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Lawyers and guns: Dirty Ukrainian money in the US

While the western media has been recently full of reports and analyses of Paul Manafort (now former manager of Donald Trump’s US presidential campaign) and his ties to former Ukrainian President Viktor Yanukovych, Russian President Vladimir Putin and Russian intelligence, the deeper links between Ukrainian oligarchs and Washington are only beginning to see the light of day. A report in the New York Times about ties between the Clintons and international funding, including from Ukrainian oligarchs, was merely the tip of the iceberg.

August 23, 2016 - Taras Kuzio - Articles and Commentary

Secretary Clinton and Ukrainian President Hold Joint Press Conference

Photo An678ko (CC) commons.wikimedia.org

Both Republicans and Democrats have been recipients of generous sums from Presidents Leonid Kuchma and Viktor Yanukovych as well as Ukrainian oligarchs seeking to ingratiate themselves with American public opinion. Some information can be found in cases where US consultants were registered with the US department of justice’s FARA (Foreign Agents Registration Act), while in other cases further investigations are required.

Viktor Pinchuk and the Clintons

Viktor Pinchuk, who is most closely associated with the Clintons and the most philanthropic of Ukraine’s oligarchs, is the only Ukrainian oligarch who has attempted to build a new image for himself in the West. Therefore, his links to US political consultants have a long history. In the Kuchma era this was undertaken through the Agency for Humanitarian Technologies (AHT) established in 1997 by, among others, Valery Khoroshkovskyy, who went on to be chairman of the Security Service of Ukraine (SBU) under President Yanukovych.

In 2003 and 2004 Pinchuk focused on bringing US VIPs such as Henry Kissinger, Richard Holbrooke, Zbigniew Brzezinski and former US President George H.W. Bush to Ukraine to improve Kuchma’s and Ukraine’s international image, which had been battered by the “Kuchmagate” scandal of murdered journalist Georgi Gongadze and the illegal sale of Kolchuga radars to Iraq (although these were never found by coalition forces). The AHT worked on behalf of the “Ukrainian government” (a contract was signed by political technologist Volodymyr Hranovskyy) which hired the PR firm Hill and Knowlton. The AHT also hired BKSH Associates for public relations work and another contract was signed between AHT and the Washington World Group.

As part of his effort to ingratiate himself with international VIP’s, Pinchuk was elected a member of the Advisory Board of the International Crisis Group think tank. Since 2006 Pinchuk has organised an annual business lunch and round table on philanthropy at the Davos World Economic Forum. Pinchuk is the only Ukrainian oligarch to lobby for European integration through the Yalta European Strategy (YES) NGO he established in 2004. These annual summits have been attended by many international politicians and VIP’s such as former British Prime Minister Tony Blair and of course the Clintons.

Pinchuk especially nurtured good relations with former US President Bill Clinton by providing a donation to the Clinton Library and financially supporting the William J. Clinton Foundation’s programme to combat HIV/AIDs. Pinchuk’s wife, Elena, leads the work against the spread of AIDS inside Ukraine through the ANTIAIDS Elena Pinchuk Foundation. When Hillary Clinton was US secretary of state in 2009-2013, the Clinton Foundation received $8.6 million from the Pinchuk foundation (see also here). Pinchuk has also provided a large donation to the NGO Ukrainian-American Children of Chornobyl.

In Kyiv, Pinchuk has opened a Museum of Modern Art, a taste in art common among post-Soviet nouveau riche, and his fund supports the work of modern Ukrainian artists. During Yanukovych’s presidency, Doug Schoen of New York represented Pinchuk in the USA.

The European Center for a Modern Ukraine (ECMU) hired the Podesta Group to lobby in Washington DC. Anthony Podesta is among the top lobbyists in the US and is close to the Democratic Party while his brother, John Podesta, a former chief of staff to President Bill Clinton, is Hillary Clinton’s campaign manager. The ECMU declared that it “seeks to inform the American government, opinion leaders, political decision makers and civil society, focusing on reforms being undertaken by Ukraine as part of its commitment to becoming a fully western-facing democracy”. Other consultants hired by the Party of Regions and did not register with FARA included Blue Star Strategies and Mercury Communications who worked on the ECMU for which they received $1.4 million in 2012-2013.

Washington Think Tanks

Think tanks provide a back door to lobbying the US government without the need to register with FARA and the LDA (Lobbying Disclosure Act). Pinchuk had long provided donations to the Brookings Institution for projects headed by former US ambassadors to Ukraine Carlos Pascual and Steven Pifer. He also provided extensive donations to the Petersen Institute for International Economics when Anders Aslund was a senior fellow.

The chairperson of the international advisory board of Rinat Akhmetov’s Foundation for Effective Governance (FEG) was Kim Campbell, who was Canadian Prime Minister for six months in 1993. Former US Senator Lincoln Chafee was a member of the international advisory board of the FEG but his name no longer appears on the list of board members. Since 2011, Chafee has been governor of Rhode Island.


Pinchuk and Serhiy Tihipko had hired Kroll Investigative Agency in 2001 on behalf of the Dnipropetrovsk-based oligarchic Labour Ukraine Party to whitewash President’s Kuchma’s involvement in the Gongadze murder. Their report was drawn upon in the documentary entitled “PR” produced for the March 2002 Ukrainian parliamentary elections. Although police officers have been jailed for the murder, nobody higher up, who gave the order for the attack on Gongadze, has been criminally charged.

In 2010 Ukraine’s Nikolai Azarov government paid $3 million for an international audit of the 2007-2010 Yulia Tymoshenko government. The contract was given to Trout Cacheris, a law and lobbying firm, Akim Gump Strauss Hauer & Feld, an international law firm whose client list includes Donetsk oligarch Rinat Akhmetov, and the Kroll investigative agency. None of the three companies had experienced in professional auditing.

In 2012 American law firm Skadden Arps Slate Meagher & Flom LLP prepared a lengthy legal investigation of the trial of the politically charged Tymoshenko for an undisclosed sum. Then US state department spokesperson Victoria Nuland responded to questions from journalists about the report by saying, “our concern is that Skadden Arps lawyers were obviously not going to find political motivation if they were not looking for it. The report also fails to consider the selective nature of the trials, those who were chosen for trials against Tymoshenko and her – and former members of her government.” Nuland added, “Whomever – whoever commissioned this study, whatever the mandate for the study was, it was incomplete and does not give an accurate picture.” The European Court of Human Rights (ECHR) ruled that the right of defendants Tymoshenko and Yuriy Lutsenko to confront witnesses, present their own witnesses and evidence and have access to government held evidence were violated by the judges.

Another factor was the manner in which Skadden was awarded tenders without competition and the inability of Ukrainian law firms to compete for these tenders which is now subject to criminal investigation by the newly formed national anti-corruption bureau.Ukrainian expert Serhiy Kudelia has said that, “The entire tender process has for years been probably only second to the energy sector in the scale of rampant corruption that exists in this sector of the Ukrainian economy. Tenders remained corrupt during the Yushchenko presidency and corruption dramatically increased during the preparations of the Euro 2012 football championship when contracts were given without tenders (primarily to Donetsk-based companies). The February 2012 change in the tender law has institutionalised this corrupt process by not requiring the need for tenders and contracts are awarded, as in the case of two contracts given to Skadden law firm, at the whim of the government and without any transparent process.”

The Akin Gump law firm worked on behalf of Donetsk oligarch Rinat Akhmetov who was a close associate of Yanukovych since the 1990s. The Akin Gump specialised in the task set out by Akhmetov of threatening academics and journalists with libel cases because of their investigations and writing about Akhmetov’s opaque past when he was tied to organised crime groups in the Donbas. The University of Toronto Press tore up a book contract with this author in 2014 after being threatened by Akin Gump who had demanded to read the manuscript before it went to print. In such a manner Ukrainian oligarchs were spreading censorship of the media and scholarship, policies that that they had practiced in Ukraine, to western democracies.

They are not worth the money

US political consultants and lobbyists do not come cheap and the dividends are far less than the high financial costs. The huge investment of the Party of Regions into US consultants and lobbyists did not prevent the US Congress from adopting tough and critical resolutions on Ukraine. A long-time Washington policymaker on Ukraine explained the cost-benefit relationship as follows: “Much more important is whether the lobbying has worked or not. From my observations, I would argue that especially the pro-government PR firms over the years – whether pro-Kuchma or pro-Yanukovych – has received a poor return on their investment. This is not because these lobbyists are all incompetent (some, actually, are quite competent), but because they simply do not have a good product to sell. Far more significant for developments in US-Ukraine relations than the role of PR firms has been the role of Congress, including the Helsinki Commission, over the last two decades, both before and after independence.”

The ultimate irony of the Washington House of Cards is that far more was invested in lobbying efforts by authoritarian and corrupt political leaders than by pro-western democratic forces who supported the Orange Revolution and the EuroMaidan. Yet, both Republicans and Democrats were willing to take the dirty money.

Taras Kuzio is a senior fellow at the Canadian Institute of Ukrainian Studies, University of Alberta and author of the 2015 book Ukraine. Democratization, Corruption and the New Russian Imperialism.


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