House of Trump, House of Putin2

by Craig Unger

  A self-proclaimed libertine, Stone displayed a photo in his Miami office of himself clad only in a banana hammock, standing poolside next to porn star Nina Hartley. If the photo had shown him from behind, you’d have seen the face of Richard Nixon tattooed on his back. All of which made him catnip to reporters, who couldn’t resist the bravado of a spinmeister who walked down the aisle of press buses and called out, “I’m here. Who needs to be spun?”15

  Next to Stone, Manafort was relatively understated, although over time, he cultivated a more lavish globetrotting lifestyle in keeping with the oligarchs he worked for. Putting on his long overcoat with a grand sweeping gesture, he cut such a swashbuckling figure that friends reportedly dubbed him “the Count of Monte Cristo.”16

  But in general, he played his cards close to his vest, befitting a protégé of George H. W. Bush’s consigliere, James Baker.17 Baker was all smoothness and charm, the Velvet Hammer, always proper, but a man no one wanted to cross. “From Baker, [Manafort] learned the art of ostentatious humility,” writes Franklin Foer in the Atlantic,18 “how to use the knife to butter up and then stab in the back.”

  Together, Manafort and Stone rewrote the rule book on lobbying, bundling political consulting, public relations, and other services into an operation that Time magazine called “the ultimate supermarket of influence peddling.”19

  Before long, they went global, and took an almost perverse and giddy pride in representing the most brutal tyrants on the planet—including Iraq’s Saddam Hussein, Nicolae Ceauşescu of Romania, Zairean dictator Mobutu Sese Seko, and regimes that enslaved children and murdered priests. “Black, Manafort, Stone, and Kelly lined up most of the dictators of the world we could find,” Stone crowed.20 The firm’s propensity to represent dictators—rulers from the Dominican Republic, Nigeria, Kenya, Equatorial Guinea, and Somalia were also clients—was such that the Center for Public Integrity included them in a report titled “the Torturers’ Lobby.”21

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  So on some level, working for Yanukovych in Ukraine was more of the same for Manafort. On the other hand, Ukraine was a real geopolitical tinderbox. At a time when the EU and NATO were inching ever closer to Russia’s borders, Putin was determined that Ukraine not fall into the West’s sphere of influence.

  Manafort’s work in Ukraine began in late 2004 when he was hired as general consultant to the Party of Regions to transform Yanukovych’s image from that of the archvillain of the Orange Revolution and a pawn of Putin, to that of a pro-West reformer who was one of Ukraine’s most popular politicians.22

  And so, Manafort operatives moved into a small office for six to eight people on the first floor of 4 Sofievskaya Street in Kiev.23 Ukrayinska Pravda described the office as mysterious and noted that the windows were curtained all day long. When journalists approached they were politely told to leave and not come back.24

  Over the next decade, Manafort made at least 138 trips to Ukraine25 in a spectacularly lucrative relationship that also took him into the shadowy world of flight capital, offshore shell companies, banks in Cyprus, and Russian agents.

  Far more than a mere political consultant, Manafort had the kind of power in Ukraine that American intelligence operatives and oil executives had brandished back in the Cold War era, when covert operations staged coups in Guatemala or Iran. Manafort, however, had found a way to undertake his operations without being in any way attached to the United States government—indeed, often working against America’s stated policies, all while making tens of millions of dollars,26 much of which, according to an indictment that was later filed, went into foreign tax havens and then into real estate, antique rugs, expensive cars, and other instruments used to avoid taxes.27 His deputy Rick Gates, who played a key role in Manafort’s Ukraine operation, explained to a group of Washington lobbyists, “Paul has a whole separate shadow government structure . . . In every ministry, he has a guy.”28

  At the time, Russian intelligence agents had penetrated the highest levels of power in various institutions throughout Ukraine,29 and Manafort’s operation was no exception. His most trusted protégé, Konstantin Kilimnik, who was affectionately known as KK, was a case in point. Also called “Manafort’s Manafort,”30 because he was his boss’s right hand, Kilimnik, though just over five feet tall next to the six-foot-plus Manafort, aped his employer in many ways, the Atlantic reported, driving the same BMW and wearing similar designer suits.31 But what was most interesting about Kilimnik was that the man Paul Manafort so heavily relied on in Ukraine was a foot soldier for Russian intelligence.

  Kilimnik told the New York Times he had no ties to Russian intelligence, but in fact he had studied at the Military Institute of the Ministry of Defense in Moscow, which trains interpreters for the Russian military intelligence agency, formerly known as the GRU and now called the Main Directorate.32 Moreover, according to Phil Griffin, a longtime political consultant with Manafort who hired Kilimnik in the early 2000s to work at the International Republican Institute in Moscow, “he was completely upfront about his past work with Russian military intelligence. It was no big deal.”33

  Given the language barrier, Kilimnik became crucial. “Because Paul doesn’t speak Russian or Ukrainian, he always had to have someone like that with him in meetings,” said one operative who worked with Manafort.34 “So KK was with him all the time. He was very close to Paul and very trusted.”

  Assisting Manafort covered a lot of ground. Manafort and his team launched a potent disinformation campaign to discredit Yanukovych’s rivals using covert operations that could have been pulled straight out of the KGB playbook. According to the Guardian, Manafort worked with former Wall Street Journal and Financial Times reporter Alan Friedman to propose an ambitious strategy to discredit rival Yulia Tymoshenko all over the world.35

  They set about smearing Ukrainian opponents of Yanukovych by rewriting their Wikipedia entries. They set up a phony think tank in Vienna called the Center for the Study of Former Soviet Socialist Republics, which proceeded to disseminate articles supporting Yanukovych. When then–secretary of state Hillary Clinton publicly supported Yulia Tymoshenko, Manafort’s team allied with Breitbart, the right-wing news site, to attack Hillary for creating “a neo-Nazi Frankenstein.”36

  Thanks to his work with Yanukovych, Manafort was soon fully conversant with a network of oligarchs including aluminum billionaire Oleg Deripaska, coal and steel tycoon Rinat Akhmetov, and natural gas magnate Dmitry Firtash. “Manafort was introduced by Yanukovych’s people to Firtash, Deripaska, and others and it opened up a whole new world for him,” said Kenneth McCallion.37

  Now the money began to roll in. In late 2004, Deripaska dispatched Manafort to the eastern Ukraine city of Donetsk, the Wall Street Journal reported, where he met Rinat Akhmetov. A billionaire financier behind the Party of Regions, Akhmetov agreed to pay Manafort’s firm roughly $12 million to provide corporate strategy and branding assistance for his holding company, System Capital Management.38

  Less than a year later, in 2005, according to the Associated Press, Manafort began a secret deal with Deripaska whereby Manafort’s firm was paid $10 million39 per year to influence politics, business dealings, and media coverage inside the US, Europe, and the former Soviet republics in a way that would benefit Vladimir Putin’s government.

  Deripaska was “among the 2–3 oligarchs Putin turns to on a regular basis,” according to a diplomatic cable published by WikiLeaks, so Manafort clearly knew whose interests were being served.40 “We are now of the belief that this model can greatly benefit the Putin Government,” Manafort wrote in the proposal.41 He added that his firm would “be offering a great service that can re-focus, both internally and externally, the policies of the Putin government.”

  Lobbyists serving the interests of foreign governments are required to register with the Justice Department under the Foreign Agents Registration Act.42 However, Manafort did not bother to register until June 2017.43

  In summer 2005, Manaf
ort went to Moscow before Ukraine’s parliamentary elections and met with Yanukovych, Akhmetov, and other influential Ukrainians tied to the Party of Regions. At times, Yanukovych made noises about cooperating with the US.

  But Ambassador John Herbst told the Daily Beast that such sentiments stopped as soon as they infringed “upon [Yanukovych’s] core interests in Ukraine, which were related—among other things—to ensuring his friends got their share of the national pie, and things that might have ticked off the Kremlin.”44

  Articulating pro-West sentiments was terrifically popular with voters, especially in the western half of the country, during electoral campaigns. But Yanukovych’s heart—and wallet—were in Moscow. “He was out for the good of himself, his group, and also his country, starting with himself and his group,” said Herbst. “And for that, having a good relationship with the U.S. was a counter to being overly dependent on the Kremlin.”

  As for Manafort, Herbst noted that the Party of Regions, “long a haven for Donetsk-based mobsters and oligarchs,” had taken on Manafort for an “extreme makeover” to “transform its image into that of a democratic political force.”45

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  Meanwhile, Manafort began to live an outrageously extravagant lifestyle commensurate with his huge income. He bought a brownstone in New York and a home in Arlington, Virginia. He got three Range Rovers and a Mercedes-Benz, and paid for expensive improvements at his homes in the Hamptons and Palm Beach, Florida.46 But he brought in so much money from Ukraine that in order to hide it from US authorities, he allegedly laundered it through scores of United States and foreign corporations, partnerships, and bank accounts, and allegedly filed false income tax returns, failed to file foreign bank reports, and engaged in bank fraud conspiracy.* 47

  In all, Manafort is said to have deposited $75 million in offshore accounts.48 He also allegedly laundered more than $30 million in income by purchasing property, goods, and services such as valuable antique rugs, automobiles, real estate, landscaping, and home improvements for his house in the Hamptons and hiding the income from the US Treasury.49 Richard Gates is said to have transferred more than $3 million from the offshore accounts to other accounts he controlled.

  Among the offshore companies Manafort used to wire millions of dollars to the United States was a shell company called Lucicle Consultants Limited. It was held in the name of Ukrainian businessman and legislator Ivan Fursin, who was “a senior figure in the Mogilevich criminal organization,” Taras Kuzio, a fellow at the Johns Hopkins School of Advanced International Studies’ Center for Transatlantic Relations, told the Daily Beast.50 Among many other transactions with Lucicle, Manafort allegedly transferred more than $1.3 million to a home improvement company in the Hamptons.51

  In the meantime, for candidate Yanukovych, the makeover had begun. Manafort and Yanukovych became friends. They played tennis together at Mezhyhirya. Manafort had the good sense to let Yanukovych win.52 As reported by the Atlantic, they swam nude together outside the banya (sauna). Manafort was given to wearing fine Italian suits. He got Yanukovych to do the same. Manafort combed his hair back. Ditto for Yanukovych. Manafort taught him how to make small talk53 and how to wave to a crowd. “Manafort taught Yanukovych how to speak, how to become a Western type of candidate, a media star,” said Ken McCallion.54

  Manafort introduced polling techniques, microtargeting, and voter turnout practices that were standard operating procedure in the US.55 He even taught Yanukovych to steal lines from American politicians. “I understand your dreams,” Yanukovych told supporters at a rally, before he borrowed an oldie but goodie from Bill Clinton’s repertoire.56 “I feel your pain, and I share in your desire to make Ukraine a land of opportunity.”

  In 2006, Yanukovych’s Party of Regions did far better than anyone expected in the parliamentary elections, resulting in Yanukovych’s becoming prime minister. That put Manafort in a position to ask for—and get—more and more money. Every time he submitted extravagant bills, Yanukovych simply asked other oligarchs to chip in a million or so.57 There was no end in sight.

  One major source of the funds was Dmitry Firtash, whose billions, Reuters reported, grew out of “remarkable sweetheart deals brokered by associates of Russian leader Vladimir Putin, at immense cost to Russian taxpayers.”58 His money, of course, came from the billions of dollars skimmed off the top of the energy trade—principally Turkmen and Russian natural gas—in Ukraine by RosUkrEnergo at bargain-basement prices and resold at much higher Western market prices.

  In March 2008, US ambassador to Russia William Burns tried to get to the bottom of what RUE really was by meeting with a representative of the company, who, he cabled, “seemed like a man who had received instructions to reveal nothing and who was very comfortable in that role. Our meeting with him helped confirm that RUE has little interest in revealing its inner workings.”59

  On paper, RUE was half owned by Gazprom and half by Firtash and Ivan Fursin. But as Yulia Tymoshenko, the braided leader of the pro-West Orange Revolution who became prime minister of Ukraine in 2005, alleged, they were just fronts for a powerful and familiar name in organized crime. “When I was the Prime Minister,” she said, “we provided the President of Ukraine with documented proof that some powerful criminal structures are behind the RosUkrEnergo company. I can only say as a politician: we have no doubts whatsoever that the man named Mogilevich is behind the whole operation called RosUkrEnergo.”60

  Nevertheless, RUE continued to rake in the dough. Between 2010 and 2014 alone, according to Russian customs documents detailing the trade, Gazprom sold more than twenty billion cubic meters of gas at prices so low that Firtash and—possibly—Mogilevich made more than $3 billion.61 In addition, bankers close to Putin gave Firtash up to $11 billion in credit, which positioned Firtash to become a dominant player in Ukraine’s chemical and fertilizer industry and a major backer of pro-Putin political factions in Ukraine, and to fund Manafort. Just as Putin had used the state assets of the Russian people to enrich political allies, now he was doing the same with Firtash and Mogilevich in Ukraine, which was so vital to Putin’s strategic interests.

  The high stakes became more than apparent in December 2007, when Ukraine’s leadership changed hands and Yulia Tymoshenko, the opposition leader, became prime minister. Suddenly, the billions of dollars being siphoned off from the Ukraine energy trade through the Mogilevich-Firtash money pipeline were at risk. And in January 2009, Prime Minister Tymoshenko finally engineered a deal that eliminated RUE as an intermediary in gas transactions.62 RUE claimed that this amounted to a confiscation of its property.

  Yanukovych too had a change in fortune on the horizon. As of 2010, Manafort had been successful in reinventing him as a pragmatic businessman and a “new-born democrat.”63 By 2013, however, that façade had been stripped away when massive nationwide protests erupted, sparked by President Yanukovych’s sudden decision to suspend the promised signing of a trade agreement with the European Union and instead be closer to Russia.64 He was doing everything Putin wanted, which sparked massive protests in Maidan (Independence) Square, the central square in Kiev. In the Orange Revolution of 2004, Yanukovych had been forced to give up the presidency in response to protests. Once again, he was the target as violence escalated during months of protests centered around Maidan Square. In the end, nearly one hundred activists and seventeen police officers were killed.

  Finally, on February 21, 2014, President Yanukovych signed the Agreement on Settlement of the Political Crisis in Ukraine. The next day, Yanukovych tried to flee by charter plane but was stopped by border guards.65 He finally escaped to Russia on February 23. Within twenty-four hours, he had been put on Ukraine’s most wanted list and had become the target of a criminal case regarding the mass killings of civilians who were demonstrating.66 Wanted by Ukraine for high treason, Yanukovych went into exile in Russia.

  And what of the puppet master? What role, if any, did Paul Manafort have in all this? It was not clear exactly who w
as behind Yanukovych’s decision to crush the protesters with force, but human rights lawyer Eugenia Zakrevskaya called on Manafort to clarify allegations that he may have played a role in the events that occurred in Kiev between February 18 and 20, 2014.

  No conclusive evidence has surfaced regarding Manafort’s role in the Maidan violence, but the allegations clearly struck close to home, according to text messages hacked from the phone of Manafort’s daughter Andrea. In March 2015 Andrea texted her sister, Jessica, saying their father had “no moral or legal compass.”

  “You know he has killed people in Ukraine?” she wrote. “Knowingly. As a tactic to outrage the world and get focus on Ukraine. Remember when there were all those deaths taking place. A while back. About a year ago. Revolts and what not. Do you know whose strategy that was to cause that, to send those people out and get them slaughtered.67

  “Don’t fool yourself,” Andrea texted. “That money we have is blood money.”

  CHAPTER SEVENTEEN

  WAR BY OTHER MEANS

  As the Ukraine crisis was building to a boil, a short story called “Without Sky” was published in a literary magazine called Russian Pioneer. Set in the future, after the “fifth world war,”1 “Without Sky” was written by Natan Dubovitsky, whose literary endeavors would have been considerably less noteworthy were it not for the fact that his real name was Vladislav Surkov and from 2011 to 2013, as deputy prime minister to Vladimir Putin, he served as the Kremlin’s chief ideologue and “gray cardinal.”

  As Soviet-born British author Peter Pomerantsev put it, Surkov, “‘the puppet master who privatised the Russian political system’ . . . is the real genius of the Putin era,”2 a man who is essential to understanding how Putin created a new strain of authoritarianism that was far more subtle and more understated than the epic spectacles from the previous century.