Donald Trump’s campaign chairman Paul Manafort helped a pro-Russian political party in Ukraine secretly funnel more than $2 million to two lobbying organizations in Washington, The Associated Press reported Wednesday.
Citing unidentified sources with knowledge of the effort, the AP reported that the $2.2 million in payments was concealed in order to mask the party’s efforts to influence U.S. lawmakers.
{mosads}Manafort’s ties to Ukraine have come under heavy scrutiny, with critics questioning whether he has played a role in Trump’s favorable statements about the Russian government and its president, Vladimir Putin.
Lobbyists in the U.S. are required by law to register with the Justice Department as “foreign agents” if they receive funding from foreign governments or the leaders of other nations.
The requirements, which are much more stringent than other lobbying requirement, fall under the Foreign Agents Registration Act (FARA) — a law passed during World War II due to fears that the Nazis could influence U.S. policy and public opinion.
From 2012 to 2014, Podesta Group and Mercury earned $2.2 million from the European Centre for a Modern Ukraine, a non-profit organization based in Brussels, according to domestic lobbying disclosure records required under the Lobbying Disclosure Act (LDA).
A legal memo drafted for the firms stated that registration with the Justice Department, and under FARA requirements, was not needed.
The two firms lobbied on several policy issues, including against a resolution that would have slapped sanctions “tailored against persons responsible for the capture of Crimea” and another resolution “condemning the illegal Russian aggression in Ukraine.”
The European Centre for a Modern Ukraine, which has labeled itself as a non-profit research organization, was founded with close ties to the then-ruling party of Viktor Yanukovych and at least one of his primary donors.
Leonid Kozhara, a former foreign minister for Yanukovych’s government, was one of the Centre’s first leaders, according to The Daily Beast.
The Centre was initially governed by a board that included parliament members from Yanukovych’s party, according to the AP report.
The amount of funding or backing the non-profit received from a foreign government or its leaders determine whether an advocate must register as a foreign agent.
Lobbyists in the United States who represent private entities — such as companies and non-profits — that are based abroad do not have to file under FARA, unless those entities receive financial support or influence from foreign leaders or governments.
The AP report cites a legal opinion drafted for Mercury that said that while the Centre could be considered a “foreign principal” under the law, disclosing the work to DOJ was not necessary.
“If counsel had determined FARA was the way to go, we would have gladly registered under FARA,” the firm told AP and The Hill.
Podesta Group confirmed the authenticity of the legal opinion, which was drafted jointly with its in-house counsel and Mercury’s in-house and outside counsel.
Kimberley Fritts, the Podesta Group’s CEO, said the non-profit signed a statement testifying to its independence from Ukraine’s government.
“The firm has a formal process in place, led by in-house counsel, to ensure that we follow the law, which includes determining whether our work for a given client would best be registered and reported under the Lobbying Disclosure Act or the Foreign Agent Registration Act,” Fritts said in a statement to The Hill.
“To further ensure legal compliance, our agreement with the Centre included a signed attestation 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,’” she added.
That might not be enough to skirt a FARA violation, if it is found that the client misrepresented the level of its ties.
“The U.S. entity may still be liable for some violation of FARA if the principal lied to it, but it’s unlikely there would be a criminal prosecution or jail time as long as the U.S. entity did its due diligence,” said Joshua Ian Rosenstein, a partner at Sandler Reiff Lamb Rosenstein & Birkenstock and expert in lobbying compliance.
However, if Manafort or Rick Gates — another Trump campaign strategist who had worked with Yanukovych’s party — had advised the Centre on what U.S. lobby firms to hire at the time, that may also have triggered disclosure for them under FARA.
Prosecutions under FARA are exceedingly rare, in part because the enforcement system favors voluntary compliance. If a firm or individual has not properly disclosed, in other words, simply correcting the disclosures can be sufficient in some cases.
“We were not aware that Rick Gates was a Party of Regions consultant at the time he introduced us to the Centre,” Fritts told The Hill in the emailed statement. “Our assumption was that he was working for the Centre, as we were hired to do.”
In the AP report, Podesta principal John Ward Anderson issued a similar statement.
The report cites Gates as saying that “he and Manafort introduced the lobbying firms to the European Centre nonprofit and occasionally consulted with the firms on Ukrainian politics.”
He characterized the actions as “lawful,” according to the AP, and said there was no effort to get around registering under FARA.
The New York Times reported earlier this week that Manafort’s name was found in a secret ledger in Ukraine, which listed more than $12 million in cash payments to the political operative, which he has since denied receiving.
Manafort did not register under FARA for any of his activities in Ukraine, but the PR giant Edelman did. The firm subcontracted with Manafort’s firm in 2008 to “develop and execute a media campaign” that pumped up Yanukovych in the United States. Edelman billed $35,000 at the start of the contract, and an additional $35,000 per month for its services, according to disclosures.
While it’s unclear if Manafort’s firm ever did work necessitating a registration with the Justice Department, he could have avoided disclosure if he operated solely in the Ukraine.
– This story was updated at 11:40 a.m.