Paul Manafort on “Meet the Press” earlier this month. (Photo: William B. Plowman/NBC/NBC NewsWire via Getty Images)
A lawyer for Paul Manafort, Donald Trump’s chief campaign aide, acknowledged Tuesday evening that the longtime GOP operative has been questioned by officials from the Cayman Islands in connection with a $26.2 million investment by a billionaire Russian oligarch who was his partner in an ill-fated telecommunications development in Ukraine. The lawyer’s comments came in response to an earlier story by Yahoo News about the Cayman officials’ efforts to track down Manafort for his testimony.
The dispute goes back years, but last summer, court-appointed liquidators from the Cayman Islands initiated legal action in federal court in Alexandria, Va., seeking to question under oath Manafort and two business partners about a business deal involving firms controlled by Oleg Deripaska, a Russian aluminum magnate who for years was barred from entering the United States over allegations of ties to organized crime.
“These guys are chasing their money,” said Rick Davis, one of the partners subpoenaed in the case and the manager of John McCain’s 2008 presidential campaign. “They [Deripaska’s firms] invested in something and it just went away. They are actually trying to track down where the company went and where the [money] went.”
Richard Hibey, a lawyer for Manafort, emailed Yahoo News Tuesday night stating that “Mr. Manafort and others appeared for depositions some months ago and answered all questions,” mooting the legal action in Virginia, and added, “we are not privy to any other developments.” HIbey, however, declined to address any specifics about Manafort’s dealings with Deripaska, noting that since “the matter is pending in the Caymans, it would be inappropriate to discuss it.”
Davis told Yahoo News that, through his lawyer, he informed the Cayman Island court officials that he knew nothing about the investment, even though Manafort’s company in the partnership with Deripaska, Davis Manafort International, still bears his name.
In fact, Davis said, he hasn’t spoken to Manafort in more than five years, didn’t know how to reach him and was stunned to learn last year about Manafort’s side business investments with Deripaska, a controversial figure who — through Davis’ help — had met with McCain and other U.S. senators in 2006 during a time the Russian oligarch was seeking to persuade U.S. authorities to allow him to enter the United States.
“I was like, what the f*** is this?” Davis recalled when he learned the Cayman Island court officials wanted to question him about the Ukrainian telecommunications investment. “I wasn’t involved in this thing.”
In earlier court filings in the Caymans, Deripaska’s lawyers had alleged that Manafort and another of his business partners, Rick Gates (who also recently went to work for the Trump campaign), had failed to respond to repeated requests for audit reports or any other information about the Ukrainian investment funds put out by Deripaska. Gates also did not respond to a request for comment by Yahoo News. “It appears that Paul Manafort and Rick Gates have simply disappeared,” Deripaska’s lawyers wrote in a petition to the Cayman Islands court filed in Dec. 4, 2014.
Whatever the explanation, the court documents shed new light on a trail of complicated offshore business dealings (many of them through firms registered in the Cayman Islands, Cyprus and elsewhere) that Manafort engaged in with wealthy Russian and Ukrainian oligarchs — relationships he appears to have forged while serving as chief political consultant to former Ukrainian president Victor Yanukovych, an ally of Russian president Vladimir Putin who fled Kiev in February 2014 and now lives in Moscow.
These ties could prove problematic for Manafort, especially in light of a report today by Politico that Trump has increasing misgivings about his new top aide, who is trying to position the Republican frontrunner as a more conventional candidate. According to Politico, Trump also had concerns about Manafort’s past ties to controversial foreign figures like Yanukovych and, as reported by Yahoo News last week, to a Pakistani intelligence front group — associations that Trump was apparently unaware of when he hired him.
A separate lawsuit filed in New York three years ago details multiple business deals that Manafort had with another pro-Putin oligarch, Dmitri Firtash, including plans to purchase New York’s Drake Hotel and develop a high-end resort on the Bahamian island of Bimini.
The New York lawsuit, filed on behalf of former Ukranian Prime Minister Yulia Tymoshenko, Yanukovych’s rival, alleged that Manafort’s business deals were part of a “racketeering” scheme to launder hundreds of millions of dollars through a “labyrinth” of Firtash-controlled companies in Panama, Cyprus and Europe for the benefit of Yanukovych.
The lawsuit was tossed out by a federal judge in New York last fall on the grounds that it mainly involved overseas activity that was not within the jurisdiction of the court. But as part of the case, the lawyer for Tymoshenko, Kenneth F. McCallion, put into the court record documents detailing Manafort’s business arrangements with Firtash, including memos and emails about meetings between them in Kiev and a copy of an agreement to create a limited partnership with Firtash registered in the Cayman Islands that was signed by Manafort in April 2009. (Firtash two years ago was indicted by a federal grand jury in Chicago for alleged conspiracy to bribe Indian government officials for a titanium contract. He was arrested in Vienna, but theAustrian government rebuffed a Justice Department request for his extradition last year. The oligarch remains a federal fugitive with an outstanding Interpol warrant, afraid to risk arrest by leaving Austria,according to a source close to him.)
During the same period that Manafort was pursuing the business deals with Firtash, he was also soliciting investments from Deripaska, according to the court petition filed by Deripaska’s lawyers in the Cayman Islands and, more recently, by the Cayman liquidators in Alexandria, Va.
Long known as one of Putin’s favorite oligarchs, Deripaska made billions of dollars in the aluminum business in the 1990s, becoming one of Russia’s wealthiest men. But in 2006, the State Department, at the FBI’s request, revoked his visa to enter the United States because of concerns about allegations of corruption, bribery and possible ties to organized crime, which Deripaska denied.
According to “Missing Man,” a forthcoming book by New York Times reporter Barry Meier, the FBI later relented and secretly arranged to have the Department of Homeland Security issue Deripaska a temporary visa in 2009, allowing him into the U.S. to meet with American business leaders after the oligarch promised he could help the bureau find Robert Levinson, a former bureau agent who has gone missing in Iran. But according to Meier’s book, Deripaska’s leads went nowhere and bureau officials determined they had been had by the Russian. The FBI concluded that Deripaska and two associates “were bullshit artists who had used Bob’s case as a means to try to get the United States to do what they wanted without ever delivering anything,” Meier writes.
The court filings in Alexandria stem from an agreement in March 2007 to create a Cayman Islands partnership called Pericles Emerging Market Investors, between a firm owned by Manafort and Gates and Surf Horizon, described as a company incorporated that summer in Cyprus to serve as a special purpose vehicle for investments by one of Deripaska’s companies in Moscow. (Deripaska is not identified by name in the court filings, but sources directly familiar with the case told Yahoo News he was the principal figure with whom Manafort had partnered.)
The partnership’s purpose was to “generate significant long-term capital appreciation” through private equity investments in Ukraine, Russia and elsewhere. As part of the deal, Deripaska’s firms paid $7.35 million in management fees to Manafort and Gates.
But the deal went south after Pericles paid $18.9 million in 2008 to holdings in Cyprus controlled by Manafort and Gates for the purchase of Black Sea Cable, a Ukrainian holding company for telecommunications and Internet interests in that country. Citing the worldwide financial crisis that year, Deripaska’s firms later suspended further investments and the two parties agreed to wind down their partnership, according to the filing by Deripaska’s lawyers.
Lawyers for the Russian oligarch then started seeking information — and audits — about what happened to the investment and the management fees Deripaska’s firms had paid. In court papers, they allege they discovered that the Ukranian investment had been structured differently than they had been led to believe — and with different partners. When they sought obtain copies of the agreement and sales contracts, as well as promised audit reports on their investment, Manafort and Gates did not respond to their requests. Deripaska’s lawyers then sought and obtained the appointment of court-appointed liquidators to investigate what happened to his money.