A Rebuke to Kleptocracy – The Atlantic

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A Rebuke to Kleptocracy - The Atlantic


Nobody knows how Monday’s indictment of Paul Manafort and Rick Gates, and the disclosure of a plea deal by George Papadopoulus, fits it into Robert Mueller’s broader investigation of Russian collusion with the Trump campaign. But Mueller’s filings stand on their own as an important rebuke to global kleptocracy. That’s because the American face of the problem is Paul Manafort.

As an international political consultant, Manafort built a career trying to soften the reputation of corrupt rulers. He spent decades shuttling to the palaces of exploitative dictators (Ferdinand Marcos, Sani Abacha, Mobuto Sese Seko) and then presenting them to the press and lawmakers as friends of western democracy, perfectly acceptable citizens of the global order. And, today’s indictment alleges, Manafort also attempted to make his fortune by joining the heist.

I first started writing about Manafort in the April of 2016. But I had never had an inkling of the entirety of his efforts until today: Federal authorities put it at $75,000,000. The sum of money he is alleged to have surreptitiously moved around the world is staggering—and perhaps evidence of how little the global system actually cares about the curse of money laundering. The scale, however, shouldn’t distract from the source. He received his money for rendering a very important service to Kremlin-aligned oligarchs.

In 2004, in the shadow of the Orange Revolution, Manafort first went to work in Kiev. He was brought there by one of the oligarchs closest to Vladimir Putin, Oleg Deripaska. Manafort’s initial task was to assess the protests against the Ukrainian regime, to gauge its possibilities for spreading to other countries and tearing down the entire corrupt post-Soviet order. That order was rightly terrified—and it wanted a state-of-the-art American strategist to help it understand the risks, and how to combat them.

Part of the reason that dictators have always liked Manafort is that he can read a poll. Until relatively recently, polling was primarily an instrument of American politics, with few sophisticated practitioners beyond our borders. So Manafort could waltz into a country, send out a survey, and then enter into a meeting with a deeper understanding of public opinion than any native consultant. Because he managed to correctly predict the outcome of political events in Ukraine, he acquired the aura of a guru.

In Kiev, he took on a tough assignment. His client was Viktor Yanukovych. The Orange Revolution had been directed at him. He had rigged an election and was drummed into self-imposed exile in a Czech resort. Few held out much hope for his political future. But Manafort had good reasons for taking him on as a project.

Good-government types often talk of Mafia States—and that can seem like an exaggeration. But in Ukraine, a group from the old industrial, metallurgical powerhouse of Donetsk attempted to take over the country through its influence in a new political apparatus, the Party of Regions. (The party was founded in the late 90s—and a U.S. diplomatic cable described it as a “a haven for Donetsk-based mobsters and oligarchs.”) They attempted to recreate themselves as more honorable captains of industry. They craved the respectability of being able to shake hands at Davos, where Manafort escorted Party of Regions honchos to parties. They wanted a reputation that would enable them to park their money in Manhattan and Mayfair without hassle. (As Oliver Bullough has argued, “The aim…is to so thoroughly embed a kleptocrat into the upper-crusted life of his adopted country that he becomes part of the scenery, as unremarkable as any garden-variety extremely wealthy person can be.”)

Their rehabilitation became Manafort’s grand project. Their party was his primary client. Other political consultants would skip into Kiev, take a meeting, stay a night at the Radisson, and then depart. But during the parliamentary elections of 2006, Manafort resided in the country for months, according to those who worked with him on the campaign. He used polling to refine the party’s message. He cultivated a sense of victimization among Russian language speakers, emphasizing ethnic differences that no politician had effectively tapped. It worked. The Party of Regions succeed beyond its stalwarts’ most grandiose hopes.

Manafort didn’t just enjoy the prestige that followed his successes, which culminated in Victor Yanukovych’s election to the presidency in 2010. He attempted to leverage them for his own purposes. Anyone in his position could see the possibilities. He worked for oligarchs who used their political connections to amass profitable businesses. In 2006, he tapped Rick Gates, an old intern from his D.C. firm, to join him. They created a new private-equity firm called Pericles. It set out to use Manafort’s newfound political connections to buy small regional companies that they would turn into national powerhouses.

After having spent so much time around Ukrainian oligarchs, after having earned their trust, Manafort set out to join their ranks. He even attracted funding from Oleg Deripaska himself. This was quite an endorsement: Manafort had become such a political insider in Ukraine that one of the most powerful, best-connected Russian oligarchs wanted to do business with him there.

The charge that Manafort sought to launder his earnings from Ukraine is unsurprising; it would have been challenging for him to render a full accounting of his income. One Manafort associate described to me how his boss would slap a massive, seven-figure price tag on his services. Yanukovych would approve the bill. Then one oligarch would go to the other oligarchs to collect the money. Party of Regions officials like to plead poverty, but their group constituted an informal network that set out to obscure its own machinations.

At bottom, the riches of the party’s patrons had been originally amassed in the chaos of the transition from communism—and they had been preserved through shell companies and tax havens and the complicity of unfastidious regimes. (As the Ukranian scholar Taras Kuzio has explained, “Ruling elites expropriate as much as they can because they can do so with unrestrained impunity.”) Once he had chosen to operate in this environment, Manafort would likely have been compelled to adopt local customs for moving money.

Perhaps Paul Manafort thought he could repeat that success by going to work for Donald Trump. He may have seen him as a familiar figure, another oligarch, who could help him amass greater business opportunities for himself. A connection to a Trump regime would have proved fantastically lucrative for the political consultant who engineered its unlikely triumph. That, of course, never came to pass; Manafort resigned in disgrace long before Election Day. And perhaps the American system would have proved more resistant to Manafort’s greedy maneuvers, even if he somehow had managed to stick around.

But Manafort spent decades profiting from kleptocracy with impunity. He worked to improve its international reputation without reproach. And Mueller’s indictment charges that top-drawer Washington firms were complicit, abetting Manafort’s work in potential violation of the Foreign Agents Registration Act. Even before today, it had been publicly reported that Manafort enlisted the help of the Podesta Group, Mercury Public Affairs, and Skadden, Arps, three influential outfits in town. The business of laundering reputations and money isn’t just the work of rogue actors. It’s the stuff of Big Law and Big Banks.

Whatever happens next in Mueller’s investigation, Monday provided an unambiguous sign that the United States won’t quietly accede to the creep of kleptocracy.



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