Paul Manafort, former campaign manager for Donald Trump, exits the U.S. Courthouse in Washington, D.C. (Photographer: Zach Gibson/Bloomberg)

The Real Promise of the Manafort Indictment

(Bloomberg View) -- The indictment of Paul Manafort will be an enormous source of speculation for weeks and months to come. But Special Counsel Robert Mueller has already achieved something significant, if underappreciated so far: He opened a far more promising line of inquiry into the reasons why the U.S. political establishment is broken -- on both the Republican and the Democratic side. It would take substantial courage and political will to pursue it further.

Manafort and his partner Richard Gates have been indicted for hiding from U.S. authorities their work for former Ukrainian President Viktor Yanukovych and the money they received for this work. That money is part of an avalanche of post-Soviet cash that hit Washington in the last two decades. The Foreign Agent Registration Act database lists a total of 211 "foreign principals" from Russia that have hired U.S. lobbying, public relations and law firms to represent them, 78 "foreign principals" from Ukraine, 54 from Georgia, 44 from Azerbaijan, 34 from Kazakhstan, and 19 from Uzbekistan. That is probably far from the full list. One of the counts of the Manafort indictment is failure to register as a foreign agent under FARA.

The countries that hired the high-powered Washington firms and paid them top dollar are well-known for their high levels of corruption. Azerbaijan ranks 123rd on Transparency International's 2016 Corruption Perception Index; Russia and Kazakhstan rank 131st; Uzbekistan 156th. Both government and private entities with government connections in these countries have things to spin and things to cover up. They pay extremely generously for the work, as the indictment shows. It says Manafort and Gates made more than $75 million working for Yanukovych and his Party of Regions between "at least 2006 and 2015." 

Yanukovych is often called a pro-Russian leader, and while he tried to steer a middle course for Ukraine between ties to Russia and the European Union, his personal sympathies were with the like-minded regime of Vladimir Putin in Moscow. When it came to political technology, though, Yanukovych was firmly pro-American. After a team of Russian consultants led by Kremlin veteran Gleb Pavlovsky led his disastrous 2004 presidential campaign -- which ended in riots over vote-rigging; a recount; and a win for his rival, Viktor Yushchenko -- Yanukovych wanted as little to do with Russian "experts" as possible. When Ukraine's richest man, Rinat Akhmetov, a longtime backer and major donor, led him to Manafort in 2005, Yanukovych grabbed on with both hands and wouldn't let go even after his longtime campaign manager resigned because he didn't trust Americans. The U.S. experts trained Yanukovych -- even up to his gesticulations and mannerisms -- and fine-tuned his campaign machinery so that when he won the presidency in 2010, there was no repeat of the 2004 events.

Soon, Yanukovych and his allies found out that U.S. expertise available to them knew no party boundaries. Both Republicans and Democrats were happy to take their money. After the Manafort indictment was released on Tuesday, Democratic lobbyist Tony Podesta resigned from his company, the Podesta Group, because the firm is reportedly the "Company B" referred to in the indictment as a recipient of funds for lobbying "multiple Members of Congress and their staffs about Ukraine sanctions, the validity of Ukraine elections, and the propriety of Yanukovych's imprisoning his presidential rival Yulia Tymoshenko."

Yanukovych paid generously, but the provenance of the money was always murky. In February 2014, days after Ukraine's Revolution of Dignity, journalist Oleksandr Akymenko, then a colleague in Kiev, showed me the spot on the grounds of Yanukovych's abandoned country residence, Mezhihirye, where a team of investigative journalists had fished out of a reservoir the deposed president's "black ledgers." The reporters used a sauna on the grounds to dry out the books, dumped by Yanukovych's fleeing staff, in which contributions and payouts were entered by hand; they were published on a Ukrainian website and now sit with the public prosecutor. Some names next to the entries were well-known, others less so. Manafort's name appeared in a similar ledger next to records of a total of $12.7 million in payouts. In June 2017, Ukraine's special anti-corruption prosecutor Nazar Kholodnitsky declared there was no proof Manafort had ever received the money.

The U.S. and European Union later imposed sanctions against Yanukovych and his inner circle for corruption. But his successors showed little interest in recovering the fortunes they were accused of pumping out of the country -- one major obstacle to any Western efforts to find and freeze these assets, required by the sanctions. Their money is still assumed to be parked in Western banks through a network of offshore companies, though the ex-president and many of his friends now live in Russia.

But the Mueller investigation has showed that where there's a will, there's a way. Mueller didn't need Manafort's signature in the Yanukovych ledgers to track the money that was, according to the indictment, paid to the political consultant for work in Ukraine. It's only a step from there to finding the sources of the payments, and from there to locating the Yanukovych team's Western assets. Serhiy Leschenko, the Ukrainian legislator and former investigative journalist who broke the story of the ledger with the Manafort payouts, celebrated the indictment because it traced "money stolen from Ukrainian taxpayers."

Should U.S. taxpayers care about it, though? The answer is yes. The Manafort case promises to lead a diligent investigator to stashes of dirty post-Soviet money that represent a bigger threat to U.S. democracy than any leaked emails or Russian-bought Facebook ads. It would be naive to imagine that, after working for years for Yanukovych and taking his tainted cash, the consultants didn't bring any of the cynicism and rule-bending prowess to U.S. politics. This is not the kind of baggage one can leave outside the door. The political operatives, spin doctors, lobbyists, and lawyers who have taken the Russian, Ukrainian, Kazakh, Azerbaijani money have contributed to the poisoning of the U.S. political scene. Trump won the election last year on the promise to clean up the swamp they helped create -- but he himself is a creature of that swamp.

An investigation into the origins of the money that fed this toxic culture, and efforts to recover it and cut off its circulation, would do the U.S. a world of good by helping to clean up both major parties. Mueller’s mandate is by no means that broad. And it's hard to imagine a real estate billionaire who keeps his taxes secret and his business private leading the charge. It would be left to U.S. law enforcement agencies to take the lead. American voters and the U.S. political elite need to realize where the real "Russian threat" -- or, more broadly, post-Soviet threat -- lies, and start fighting it. It won’t be easy. But it'll be more productive than going after Russian propaganda and disinformation.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Leonid Bershidsky is a Bloomberg View columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.

For more columns from Bloomberg View, visit http://www.bloomberg.com/view.

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