PAYING THE PRICE
Skadden Arps Knew Its Work for Manafort Was Borderline at Best—and Now It'll Pay More Than $4 Million for It
The prestigious Wall Street law firm is paying for a 2012 report it wrote for Manafort justifying the Kremlin-friendly Ukrainian government’s prosecution of a political rival.
Paul Manafort just brought one of America’s most powerful law firms down with him.
The firm Skadden Arps, once home to Barack Obama’s first White House counsel, admitted on Thursday that it misled the Justice Department to cover up the nature of its work for the Ukrainian government. Thanks to a report it produced to help Manafort in his work for Ukraine’s Kremlin-friendly president in 2012, it has now promised to register as a foreign agent.
And it’s costing the firm. Skadden Arps will have to pay the Treasury Department $4.6 million–the cost of the report it delivered to Manafort justifying the Party of Regions government prosecuting and jailing its political rival, Yulia Tymoshenko.
“This is only one piece, but an important piece, we think, in the mosaic involving collusion by Manafort and others,” said Kenneth McCallion, who represented Tymoshenko in a lawsuit that first exposed Skadden’s shady dealings with the old Ukrainian government that paid Manafort.
In unveiling an agreement with Skadden on Thursday, prosecutors revealed that lawyers at the firm had, at the outset of agreeing to take on the report, discussed whether they needed to disclose their Ukraine work under the Foreign Agents Registration Act (FARA). Ultimately, they looked for ways to avoid disclosure, even as they helped in public relations work for Ukraine.
“We need an answer from someone who we can rely on with a straight face,” wrote an unnamed Skadden partner whose description provided by prosecutors matches that of Barack Obama’s first White House counsel, Greg Craig. In a different exchange revealed by prosecutors, the same Skadden partner told a colleague: “[W]e cannot run close to the FARA line and if we were seen as hiring and directing [an unnamed PR firm] we would be doing more than just lawyering.”
A lawyer for Craig declined to comment.
Skadden’s work alongside Manafort was a key part of his effort to sell Washington on Ukraine’s Kremlin-friendly government in the years before that government was ousted. Court documents related to Manafort’s prosecution say he hired an unnamed law firm—known to be Skadden—to produce a report giving a veneer of respectability to Tymoshenko’s incarceration. Craig and his associates ran the project. Manafort then dispatched them to share their findings on Capitol Hill and with members of the Obama administration.
The report, completed in December 2012, expressed discomfort with Tymoshenko’s prosecution—conceding she was denied counsel at important stages of the trial—but claimed to find nothing substantially untoward. It placed the burden of proof on Tymoshenko. “We do not believe that Tymoshenko has provided specific evidence of political motivation that would be sufficient to overturn her conviction under American standards,” Skadden’s report concluded. The State Department called it a whitewash.
The report, federal prosecutors noted, did not disclose “how much money was received by the Law Firm for preparing the report,” nor that a third party—an unnamed businessperson—helped finance it. Both would have been disclosed had Skadden Arps registered under FARA.
Taking the lead on the Tymoshenko report was Skadden attorney Craig, an elite lawyer who had been Obama’s first White House counsel. “We leave to others the question of whether this prosecution was politically motivated,” Craig explained to The New York Times. “Our assignment was to look at the evidence in the record and determine whether the trial was fair.”
Secretly, it appeared Craig had doubts. A Skadden attorney whom prosecutors called “Partner-1” and who fit Craig’s description wrote shortly before the report’s release that "the evidence of criminal intent—i.e., that [Tymoshenko] intended to commit a crime—is virtually non-existent."
Craig left Skadden in April 2018, after special counsel Robert Mueller secured a guilty plea from a different Skadden attorney, Alex van der Zwaan, that concerned the relationship between Skadden, Manafort, and Ukraine. Van der Zwaan admitted to lying to federal investigators and served a short prison sentence.
Skadden might have gotten away with it, had it not been for documents recovered in, among other places, a sauna.
After the government of Viktor Yanukovich fell in a 2014 coup, opposition figures hunted for the former leadership’s papers. Contained in a sauna was an early draft of Skadden’s report on the Tymoshenko case, with what the Times characterized as annotations “by Ukrainian government officials, who appeared to be pushing the Americans for a more sympathetic interpretation of the case.”
Other recovered documents showed Craig turning to Manafort for “help” in loosening material from the prosecutor-general’s office on the fairness of the trial, including Tymoshenko’s access to her attorneys. And they also presented a questionable accounting. In June 2012, Ukraine’s Ministry of Justice claimed the report cost around $12,000 to $13,000—something lawyers helping Tymoshenko sue Manafort in New York federal court immediately considered dubious.
Crunching numbers for international travel, the number of attorneys, food, lodging and other expenses, “a conservative estimate of the Skadden billing for attorneys’ time is $2 million,” Tymoshenko’s attorneys wrote in an April 2014 court filing.
Tymoshenko attorney McCallion said he took their calculations to the FBI and the Southern District of New York, but didn’t know if they followed up. He wouldn’t learn until four years and a different jurisdiction later, when Special Counsel Robert Mueller charged van der Zwaan with lying to federal investigators.
On Thursday, federal prosecutors revealed they had obtained an email from April 2012 between Manafort and a Skadden partner matching Craig’s description confirming a “deal” in which, the prosecutors said, “the Law Firm would be advanced $4 million for the project against which it would charge its customary fees and actual expenses incurred.”
McCallion told The Daily Beast he felt vindicated.
“Skadden Arps, generally a fine firm, made a critical and decisive error by undertaking the representation of the government of Ukraine under a cloud of suspicious circumstances,” he said, “and also failing to supervise Alex van der Zwaan and others out of their London office in undertaking basically a whitewash investigation that exculpated and gave a clean bill of health to the government. That was managed to a large extent by Paul Manafort.”