- BY ELIAS GROLL=JULY 7, 2017
In May 2013, the Republican lobbyist Vin Weber welcomed Serhiy Klyuyev, one of Ukraine’s most powerful political operatives, to Washington. For two days, Weber squired the member of parliament around Capitol Hill to spread the message that then-Ukrainian President Viktor Yanukovych was leading his country on the path to reform and was seeking to embrace the West.
Klyuyev had come to Washington as part of a lobbying campaign carried out on behalf of an obscure Brussels-based think tank, the European Centre for a Modern Ukraine (ECFMU), which was founded by veterans of Yanukovych’s Party of Regions. On the recommendation of Paul Manafort, President Donald Trump’s former campaign chairman who worked as a political fixer for Yanukovych, ECFMU hired two powerhouse Washington lobbying firms, the Podesta Group and Mercury LLC.
Working with Manafort and his deputy, the two firms pushed Yanukovych’s agenda in Washington, but none at the time documented their work under the Foreign Agents Registration Act (FARA) — passed to counter the influence of foreign propaganda on American politics. In the controversy that has ensued since Trump’s victory and allegations that Russia interfered in the 2016 U.S. presidential election, Podesta, Mercury, and Manafort’s firm have all conceded that their work benefited the Ukrainian government and have filed paperwork under FARA.
Interviews with individuals who met Podesta and Mercury lobbyists, federal disclosures, and sources close to the two firms describe a lobbying campaign that presented Yanukovych as a reform-minded leader ready to march out from under Russia’s shadow and into the arms of the European Union. Crucially, however, working on behalf of ECFMU created the impression that Podesta and Mercury were not lobbying on behalf of the Ukrainian government but an independent entity. The distinction allowed both Mercury and Podesta to register under less stringent lobbying disclosure rules and reveal less information to the public.
Moreover, ECFMU provides the link between Manafort’s work as a political fixer in Ukraine from 2012 to 2014 and the promotion of Yanukovych’s interests in Washington. “In retrospect, it’s fair to call ECFMU a front group for the Party of Regions to set up a lobbying operation in D.C.,” said one source familiar with the campaign.
Manafort’s lobbying firm, DMP International, maintains in disclosures filed last week that he only provided “advice” to ECFMU, but sources close to Mercury and Podesta dispute that account. Two individuals speaking on condition of anonymity and familiar with the lobbying efforts told Foreign Policy that Manafort and his deputy, Rick Gates, were in regular contact with Podesta and Mercury lobbyists to discuss the lobbying campaign on behalf of ECFMU. Emails obtained by The Associated Press last year claim that “Gates personally directed the work” of Mercury and Podesta and that Manafort helped coordinate the effort by phone.
“Paul’s primary focus was always directed at domestic Ukrainian political campaign work,” Jason Maloni, a spokesman for Manafort, said in a statement.
Spokesmen for both firms rejected the description of ECFMU as a front for the Party of Regions and said they relied on assurances from Ina Kirsch, the director of the center, that it did not have connections to Yanukovych’s political operation. Kirsch did not respond to questions from FP.
The FBI is now examining Manafort’s work for Yanukovych as part of its wide-ranging probe into Russian meddling in the 2016 election and whether any Trump aides conspired with that effort.
Set up in 2012, ECFMU ostensibly was founded to advocate for closer ties between Ukraine and the European Union. The think tank’s website is nowdefunct, but when it was up and running, it listed a mere two staff members. The source of the group’s funding remains unclear, but Ukrainian investigative journalists uncovered evidence indicating that it was backed at high levels by the Party of Regions. Efforts to reach its founders were unsuccessful.
In meetings beginning in 2012 with Washington officials, journalists, NGO officials, and think tank researchers, Podesta and Mercury lobbyists working for ECFMU sought to downplay human rights concerns in Ukraine — principally over the detention of opposition leader Yulia Tymoshenko. They also sought to portray Yanukovych as a bona fide reformer and secure support in Washington for a so-called association agreement between Ukraine and the EU, which would move Kiev out of Moscow’s orbit.
The lobbying campaign relied on about a dozen operatives spread across both firms and targeted the Washington foreign-policy establishment. Podesta and Mercury employees met with staff and senior lawmakers on Capitol Hill and administration officials in the White House and State Department.
Despite concerns over Yanukovych’s human rights record and corruption issues, the lobbyists found an opening to bind Washington closer to Kiev. “We weren’t really buying the line that we should ignore the human rights concerns,” said a former State Department official who met with Podesta lobbyists and requested anonymity to describe the meeting. “But we didn’t want to turn our back on Ukraine.”
On Capitol Hill, aides perceived the campaign as a run-of-the-mill lobbying effort. While in Washington, Klyuyev met with Rep. Tim Murphy (R-Pa.), the co-founder of the Congressional Natural Gas Caucus, and later traveled to his Pennsylvania district, a hot spot of shale gas production. Ukraine at the time was eager to develop its own shale gas resources. “This kind of thing happens all the time,” said one Murphy aide.
Concerns over corruption, human rights, and governance had made European officials leery of propping the door wide open to Ukrainian EU membership. But the lobbyists’ message to Washington was, “Don’t let that get in the way of bringing Ukraine into the fold,” said one of the sources familiar with the lobbying effort.
“Another way to look at it could be to say that the campaign was trying to whitewash the terrifically corrupt and kleptocratic system that Yanukovych was running at the time and put a friendly face on it when in fact it was something very different,” said Hannah Thoburn, a research fellow at the Hudson Institute.
Individuals who met with Podesta lobbyists say there was little doubt that the firm was working on behalf of the Yanukovych government, with ECFMU as their ostensible client. “They were actually very upfront about the fact that this group was connected to the government,” said one former Barack Obama administration official, who requested anonymity to describe the encounter.
“It was clear they were representing the Ukrainian government,” said the head of a Washington advocacy group.
A spokesperson for Podesta said its employees at all times made clear that their client was ECFMU, not the Ukrainian government.
As Mercury and Podesta made friends for Kiev in Washington, Yanukovych attempted to play the EU and Russia against one another. The Ukrainian leader gave the EU the impression he would sign an association agreement to bind his country to the union, all the while demanding additional financial support from Brussels. Under intense pressure from Moscow and promises of financial aid and lower gas prices, Yanukovych balked at the last minute.
When he refused to sign the EU deal at a summit meeting in Vilnius, Lithuania, on Nov. 29, 2013, Ukrainians poured into city streets in protest, and the resulting popular uprising soon toppled Yanukovych and laid bare his regime’s fantastic corruption.
Documents revealed Klyuyev, the parliamentarian whom Weber had shepherded around Capitol Hill, as the owner of the president’s fantasyland estate, Mezhyhirya, complete with a private zoo, a collection of rare cars, and even a pirate ship. Ukrainian prosecutors have accused Klyuyev and his brother, who served as Yanukovych’s chief of staff, of fraud related to illegal privatizations and failing to repay loans in excess of $500 million.
Described by anti-corruption activists as one of the masterminds of Yanukovych’s kleptocracy, Klyuyev fled the country in 2015 before he could be arrested. That year, the U.S. Treasury Department sanctioned Klyuyev’s brother, Andriy, for his role in raiding Ukrainian state coffers.
Serhiy Leshchenko, a crusading Ukrainian journalist and now a member of parliament, described the Klyuyev brothers as Yanukovych’s “most loyal and permanent allies.”
“They were architects of Yanukovych’s autocracy and widespread corruption,” Leshchenko said. “They were not only political partners but also in business with Yanukovych.”
Even if their campaign had been for naught, ECFMU represented good business for Podesta and Mercury. Podesta netted $1.2 million for the work; Mercury took home $720,000. In his FARA disclosure filed last week, Manafort revealed that he received more than $17 million in payments from Yanukovych’s Party of Regions.
Podesta, Mercury, and Manafort all maintain that they followed the law in disclosing their lobbying activities, and they are unlikely to face legal consequences for failing to immediately register as foreign agents. The Justice Department historically does not prosecute FARA violators and works to bring them into compliance with the law, rather than filing charges.
In the months since Trump’s election, Manafort has become a liability for the president. The Republican operative’s work on behalf of Yanukovych, currently in exile in Russia, has become a prime example of Trump’s connections to pro-Kremlin figures.
And while Manafort took on lucrative work for a politician now recognized as a Kremlin pawn, there’s a certain irony to the campaign he helped organize: Podesta and Mercury’s Washington operation aimed to bring Ukraine toward the EU and away from Russia, undermining a Kremlin foreign-policy objective.
That lobbying campaign bought the Yanukovych regime time to make its case at high levels of the U.S. government — and Ukrainian officials absolutely loved it. On visits to Washington, Yanukovych’s foreign minister, Leonid Kozhara, would brag about how his government’s lobbying efforts had opened doors, said Anders Aslund, a senior fellow at the Atlantic Council and a well-connected expert on Russian and Ukrainian affairs.
“He boasted how extremely good relations they had with both parties thanks to Podesta and Mercury,” Aslund said. “He loved it that he had all this access. It was all about getting access.”