Paul Manafort, who briefly managed the presidential campaign of Donald Trump last year, has been accused of money laundering by a Ukrainian official and is the focus of a federal probe over his banking in the region, according to the Associated Press.
The AP reported that the Financial Crimes Enforcement Network, which was set up after the 9/11 attacks to crack down on the financing terrorism and and incorporated into the Treasury Department soon afterwards, recently asked Cyprus for information about Manafort’s offshore financial transactions “as part of a federal anti-corruption investigation into his work in eastern Europe.”
The AP’s story is a long way short of saying that Manafort may have received money or instructions to further Moscow’s political agenda—potentially even during the 2016 campaign. It adds to suggestions of improper connections between Trump and Russian interests, and casts suspicion on Manfort’s roughly four-month tenure leading the campaign, during which time Trump made some of his most conspicuously pro-Russian comments. Those included considering the recognition of Russia’s annexation of Crimea in 2014, a key objective of President Vladimir Putin’s policy.
The news comes only a day after the AP reported that Manafort had had extensive contact with Russian metals magnate Oleg Deripaska in the course of his PR and lobbying work since 2005 (for more on Deripaska, click here). It cited pitch documents drafted by Manafort’s company that his services would “greatly benefit the Putin Government”—reflecting an assumption common at the time that Deripaska was close enough to Putin to function informally as an agent of Russian economic policy abroad.
Deripaska’s aluminum company, Rusal, had long had a specific business interest in Ukraine—an alumina refinery that had traditionally supplied feedstock to smelters elsewhere in the former Soviet Union. But he was also one of numerous Russian businessmen hoping to use their newfound wealth to expand abroad, with Ukraine being an obvious first port of call due to the countries’ historic ties. Such ambitions dovetailed with Putin’s policy of restoring Russia’s economic influence over its backyard (but naturally clashed with nationalist sentiment in places like Ukraine).
In later years, Deripaska reportedly invested in an offshore fund, called Pericles Emerging Markets, that was managed by Manafort, in the hope of buying other assets in Ukraine in media, retail and infrastructure. One deal in particular was the planned $18.9 million acquisition of a TV company, Black Sea Cable. He later sued in the Cayman Islands to recover his investment and $7.3 million in management fees.
It’s not clear whether this is the deal at the center of the FinCen investigation. It has been common for a long time for Russian businessmen to route their dealings through offshore centers, even when investing in their own companies, and drawing the line between money-laundering and tax evasion (of which Russian government officials constantly complained) and legitimate investment activity has never been entirely clear-cut.
Russian investors in Cypriot banks were badly caught out by the island nation’s financial collapse in 2014, with 80,000 depositors in its largest bank, Bank of Cyprus, having their offshore accounts turned into equity as part of a “bail-in” imposed by the Eurozone and International Monetary Fund. Bank of Cyprus, famously, was one of a number of collapsed Eurozone banks into which Wilbur Ross, now Commerce Secretary, invested in during the Eurozone’s four-year streak of bailouts. Ross was vice-chairman of the bank until February.
There is no suggestion that Ross was involved in any improper activity. Deripaska and Manafort couldn’t immediately be reached for comment. FinCen as a matter of policy doesn’t comment on its ongoing investigations.