2014

Oleg Deripaska sues Paul Manafort for $18.9 million

Involving
Oleg Deripaska
Paul Manafort
Konstantin Kilimnik

Oleg Deripaska sues Paul Manafort for allegedly failing to recover $18.9 million Deripaska had invested in a failed joint venture to acquire the Ukrainian company Black Sea Cable. Though Manafort claimed in 2016 that the suit had been resolved, and his spokesman said the case “is dormant and will not be pursued further,” according to The Washington Post, “there are no signs in court documents that the case has been closed.”


Paul Manafort is a longtime American consultant and political operative who served as Donald Trump’s second campaign chairman. After serving in the Reagan administration, Manafort co-founded the lobbying firm Black, Manafort, Stone, and Kelly, which became known as “The Torturers’ Lobby” for its work on behalf of dictators like Ferdinand Marcos and Mobutu Sese Seko and rebel leader Jonas Savimbi. Prior to joining the Trump campaign in March 2016, Paul Manafort worked extensively to advance Russian interests in Ukraine and the United States.

In 2004, Manafort began a decade-long relationship with the pro-Russia Ukrainian politician Viktor Yanukovych and his Party of Regions, helping them gain power by capitalizing on pro-Russia, anti-NATO sentiment in Eastern Ukraine. For at least part of the time that Manafort worked with the Party of Regions, he did so as an unregistered foreign agent, and only properly registered in June of 2017 for work he did between 2012 and 2014. Manafort ultimately resigned from the Trump campaign because investigators in Ukraine found secret ledgers listing more than $12 million in off-the-books payments to Manafort from the Party of Regions (Manafort’s lawyer has said that Manafort did not receive “any such cash payments.”)

Manafort’s failure to register brought scrutiny from the FBI; according to CNN, the FBI had been investigating Manafort’s extensive unregistered work in Ukraine since at least 2014. That year, the FBI received a warrant from a federal court to surveille Manafort’s communications, including by wiretapping his phones, under the Foreign Intelligence Surveillance Act (FISA). After the initial FISA warrant expired in 2016, the FBI received a second warrant that extended at least into early 2017, although sources have said that the FBI was not listening to his communications in June 2016.

Manafort has been linked to Ukrainian billionaire Dmitry Firtash, whom Bloomberg has described as “Putin’s handpicked surrogate” in the Ukrainian natural gas industry. In a civil court case filed in the U.S. in 2011, former Ukrainian Prime Minister Yulia Tymoshenko alleged that Manafort and Firtash collaborated on a Manhattan real-estate project that doubled as a money-laundering operation. Firtash has denied the charges and accused Tymoshenko of lying, while Manafort has said that the deal with Firtash “never got off the ground;” the case was ultimately rejected on jurisdictional grounds.

Manafort also has a long track record of business with Oleg Deripaska, a Russian oligarch and aluminum magnate who was described in a 2006 diplomatic cable as “among the 2-3 oligarchs Putin turns to on a regular basis” and “a more-or-less permanent fixture on Putin’s trips abroad.” In 2006, Manafort signed a $10-million annual contract with Deripaska to lobby American officials to “greatly benefit the Putin government” as part of a $60-million-plus business relationship. Manafort allegedly owes Deripaska at least $19 million from a failed business deal in Ukraine, and offered the billionaire secret briefings on the Trump campaign. Manafort has denied that his work with Deripaska “involve[d] representing Russia’s political interests.”

In 2007, Manafort and Deripaska co-founded the private-equity firm Pericles Emerging Market Partners in the Cayman Islands with the intent of investing in the Eastern European telecommunications market. According to The New York Times, Deripaska agreed to commit as much as $100 million to the endeavor, which began with an investment of nearly $18.9 million to purchase the Yanukovych-linked Ukrainian company Black Sea Cable. The deal failed, leading to a falling out that has played out in part through a lawsuit in the Cayman Islands involving Deripaska suing Manafort seeking to recover his initial investment (although Manafort has indicated that the legal matter was resolved, The Washington Post has disputed this account, and the status of the case is unclear.)

Emails obtained by journalists at The Washington Post and The Atlantic seem to indicate that Manafort saw his involvement in the Trump campaign at least in part as a means of resolving his legal conflict with, and debt to, Deripaska. In an April 11, 2016, email conversation with his former business associate Konstantin Kilimnik, Manafort reportedly asked whether “our friends,” including “OVD”—initials believed to stand for Oleg Vladimirovich Deripaska—had seen the media coverage surrounding his joining the Trump campaign two weeks prior. Manafort reportedly went on to ask Kilimnik, “How do we use to get whole?” Manafort’s spokesman Maloni has denied this interpretation, calling the emails “innocuous” and characterizing them as an attempt by Manafort to collect on, rather than repay, debts. Deripaska’s spokeswoman in turn denied that Deripaska owes Manafort any money, and denied any communication between Deripaska and Manafort during the election. Kilimnik has not yet publicly commented on the subject. On July 7, 2016, Manafort made what could be considered as another attempt to make peace with Deripaska, reportedly suggesting to Kilimnik that he would be able to provide private briefings to Deripaska’s aide during the campaign.

Though Manafort’s official participation in the Trump campaign lasted just less than five months, he has nevertheless emerged as a key focus of Robert Mueller’s investigation into the campaign’s collusion with Russia because of the timing and substance of his involvement. Manafort has been tangentially connected with Trump since the 1980s, when the Trump Organization briefly contracted with Black, Manafort, Stone, and Kelly to lobby the government on gambling and real estate, although there is little reason to believe they had anything more than cursory interactions prior to the 2016 election. Manafort ultimately joined the Trump campaign in March 2016. His method of doing so was itself unusual: According to The New York Times, Manafort began writing unsolicited emails to Trump offering advice about how to run the campaign in late February. According to Thomas Barrack, a long-time Trump associate who has known Manafort for decades, Manafort at one point told him, “I really need to get to” Trump. Manafort officially joined the campaign as an unpaid adviser on March 28 to help coordinate delegate-counting efforts for the Republican National Convention, and went on to become Trump’s campaign chairman on May 19, still as an unpaid position.

Perhaps the single most notable occurrence during Manafort’s tenure was the June 9, 2016 meeting at Trump Tower between representatives of the Trump campaign and several Russian individuals claiming to represent the Russian government and offering damaging information on Hillary Clinton as “part of Russia and its government’s support for Mr. Trump.” Manafort was present at this meeting; according to CNN, the FBI obtained his notes on the encounter in a pre-dawn raid of his home in July 2017.

Ultimately, Manafort’s past scandals caught up to him. On August 14, The New York Times reported that Ukrainian anti-corruption investigators had found handwritten ledgers listing $12.7 million in previously undisclosed payments to Manafort from the Party of Regions. Though Manafort has denied any wrongdoing, on August 19, he resigned as Trump’s campaign chairman, and was replaced by Steve Bannon.

Manafort has emerged as a central focus of special counsel Robert Mueller’s investigation into collusion between the Trump campaign and Russian operatives, and became one of the first members of Trump’s circle indicted in association with the case. On July 26, 2017, the day after he met with the Senate Intelligence Committee to discuss the June 9 meeting in Trump Tower, Mueller’s team reportedly conducted a pre-dawn, no-knock raid of Manafort’s home in Alexandria, Virginia. In court filings, Mueller’s team has disputed reports about the raid, claiming they did not pick the lock to enter Manafort’s home. On October 27, Mueller’s team indicted Manafort and his long-time business associate Rick Gates on 12 counts, including conspiracy against the United States and money laundering. Initially, Manafort and Gates pleaded not guilty to both charges on October 30, 2017. On February 16, 2018, the Office of the Special Counsel added five charges against Manafort, including Conspiracy Against the United States and Conspiracy to Launder Money. On February 22, Mueller’s team filed 32 additional charges against Manafort and Gates, including bank and tax fraud. The following day, Gates submitted a guilty plea in exchange for his cooperation in the investigation. In doing so, Gates pleaded guilty “to one count of conspiracy against the United States and one count of making false statements to FBI agents.” The other charges against Gates, including bank and tax fraud, were dropped in the plea agreement. On June 8, 2018, Mueller filed a third superseding indictment against Manafort and a business associate, Konstantin Kilimnik, which added charges related to obstruction of justice. Kilimnik has issued no response to the indictment. Also in June, the Special Counsel accused Manafort of witness tampering, alleging that he had attempted to communicate with witnesses by telephone and encrypted messages. Since then, Manafort has been held in jail in Virginia as he awaits trial.

Ever since Manafort’s initial indictment, the White House has attempted to distance itself from the charges, asserting that they stem from activities that happened prior to Manafort and Gates joining the campaign and are unconnected to allegations of collusion.

On August 21, 2018, a federal jury in Alexandria, Virginia, found Manafort guilty on eight charges, including tax fraud, hiding foreign bank accounts, and bank fraud. The judge declared a mistrial on 10 other charges. Manafort is still scheduled to go on trial in the District of Columbia in September. This separate case includes conspiracy to defraud the United States, failure to register as a foreign agent, witness tampering, money laundering, and making false statements.

On September 14, before Manafort’s trial for a separate case in the District of Columbia on charges including conspiracy to defraud the United States, failure to register as a foreign agent, witness tampering, money laundering, and making false statements, he entered into a plea deal with federal prosecutors. In this, Manafort agreed to plead guilty to conspiracy to defraud the United States and witness tampering, cooperate fully with the Special Counsel, and forfeit more than $22 million in assets.

In a November 2018 court filing, the Special Counsel’s office alleged that Manafort had repeatedly lied to federal investigators, breaching his plea agreement.

Ukraine