This Is So Much Bigger Than Paul Manafort
On the eve of the Paul Manafort trial, Treasury Secretary Steve Mnuchin casually announced that Donald Trump’s administration was considering a fresh $100 billion tax cut for the wealthy. The two events—the trial and the tax cut—should be considered plot points in the same narrative. Manafort had grown very rich by looting public monies, and Mnuchin was proposing an arguably legal version of the same.
Unlike past Trump tax cuts, this proposed cut would be implemented by executive fiat, without a congressional vote—a highly unusual and highly undemocratic act of plunder that would redirect money from the state to further enrich the American elite, not to mention Mnuchin himself.
The trial of Paul Manafort is not merely an episode in a larger scandal that will unfold over many chapters. It is a warning not to be ignored. It’s an occasion for the United States to awaken from its collective slumber about the creeping dangers of kleptocracy.
So much about America’s view of itself resists accepting a disturbing reality. Conventional wisdom long held that America’s free market would never tolerate the sort of clientelism, nepotism, and outright theft that prevailed in places like Brazil and Italy. Americans thought that globalization would export the hygienic habits of this nation’s financial system and its values of good government to the rest of the world. But over the past three decades, the opposite transpired: America has become the sanctuary of choice for laundered money, a bastion of shell companies and anonymously purchased real estate. American elites have learned to plant money offshore with acumen that comes close to matching their crooked counterparts’ abroad.
Manafort is one of the architects of this new world order. During the 1980s and ’90s, he provided strategic advice to the thuggish dictators who served as proxies for the Reagan administration’s anticommunist foreign policy. With his mastery of American media, he helped sanitize crooks like former Philippine President Ferdinand Marcos and his wife, Imelda—the symbol of their rule, the 3,000 pairs of shoes she owned, was still fewer than the number of people by killed by the regime. These dictators (also Angola’s Jonas Savimbi, the Congo’s Mobutu Sese Seko, and Kenya’s Daniel arap Moi) should never have been respectable figures in Washington. But Manafort reinvented them as latter-day Thomas Jeffersons, allies in the cause of democracy, and successfully lobbied for them to receive arms and aid from the U.S. government.
As communism fell, the former Soviet Union became the scene of one of the biggest heists in history, and the opportunity of a lifetime for Paul Manafort. In Russia, the KGB steered billions of dollars into offshore accounts during the dying days of the regime, the beginning of a pattern of plunder best described by the late Karen Dawisha in her instant classic, Putin’s Kleptocracy. These funds became the basis for some of the fortunes of those who now appear as characters in the Russiagate scandal. Vladimir Putin himself amassed wealth that totaled more than $40 billion when Dawisha calculated his haul several years ago. Russians who invested in Trump real estate over the years had many motives. But everything we know about kleptocracy suggests that they were likely attempting to relocate their money to a place where it would both disappear from public view and have the protections that come with the American rule of law.
An important part of this story is Ukraine. Paul Manafort went to work there in 2004—and the country’s ruling party remained his primary client until 2014. During those years, the country hemorrhaged more than $118 billion in illicit financial flows, according to the Kleptocracy Initiative, a think tank that has published invaluable reports about the scourge of corruption. (To set that number in relief, the country’s entire GDP in 2013 was $181 billion.) Stealing this money wasn’t a victimless crime: It came at the expense of Ukraine’s development as a market economy; it sucked funds away from public investment; it eroded faith in democracy and Western institutions. The West hypocritically lectured Ukraine about good government while it profited from Ukrainian oligarchs parking cash in Vienna, London, and New York.
Russian and Ukrainian oligarchs stole these vast fortunes, but they couldn’t accomplish the feat on their own. They needed enablers, and in the course of Mueller’s prosecution of Manafort, we’ve come to see how pillars of the American establishment filled this role.
Barack Obama’s White House counsel Greg Craig and his top-drawer law firm, Skadden Arps, abetted former Ukrainian President Viktor Yanukovych’s efforts to smash the political opponents who might get in the way of his thievery. Manafort arranged for the firm to publish a report justifying the arrest of a former Ukrainian prime minister, who had been denied counsel at crucial moments of her trial. (Last April, Craig retired under a cloud of scandal. Another Skadden associate who worked with Manafort has pleaded guilty to misleading Special Counsel Robert Mueller’s investigators.) Tony Podesta, a leading Democratic lobbyist of his generation, has watched his own power firm collapse after Mueller revealed his complicity in Manafort’s efforts. These are not stray villains, but representative figures: American law firms play an essential role in protecting global kleptocracy and helping it relocate money to the United States.
Manafort was, of course, the most important enabler of them all. During the decade he spent in Ukraine, he helped a clique of former gangsters seize control of the country’s governmental machinery, a feat he achieved by bringing state-of-the-art campaign strategy to a barely developed democracy. He hired a network of former European politicians to apologize for the regime, to whitewash its history of corruption and illiberalism. Back in Washington, Manafort would escort oligarchs around town, taking them to think tanks and meetings with politicians, helping them achieve the legitimacy that they hoped would protect their ill-gotten fortunes.
It doesn’t require any imagination to see how money stolen from Ukrainian coffers, money won in rigged privatizations and crony contracts, money obtained after the brutal murder of rivals, ended up with Paul Manafort. Clean money doesn’t need to travel through shell companies in Cyprus, unlike the millions that Manafort poured into accounts there. And Manafort allegedly used the same techniques of his dodgy clients to repatriate the money in the United States, taking advantage of gaps in the enforcement of anti-money-laundering laws to sneak cash into the country through real estate, expensive rugs, and tailored suits.
What’s increasingly clear is that Manafort also attempted to exploit the Trump campaign with similarly kleptocratic aims. Take the story of Stephen Calk, which has emerged in the course of Mueller’s pretrial filings. Calk owns a small Chicago bank. In the summer of 2016, Manafort applied for a loan from the bank—and the claims in Manafort’s loan applications were obviously shaky. According to Mueller, bank officials were quite adamant in expressing their reservations about Manafort’s application. But there was apparently a backstory that these officials didn’t know. Calk had won a place on Trump’s board of economic advisers, one of 13. Mueller’s lawyers have said that they plan to prove that Calk landed this official title only after promising Manafort loans. So even as Manafort departed the campaign amid widespread allegations of misdeeds, Calk extended him loan after loan—$16 million in total. (The loans represented 22 percent of the bank’s total equity capital.)
This small tale is just one instance of a larger genre repeated across this administration—the hints that foreign countries are financing deals that profit the president’s own family; the long list of officials (see also: Scott Pruitt, Tom Price) abusing the perquisites of their office. And those stories are just a subset of an even larger narrative still, of an American elite increasingly at home in the ranks of international kleptocracy. Thanks to Robert Mueller, that racket is now on trial.
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