WarSclerotic

Why Robert Mueller is making K Street Republicans and Democrats sweat, Washington Examiner, Sarah Westwood, November 4, 2017 

A special counsel investigation into allegations of collusion between President Trump’s campaign and Russians could end up exposing illegal activity from lobbyists and consultants at some of Washington’s most powerful firms across the political spectrum.

At least three major lobbying firms have already been identified or had their work described in court documents laying out the criminal charges against two of Trump’s former campaign aides. Those former associates — Paul Manafort, who worked on Trump’s campaign between March and August 2016, and Rick Gates, Manafort’s deputy — face a 12-count indictment related to the false foreign lobbying disclosure forms they filed after years of failing to register their activities, as well as their efforts to launder the millions of dollars they earned from their undisclosed lobbying.

But Democratic powerhouses could also get caught up in special counsel Robert Mueller’s massive investigation. And Mueller’s seeming willingness to crack down on a practice that insiders describe as common and usually tolerated by the government could send shockwaves through the K Street lobbying firms that have represented foreign clients for years without proper documentation.

“This whole scandal has made K Street very nervous,” said Craig Holman, government affairs lobbyist for Public Citizen. “There’s every indication that ignoring and violating the requirements of [the Foreign Agents Registration Act] is fairly widespread.”

Under FARA, lobbyists who represent foreign leaders or entities in Washington must disclose the nature of their business relationships to the Justice Department within a certain timeframe. However, the agency’s inspector general found in a report last year that 62 percent of all FARA registrations were late and found that the number of lobbyists registering under FARA had plummeted in recent years, suggesting more lobbyists are simply choosing not to disclose their work.

“The Department of Justice has done an exceedingly lax job at enforcing FARA, and everybody knows it,” Holman said. “Only recently, because of this Russia connection scandal, has there been any effort at tracking down those who are in violation of FARA.”

Manafort’s attorney, Kevin Downing, said Monday, after Manafort and Gates made their first appearances in court, that Mueller’s team had used a “novel theory” to build its case around a series of FARA violations despite the government’s sparse history of securing convictions using that law.

The pair of former Trump associates are far from the only Washington insiders facing pressure from investigators over their conduct, however.

Tony Podesta, the brother of Hillary Clinton’s former campaign chairman and co-founder of the Podesta Group, stepped down this week from his position as chairman of the lobbying firm he built into a Washington institution. The Democrat-leaning Podesta Group had already come under scrutiny for failing to register all of its lobbying activity in Ukraine, but the indictment against Manafort and Gates alleged that two unnamed companies — one of which is believed to be the Podesta Group — falsely represented the nature of their relationships to a think tank controlled by Viktor Yanukovych, the pro-Russia Ukrainian leader at the center of the scandal.

A former Obama administration official and the powerhouse law firm for which he works may also face scrutiny from Mueller’s team over work he performed for Manafort in Ukraine.

Gregory Craig, White House counsel for former President Barack Obama from January 2009 to January 2010, led a team that performed a supposedly neutral analysis in 2012 of the controversial trial that led to the conviction and imprisonment of Yanukovych’s political rival, Yulia Tymoshenko.

Craig’s team at the major Washington law firm Skadden, Arps, Slate, Meagher & Flom concluded that Yanukovych’s government had not locked up Tymoshenko for political reasons and found “no evidence” during the review to support the idea that Yanukovych’s government had abused the justice system. The report was described, at the time, as the product of an “independent” review that the Ukrainian government under Yanukovych commissioned and funded.

But a little-noticed passage in the 31-page indictment against Manafort and Gates suggests Manafort may have secretly steered the Skadden report in a direction favorable to Yanukovych and may have wired the report’s authors millions of dollars to secure a friendly conclusion.

“Manafort and Gates also lobbied in connection with the roll out of a report concerning the Tymoshenko trial commissioned by the Government of Ukraine,” Mueller’s team wrote in the indictment. “Manafort and Gates used one of their offshore accounts to funnel $4 million to pay secretly for the report.”

Craig did not respond to multiple requests for comment.

The report his team produced at Skadden received criticism at the time for its failure to find Yanukovych responsible for misconduct in a case that many human rights advocates considered a politically motivated effort to extract revenge on a rival.

Freedom House, a nonpartisan democracy watchdog, called many of Skadden’s findings “utterly baffling” and described the report as “misguided.”

“Predictably, the Yanukovych government seized on this part of the report as proof that the proceedings had conformed to the norms of judicial fairness,” Freedom House noted in a December 2012 blog post about the Skadden report.

The State Department, then under Clinton’s leadership, criticized Skadden’s methodology shortly after it completed the review in December 2012, but stopped short of accusing the law firm of colluding with Yanukovych.

“I can’t speak to the relationship that the Ukrainian Government has with a private law firm in the United States,” then-State Department spokeswoman Victoria Nuland said when asked in 2012 whether Yanukovych had purchased an exonerating review from Skadden. Manafort’s alleged secret payment in connection with the report was not known at the time.

The Podesta Group did not respond to a request for comment on its own activity in Ukraine, which allegedly extends beyond a simple FARA violation.

The firm registered in April its contract with the think tank cited in the indictment of Manafort and Gates. Podesta personally signed a document that said the Belgium-based think tank, the European Centre for a Modern Ukraine, hired the Podesta Group independently and directed all of the firm’s advocacy efforts, according to the Podesta Group’s lobbying disclosure forms.

A representative of the European Centre for a Modern Ukraine signed her name to a statement in the documents, swearing 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 foreign political party.”

But Mueller’s indictment alleges that the European Centre for a Modern Ukraine was nothing more than a vehicle for Yanukovych to purchase more lobbying power in Washington while evading detection. The indictment also claims the Podesta Group and Mercury LLC, a Republican-leaning lobbying firm, took their marching orders from Manafort and Gates, not the European Centre for a Modern Ukraine.

“To minimize public disclosure of their lobbying campaign, Manafort and Gates arranged 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,” prosecutors wrote in the indictment. “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 and Gates entities.”

The second unnamed company, whose partnership with the Centre is thought to be described in the Manafort and Gates indictment, could bring Mueller’s scrutiny back to the Right side of the aisle. Vin Weber, a former Republican congressman from Minnesota, is a partner at Mercury and signed his name to a FARA form that the firm filed in April for its work with the center.

Mercury retroactively registered its representation of the center just 16 days after the Podesta Group registered its own, according to disclosure forms.

Weber did not respond to a request for comment. A lawyer for Mercury also did not return a request for comment.

Mercury’s FARA compliance has come under scrutiny in the past.

For example, the firm raised eyebrows earlier this year when it filed a foreign lobbying disclosure form that did not actually name a foreign client. Instead, Mercury noted it would be doing public relations work for “Romania, Bulgaria, Serbia, Macedonia & Greece,” while listing the Libertas Foundation, an American group, as its client. Libertas was incorporated just one day before Mercury filed its FARA form for the organization, BuzzFeed reported in June.

“Mercury Group should have asked at least, who’s funding Libertas?” said Holman, the FARA expert.

Holman predicted Mercury could face prosecution for its work in Ukraine.

“The fact that Mercury Group is now shown to have violated FARA twice, indicates that Mercury really is deliberately not complying with FARA,” Holman said.

Daniel Pickard, an attorney at Wiley Rein who advises clients on FARA, said the Justice Department brought just seven criminal cases related to violations of FARA between 1966 to 2015.

“On top of this, the FARA registration unit, which is composed of intelligent and hardworking professionals, has limited staff and resources but considerable responsibilities,” Pickard said of the Justice Department unit tasked with enforcing the rules surrounding foreign lobbying disclosures.

Trump, for his part, has sought to keep the focus on Democrats’ dealings with foreign powers, as the special counsel’s investigation has closed in on three of his former campaign aides.

The president and his press secretary, Sarah Sanders, have repeatedly insisted that the only “collusion” with Russia that occurred during the presidential race came at the hands of Democrats. Trump’s allies had been emboldened by the discovery last week that the Clinton campaign and the Democratic National Committee shared the cost of producing a dossier of Russia-related allegations against the Trump campaign. The former British spy who authored that dossier sourced some of his allegations to senior Russian officials, spawning the argument that Democrats had indeed teamed up with Russians to hurt Trump.

But the two indictments and one guilty plea unsealed by Mueller this week have relegated the dossier to a footnote of the Russia narrative.

Even so, White House aides are not yet worried that the special counsel’s investigation will do lasting damage to the president, a source close to the White House told the Washington Examiner.

“White House staffers are used to dealing with high-level crises because of the sheer volume has been very intense since January,” the source said. “However, if there are more dominoes that fall, such as a Jared Kushner indictment, that would really sink the morale inside the White House to the point of potential paralysis.”

Trump’s team has managed to insulate the White House from much of the Mueller drama by pointing to the unrelated nature of Manafort’s work for Yanukovych, most of which took place long before he joined the Trump campaign. Yanukovych was ousted from power in 2014, at which point he fled to Russia. And the White House has argued the campaign hand who pleaded guilty to lying about his ties to Russia, George Papadopoulos, was simply an overzealous volunteer who never wielded real influence within the campaign.

However, Mueller’s probe does pose a threat to K Street, and lobbyists from both parties will likely watch Manafort’s case with great interest to see which of their peers and practices will come under scrutiny.

Manafort made another appearance in court on Thursday.