When Paul Manafort’s second federal trial begins in a Washington court this September, President Trump’s former campaign manager will defend charges that he violated the Foreign Agents Registration Act (FARA) by misrepresenting his lobbying work while advocating for the disgraced former Ukrainian President Viktor Yanukovych. Manafort is alleged to have lobbied elected U.S. officials on behalf of Yanukovych, while claiming his activities in Ukraine were domestic political consulting. But, a recent article on lobbying at the annual National Prayer Breakfast, shows international influence peddling from Ukraine and elsewhere is extensive in Washington.
A case in point is Yanukovych’s former political nemesis Yulia Tymoshenko, a perennial presidential candidate and leader of Ukraine’s opposition party Batkivshchyna (“Fatherland”). As reported in The Hill, Tymoshenko was at the center of a lobbying scandal between former Trump campaign advisor Barry Bennett’s Avenue Strategies and Two Paths, LLC which raised questions about who was ultimately paying for advocacy services on behalf of the Ukrainian politician. A search of Delaware’s Division of Corporations website shows the limited liability corporation (LLC), ostensibly formed to serve as a “middleman” for paying for Tymoshenko’s lobbying, was created on February 13, five days after the Ukrainian politician’s appearance at the National Prayer Breakfast in Washington. The $65,000 monthly fee for Tymoshenko’s representation far exceeded Tymoshenko’s annual income declaration ($33,975) filed with the Ukrainian government. Ukrainian law prohibits Tymoshenko as a Member of Parliament from accepting a gift of any form for the amount of the monthly fee due to Avenue Strategies.
When questions arose regarding the source of funding for the LLC, which had signed the contract with Avenue Strategies for Tymoshenko’s lobbying and was managed by Marlen Kruzhkov, a US attorney who previously stated he represented Russian oligarchs, the contract was terminated. Kruzhkov’s past representation of Russian oligarchs “raised the issue of who in fact was paying [Tymoshenko’s] bill and for what reason.” Tymoshenko’s strategy was to benefit from a Trump-connected Washington lobbyist, have an opaque third-party pay for these services, while simultaneously underreporting her wealth declaration in Ukraine. She initially accomplished this by exploiting the secrecy of Delaware corporate law, which, according to the Financial Transparency Coalition, allows the creation of “’anonymous companies’ which are perfect for hiding illicit cash.”
U.S. authorities should have prevented Tymoshenko and her American benefactors from exploiting U.S. and violating Ukrainian law, especially when Tymoshenko is a candidate for the 2019 Ukrainian presidential election. As pointed out, financial transparency in Ukraine is undermined by “acceptance of large opaque payments from Ukrainian politicians who cannot, or refuse, to explain the origins of funds.” Until U.S. law enforcement acts to scrutinize funding of foreign lobbying efforts, foreign principals will continue to feel emboldened to continue exploiting loopholes in America, which Tymoshenko is now trying to do a second time.
Four days before Avenue Strategies terminated its agreement with Two Paths, LLC and notified the U.S. Department of Justice (DOJ) that it is no longer Tymoshenko’s foreign agent, an LLC, Innovative Technology and Business Consulting (ITBC), was incorporated in Maryland by Sergei Krasnitski. Once the LLC was formed, Krasnitski, a Web developer for Blue Cross and Blue Shield according to his LinkedIn profile, then signed a $50,000 per month lobbying contract with the Livingston Group for “government affairs representation and lobbying services before the federal government on promotional issues related to Ukraine and any other matters mutually agreed upon.” The Livingston Group registered with the DOJ as the foreign agent for Krasnitski’s LLC on July 6 at 11:46am to “provide government relations and representational services for persons supporting reform in Ukraine.”
That same day at 11:56am, the Livingston Group filed an amendment to its foreign agent registration, notifying DOJ that it disseminated an email to Congress and Executive Branch officials announcing Tymoshenko’s intention to “travel to Washington in mid-July to discuss increasing ties between the US and her country. She is hopeful that you will be willing to meet with her at a time of mutual convenience.” In under ten minutes, the Livingston Group became the Washington lobbyist for Ukrainian opposition leader Tymoshenko, after previously providing nebulous government relations services for an unknown, Maryland-registered LLC.
And, once again, there is no clarity on where the funds from Krasnitski’s LLC, which pays for Tymoshenko’s lobbying services, originate from. If the funds are Tymoshenko’s, how can she pay $50,000 monthly when she underreported her wealth declaration with the Ukrainian authorities? If a third-party such as the LLC is paying for her lobbying, then this is a violation of Ukrainian law because it is illegal for her to accept a gift of this size as a Ukrainian MP.
In light of the Manafort scandal, Congress is currently considering long overdue reforms to existing FARA law. The focus of these bills has centered on cutting out existing lobbying disclosure act (LDA) loopholes and requiring registration for lobbying of foreign owned corporations. This would vastly improve transparency.
But transparency on funding of foreign lobbying projects must be reformed as well. Foreign politicians such as Tymoshenko cannot be permitted to contravene laws in their own country by hiding the source of funding for lobbying services in the United States.