to Manafort's resignation, as the latest "proof" that pro-Moscow powers were influencing not only Manafort but the Trump campaign in general (who some democrats have even painted of being a Putin agent), the reality is that a firm closely tied with the Democratic party, the Podesta Group, is just as implicated.
As AP further adds, the European Center for a Modern Ukraine, a Brussels-linked nonprofit entity which allegely ran the lobbying project, paid Mercury and the Podesta Group a combined $2.2 million over roughly two years. In papers filed in the U.S. Senate, Mercury and the Podesta Group listed the European nonprofit as an independent, nonpolitical client. The firms said the center stated in writing that it was not aligned with any foreign political entity.
Sure enough, the chairman of the Podesta Group, Tony Podesta, brother of Clinton campaign chairman John Podesta, repeated the excuse and said his firm believed Gates was working for the nonprofit. Podesta said he was unaware of the firm's work for the Ukraine's Party of Regions, led by Yanukovych. On Thursday, his firm said it had nothing new to add. As BuzzFeed added yesterday, Podesta Group CEO Kimberly Fritts also said in a statement on Thursday that “we were not aware that Rick Gates was a Party of Regions consultant at the time he introduced us to the Centre. We believed he was working for the Centre, as we were hired to do.”
Now political consultants are generally leery of registering under the FARA, and disclosing foreign government clients, because their reputations tends to suffer once they are on record as accepting money to advocate the interests of foreign governments - especially if those interests conflict with America's. Moreover, registering under the law would have required Gates, Manafort or the lobbying firms to disclose the specifics of their lobbying work and their efforts to sway public opinion through media outreach.
However, now that the FBI is involved, Podesta Group has quickly lawyered up and as a statement by CEO Fritts reveals, the firm has hired an outside legal counsel in anticipatory defense for what may be a significant legal battle for the pro-democratic think tank:
“The firm has retained Caplin & Drysdale as independent, outside legal counsel to determine if we were misled by the Centre for a Modern Ukraine or any other individuals with regard to the Centre’s potential ties to foreign governments or political parties. When the Centre became a client, it certified in writing that ‘none of the activities of the Centre are directly or indirectly supervised, directed, controlled, financed or subsidized in whole or in part by a government of a foreign country or a foreign political party.’ We relied on that certification and advice from counsel in registering and reporting under the Lobbying Disclosure Act rather than the Foreign Agents Registration Act. We will take whatever measures are necessary to address this situation based on Caplin & Drysdale’s review, including possible legal action against the Centre.”
A quick primer on Tony Podesta: born 1943, he is an American lobbyist best known for founding the Podesta Group. Podesta has lobbied for a variety of groups, including Bank of America, BP, and Egypt in addition to political campaigns such as Ted Kennedy, George McGovern, Michael Dukakis, and Bill Clinton. More recently, he has worked for Pennsylvania Democratic representatives Joe Sestak, Chris Carney, and Patrick Murphy, and chaired former Pennsylvania Gov. Ed Rendell's reelection campaign. He is closely connected with the Barack Obama White House and has repeatedly been named one of Washington's most powerful lobbyists and fundraisers.
An interesting tangent on the power of the Podesta Group was revealed back in 2009 in a brief US News expose:
When the White House proved true to its promise of full disclosure by releasing a list of recent West Wing visitors, the headlines went to the big donors like George Soros, the big movie stars like George Clooney, and the mega-union bosses like Andy Stern of the Service Employees International Union.
But to insiders, the list showed something else: The power of the Podesta family. Between them, Obama adviser and former Clinton Chief of Staff John Podesta; his brother, lobbyist Tony Podesta; and Tony's lobbying wife Heather made 25 visits. By comparison, House Speaker Nancy Pelosi made one visit.
For John Podesta, the rise as one of Washington's influentials is richly deserved. He runs the Center for American Progress, which has become a very influential policy shop for the Democrats. He also was Obama's transition chief. According to the White House list, he met with the president twice and Chief of Staff Rahm Emanuel three times. As for the Podesta lobbying husband-and-wife team, their legendary influence has now been stamped with the White House seal of approval.
The Democratic White House's seal of approval that is. Some other examples of Podesta Group clients lientele over the years according to Open Secrets: BAE Systems, BP, Credit Suisse Group, Financial Industry Regulatory Authority, General Electric, KKR & Co, Lockheed Martin, Monsanto Co, Wal-Mart Stores and Wells Fargo. Of course, this is just a small fraction and you can examine the entire list here.
Where things get even trickier is when looking at recent disclosures of who we know the Podesta Group has received substantial cash from. Namely Saudi Arabia. Recall from an April 2016 article in The Hill, discussing the fallout from the disclosure of Saudi ties in the Sept 11 terrorist attack, which as reported previously, was initially heavily frowned upon by the Saudis:
Five of the firms work for the Saudi Arabia Embassy, while another two — Podesta Group and BGR Group — have registered to represent the Center for Studies and Media Affairs at the Saudi Royal Court, an arm of the government.
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The dispute is causing a diplomatic storm for the Obama administration; Saudi Arabia has long been an ally of the U.S. despite the country’s history of abusing human rights.
The country has some top-flight representation in Washington — at a hefty price tag.
The Podesta Group is billing Saudi Arabia $140,000 a month for its public relations services. During the last few months of 2015, it sent 27 emails, had two phone calls and one meeting with lawmakers and staffers, journalists, and organizations including Human Rights Watch and the Center for American Progress, disclosure forms show.
Most recently, however, the Podesta Group made a curious appearance in early June, when the website Middle-East Eye caught a shocking statement by the Jordan News Agency (Petra), revealed that the Saudi Deputy Crown Prince Mohammed bin Salman made various traditionally diplomatic statements about the US ahead of his visit to the US, which also included the stunning claim that Riyadh has provided 20% of the total funding to the prospective Democratic candidate's campaign, something which is considered illegal. This is what bin Salman was quoted as saying:
"Saudi Arabia always has sponsored both Republican and Democratic Party of America and in America current election also provide with full enthusiasm 20 percent of the cost of Hillary Clinton’s election even though some events in the country don’t have a positive look to support the king of a woman (sic) for presidency."
Below is a screenshot of the English report published, and which then was quickly deleted, by the Petra News Agency
However, according to an update by MEE just the next day, a spokesperson for the Podesta Group contacted MEE to say that they work with the Saudi Royal Court and to request a correction to the earlier story that said the Jordanian news agency had deleted the quotes from Prince Mohammed.
Senior global communications specialist Will Bohlen - who, prior to joining Podesta, was chief researcher for a best-selling history of Bill Clinton's presidency - sent a link to a clarification issued by the Petra News Agency which said it was "totally false and untrue" that they had published then deleted the quotes from Prince Mohammed about funding the Clinton campaign.
"A technical failure on Petra ’s website occurred for a few minutes on Sunday evening, 12 June 2016," the Jordanian news agency said. "Protection systems at the agency as well as the technical department noticed that and therefore, they suspended the transmission system and the electronic site and moved to the alternative website.
"Later, it became clear that the technical failure that occurred was an attempt to hack the agency’s transmission system and its website. The agency was surprised to see some media outlets as well as the social media publishing false news that were attributed to Petra. They said that Petra transmitted a news item related to the deputy crown prince of Saudi Arabia and later deleted this news item. This is totally false and untrue."
As we said at the time, "one can see why Podesta would be worried: it is illegal in the United States for foreign countries to try and influence the outcome of elections by funding candidates. Naturally, Bohlen said he could confirm that Saudi Arabia has provided no funding to Hillary Clinton's presidential campaign. The question is now that the cat is out of the bag, can others?"
For the record, we find the story that someone would hack the Jordanian News Agency to insert a boring interview with a Saudi crown prince, hard to believe and if anything, the involvement of the Podesta Group dramatically increases the odds that what the Saudi prince revealed may have been the unvarnished truth.
We concluded by saying that "we leave it up to readers to decide how credible the Podesta-inspired explanation by Petra is that someone would hack the Jordanian news agency just to insert an interview with the Saudi deputy crown prince, which said nothing inflamatory, or defamatory, but merely made reference to just how much money the Saudis had spent on getting Hillary elected. In many other nations, merely these revelations should have been sufficient for the mainstream media to probe and inquire further to find out just how much of the Podesta statement is a lie, how deep are the inherent, and allegedly illegal, conflicts of interest if indeed Saudi Arabia has been funding a potential future US president, both directly and indirectly, and how much money the Saudis have spent on Hillary's presidential campaign: an easy check by the authorities who monitor every wire transfer out of the Kingdom and its agents."
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For now, the Clinton campaign has avoided any outside focus whether the Saudis have indeed ilegally funded it by millions of dollars, meaning the Podesta Group has done its job. However, the ironic twist is that with Manafort having become the fall guy for the Ukraine lobbying and corruption scandal, the very Podesta Group which is the stalwart defender of Hillary's presidential campaign, run incidentally by the brother of the firm's founder, is now being investigated in a totally separate matter.
Alas, if the recent interaction between the FBI and Hillary Clinton is any indication, we doubt much more will be revealed, and this latest scandal will quickly quiet down, even if it appears that Democrats were as involved in Ukraine illegal lobbying as Paul Manafort himself.
Finally, we wonder if now that the media is so clearly focused on Ukrainian money flows into the US, if it will just as ardently pursue a story first reported last March by the WSJ which revealed that the Clinton Foundation had received millions of dollars from a Ukrainian oligarch who between 2009 and 2013 had been pushing for closer ties to the European Union:
Between 2009 and 2013, including when Mrs. Clinton was secretary of state, the Clinton Foundation received at least $8.6 million from the Victor Pinchuk Foundation, according to that foundation, which is based in Kiev, Ukraine. It was created by Mr. Pinchuk, whose fortune stems from a pipe-making company. He served two terms as an elected member of the Ukrainian Parliament and is a proponent of closer ties between Ukraine and the European Union.
In 2008, Mr. Pinchuk made a five-year, $29 million commitment to the Clinton Global Initiative, a wing of the foundation that coordinates charitable projects and funding for them but doesn’t handle the money. The pledge was to fund a program to train future Ukrainian leaders and professionals “to modernize Ukraine,” according to the Clinton Foundation. Several alumni are current members of the Ukrainian Parliament. Actual donations so far amount to only $1.8 million, a Pinchuk foundation spokesman said, citing the impact of the 2008 financial crisis.
The Pinchuk foundation said its donations were intended to help to make Ukraine “a successful, free, modern country based on European values.” It said that if Mr. Pinchuk was lobbying the State Department about Ukraine, “this cannot be seen as anything but a good thing.”
In 2014, the well-funded wishes of the Pinchuk Foundation were ultimately realized when Ukraine, with the help of the US State Department (recall from February 2014: ""F**k The EU" - US State Department Blasts Europe; Revealed As Alleged Mastermind Behind Ukraine Unrest"), underwent a violent presidential coup, which led to the exile of then-president Viktor Yanukovich, a far "closer" relationship between Ukraine and Europe, the appointment of Joe Biden's son, Hunter, on the board of Ukraine energy giant Burisma Holdings, and the ongoing conflict between Ukraine and Russia.
Alas, we doubt that anyone in the media will pursue allegations that a Ukraine billionaire was funding the Clinton Campaign - with a very specific goal in mind - with the same effort as it did to show how Paul Manafort had been in bed with Pinchuk's number one opponent.