The Daily - How Paul Manafort’s Plans Backfired

Episode Date: August 3, 2018

The trial of Paul Manafort, a former chairman of the Trump campaign, is the first one to result from charges brought by Robert S. Mueller III, the special counsel overseeing the investigation into Russian election interference. Yet the trial itself, at least on the surface, has little to do with Russia or with President Trump. Guest: Nicholas Confessore, an investigative reporter at The New York Times. For more information on today’s episode, visit nytimes.com/thedaily.

From The New York Times, I'm Michael Barbaro. This is The Daily. Today. Paul Manafort's trial this week is the first trial to come out of special counsel Robert Mueller's investigation into Russian interference in the election. But the significance of the trial has almost nothing to do with Russia

or with President Trump. It's Friday, August 3rd. Nick Confessori, where does the story of Paul Manafort begin? Well, the story, or the saga really, of Paul Manafort begins on the Reagan campaign. Good evening. I'm here tonight to announce my intention to seek the Republican nomination for President of the United States. The dawn of the conservative era in Washington in 1980. The conservative, so-called, is the one that says, less government, get off my back, get out of my pocket. He sees, as a young hotshot Republican, he sees that Reagan is going to be the future of conservative politics. A party ready to build a new consensus embodied in these words,

embodied in these words, family, work, neighborhood, peace, and freedom. And he himself is not super conservative, but he wants to see where the action is. So he gets himself a job on the Reagan campaign. Reagan is our projected winner, Ronald Wilson Reagan of California. And Reagan wins. And all of a sudden, he is closely tied in with this rising new counter-establishment in Washington that has no ties to the old lobbyists, really. And instead of going into the White House, he sets up a lobbying firm. And what's distinct about the lobbying firm he creates?

It was shameless. What they did was they said that we will not only lobby for companies, but we will help elect candidates. And then we will lobby the candidates we helped elect on behalf of the companies we are also working for. Back then, it was a brand new thing because lobbying was still kind of genteel. It wasn't as influence-peddly as it was or is perceived to be today. And what's unique about combining the function of lobbying with getting people elected?

It's one-stop shopping for influence peddling. It's a way of trading the access and relationship you have to a candidate who's now an officeholder and trading that on behalf of corporate clients and getting them access to that person you helped elect. The person you helped elect kind of owes something to you and your comrades from the campaign trail. And now Paul Manafort or his partners come to your office and say, look, buddy, I got

this client, Bethlehem Steel, the tobacco industry. And can you help them out? And you should have them out because I helped you out. That's why you're in office. Yeah. The technical term for what we do and what law firms, associations, and professional groups do is lobbying. For purposes of today, I will admit that in a narrow sense, some people might term it influence peddling.

And that's what Paul Manafort did with the Reagan administration. That's right. It was called a double-breasted operation. This is back in the 80s when double-breasted suits were still a thing. Double-breasts are consulting and lobbying. That's right. And it was two separate businesses housed under the same roof with the same founding partners and most of the same personnel. And it was extraordinarily popular and lucrative for the corporate class and for their clients.

So Manafort and his team helped elect Jesse Helms, Arlen Specter, Phil Graham. I ask you, do Americans want a national defense system that falls short of being number one in the world? It's the one form of bigotry that is still allowed in America, and that's bigotry against the successful. And these are huge names in GOP politics and in Washington in the 80s. And if you have access to them for your clients, it's very lucrative on the lobbying side. I can see, Nick, why this new model you're describing is good for the consultants slash lobbyists.

Why is it appealing to the politicians who are hiring them? Well, I think in this case, they were also kind of exploiting the mood in Washington and the ideological moment in Washington. This was the new conservative movement. This was deregulation, tax cuts, Reaganism. And so one thing they were doing was helping their clients sell their causes, their needs, in terms of what the politicians wanted to advocate for. And vice versa. And that's always part of what a lobbyist does,

They can translate it. And vice versa. And that's always part of what a lobbyist does, is try to harmonize what the politician being lobbied is saying they're doing and what the corporate client is saying they want. Got it. So, for example, a chemical company might want a tax cut just for profit, but it could be framed as Reaganomics to Reagan. Everybody wins and hears it in the language they want to hear it. Yeah. And, you know, importantly, these are lobbyists who understand the language of the revolution because they were part of it at the beginning.

So they have credibility with the politicians. Okay, so then what happens? We live in a time of challenges to peace, but also of opportunities to peace. Well, aside from deregulation and tax cuts, there is a second thing happening that provides an excellent business opportunity. History teaches that wars begin when governments believe the price of aggression is cheap. It's the height of the Cold War. To keep the peace, we and our allies must be strong enough to convince any potential aggressor that war could bring no benefit. In Washington, the administration is sending off foreign aid to a

bunch of dictators and strongmen who are allies against communism. And those dictators and strongmen need someone in Washington to help them get a piece of the pie and help give them a sense of legitimacy that they aren't bad guys, so it's okay for the U.S. to back them. So what does Paul Manafort do? Well, he moves into foreign lobbying. And here again, he takes something that was kind of fusty and genteel and goes at it with zeal and shamelessness. So he works for all of these people who now we think of as kind of bad actors in the world, right? Ferdinand Marcos in the Philippines. I have appointed panels to sit down with the U.S. panel. And all of this will determine our security,

your security, and mine and our children. Mobutu Nzair. It's above the political party. Jonas Savimbi in Angola. For a long time, the Western countries have underestimated the possibility of our resistance. So it feels like he's not being all that discriminating about the kinds of clients overseas that he's taking on.

Not at all. His calling card was he was willing to work for people who were too bad for anyone else to work for. His clients were called the torturer's lobby, according to one report from the 90s. Wow. In other words, he was willing to be the lobbyist for people who tortured. Correct. And he's doing a couple of different things. He's massaging and managing their image

in Washington. So if the Reagan administration wants to send aid to Savimbi, they're sending aid to a freedom fighter, not a guy who murders his opponents. Even though he might have murdered his opponents. Exactly. And they're also doing campaign work for these people abroad. So you might have an American consultant from the Manafort firm helping Marcos on his campaign. And what's the goal there? Well, partly Americans have a lot of expertise in campaigns because we have so many of them and they're so long compared to other countries. But it's also because the elections have to look legitimate so that America can buy into the victor. And so part of the job is not just technical help on like how to run a campaign, but then selling the results back in Washington saying this was a good election, free and fair.

Support this person. So this is kind of a new version of that double-breasted business model you were describing, exported abroad. That's right. So you're doing the same thing. You're working for these candidates in foreign countries, and you're also lobbying. But in this case, you're lobbying for them. So the client is the same. Wow.

And what's different and really striking here is it's so much more lucrative than domestic lobbying. Why? Because these people are despots and strongmen. So first of all, they had tons of money. They don't know campaign finance system. And no campaign finance system. And you can charge what the market will bear.

And so they could get so much more money. And I think from talking to people who've worked with him over the years, a part of him also liked rubbing elbows with these international players, these oligarchs. He begins to be more flashy himself. He's always buying fancy suits, cars, more and more homes. Manafort paid $18,500 for a python jacket. Just a few months earlier, it was $9,500 on an ostrich vest. To apparently complement the ostrich jacket, he later paid $15,000 for.

He is becoming a guy who has expensive tastes. He loves the high life. And how do you finance the high life? You work for despots and oligarchs. For a lot of people who have heard about Paul Manafort, what they know is that he somehow gets linked up to Ukraine. How does that happen? Well, in the same way that he rode the coattails of the Reagan Revolution to riches, he finds opportunity in the end of the Cold War. Mr. Gorbachev, tear down this wall. He sees where the action is. And what's happening after the disintegration of the Soviet Union

and the freeing of Eastern Bloc countries is that these countries now have elections and are selling off state assets and are privatizing, and there is a lot of action there to get in on. Now, he eventually does work in Eastern Europe and hooks up with a Russian oligarch, Oleg Deripaska. You can't judge economy based on one year, one quarter. We have to, you know, accept reality.

Who's an ally of Vladimir Putin. I don't care about labels, oligarch. I think more important is what you could really add to the business. He does a lot of work for him as a businessman, as a consultant. And Deripaska eventually helps send him to the Ukraine, where the country is a mess. And there's unrest. He ends up working for the Party of Regions,

which is basically a group of Eastern Ukrainian kind of gangsters and oligarchs who are pro-Russia. And their candidate for president was Viktor Yanukovych. And here we have Manafort plying all the different parts of his trade. He takes this guy as kind of rough around the edges. Combs his hair, puts him in nice suits, and has him talk like he's more pro-Western than pro-Putin. And he teaches him how to be a polished, Western-style politician.

And that's designed to make him a more palatable candidate. And in 2010, Yanukovych wins the presidency. And all of a sudden, he is really in the center of the action. We believe that it is up to Ukrainians to chart your own course towards your own future. And in doing so, you can count on the support and friendship of the United States. So yet again, we're seeing the Paul Manafort model. Help somebody win office and then make all the money. That's right. But here he's added a new dimension because now he wants to get in on the real money. Which is what? He starts up a private equity firm. This firm is called Pericles. And the idea for Pericles is essentially to find

investors and then scoop up different properties in the tumult, right? Let's say a bunch of state telecom companies are privatizing in the Ukraine or other countries. You want to scoop those up and roll them up into a new private company. This was a way to not just be a consultant or a lobbyist, but to be an actual player, to be a businessman, to make real money. So if the old business model had two parts, the lobbying and the campaign consulting, this model has three. Wow. That's a real chance to make some money. Right. So how does this three-part business model work out for Paul Manafort? Well, it works out great until it doesn't. Because what happens in the Ukraine is that this act of

being, you know, pro-Western or bringing the Ukraine closer to Europe, eventually is revealed for an act. And he starts to pull away and become more openly pro-Russia. And the Ukrainians who are not Russian heritage are not happy about this. And they're agitating. And then there's eventually a revolution. Developments in Ukraine after those deadly protests, the government firing back. And Yanukovych is swept from power

and flees to Russia. It appears the country's ousted president is now in Russia. The government, they are reportedly granted victory. Wow. And what does that mean for Paul Manafort? It means Paul Manafort has lost his patron in the country, his biggest client, the source of all this money he was making for so long. And unbeknownst to him, this whole arrangement, this whole business is already being investigated by the FBI and American authorities. Because the kind of foreign lobbying that he specialized in is actually supposed to be tightly regulated. If you work for a foreign party or politician or government, you have to tell the U.S. authorities. That you're doing it.

And you have to disclose a huge amount of information. Every contact you have with an American journalist or policymaker or member of Congress, how much you're being paid, who your subcontractors are. And what they were doing was not doing any of this to avoid registering under what's called the Foreign Agents Registration Act, FARA. And it was okay for a while because FARA violations were almost never prosecuted. And there were a lot of people who did the same kind of work who didn't disclose it under FARA, who didn't register. And since there were very few prosecutions under FARA, everyone got away with it, including Paul Manafort.

Until he didn't. We'll be right back. So Manafort has lost his patron in the Ukraine, and he needs a new gig. And by February 2016, he's founded. So I want to thank my entire group. Then we beefed it up because we're really now in the final stretch, three and a half months. And Paul Manafort has done an amazing job. He's here someplace. Where's Paul?

He's the campaign chairman for Donald J. Trump. Paul Manafort. Oh, good. You made it. Paul Manafort has done a fantastic job. With the situation you're describing, why would Donald Trump hire Manafort to be his campaign manager? Trump hired Manafort because Manafort was experienced,

because no one else would work for Trump, and because Trump is cheap. And Manafort agreed to work for free. Why would he work for free? Well, think of the opportunity that Manafort saw in Donald Trump. Once again, an insurgent candidate for president and an opening for his own power, for his own influence. Here was a candidate who had alienated most of the GOP establishment in the same way that Reagan had.

Paul Manafort saw that if he went to work for Trump and Trump won, Paul Manafort could make a triumphant return to the scene of his former success. He could go back to Washington as the ultimate lobbyist for a new kind of president. So if there's a through line in the Paul Manafort story, it's seeing an opportunity in politics, in Reaganism, in communism, in Yanukovychism, in Trumpism. It seems to me that he is a man without any real ideology except a desire to make money and with a skill for seeing opportunity, for seeing when things are about to really change and for being there in the middle of the action when things do change. I brought Paul in because a very, very smart friend of mine who knew him very well

said he is fantastic, okay, and he's somewhat political, my friend. He's actually a very successful businessman, but he's a political type. He loves politics, like all of you. And he said, this guy is fantastic. I brought Paul in, and Paul has done a really good job. But he still has this liability that he brings to the Trump campaign that you described,

the FBI's interest in his finances. Right, so Manafort did not charge a fee, but his work did not come for free. There was a great cost to Donald Trump. He hired Paul Manafort, and he bought along with that all of Manafort's baggage. And eventually it would come back to haunt him. How exactly?

We spoke earlier of those opposition people back in the Ukraine. After that revolution, a ledger surfaced. The current government claims the ledger reveals off the books payments made by the former president's party. Eventually, they find a notebook, a ledger. Today, I present the documents signed by Paul Manafort. It seems to show that Paul Manafort has made tens of millions of dollars in the Ukraine. There's a lot of questions over whose money that really was and how he got it and where he put it.

Breaking news from the Donald Trump campaign and another change at the top. Campaign chairman Paul Manafort resigns Friday. This on the heels of Trump's overhaul of campaign management earlier this week. So once that ledger is found, it's a huge headache for Trump. Trump fires him very quickly. He had been demoted somewhat, and as we're understanding, and as we're learning this morning, CNN confirming Paul Manafort did in fact offer his resignation,

according to the campaign, and it was accepted. But the damage is done, because that ledger and Manafort's work overseas has begun to attract even more attention from federal prosecutors. Now, the former presidential campaign chairman to now President Donald Trump has really become the face of the Russia investigation in terms of the campaign staffers for his financial dealings with the Ukraine. There's no question that he has been engulfed in every twist and turn of this ongoing investigation. Given everything that you have just described, Nick, it seems to make sense that once Robert Mueller opens his investigation into possible collusion between the Trump campaign and Russia, that they're going to take an interest in somebody who has long worked for a pro-Putin

Ukrainian president. That's right. Look, when Mueller starts his investigation, Paul Manafort is suddenly the lowest hanging fruit with a Russia connection to Trump. And that's where it really begins. Breaking news tonight on special counsel Robert Mueller's case against Paul Manafort, the president's one-time campaign chairman. According to the New York Times,

when federal agents executed a search warrant on Manafort's Virginia home two months ago, agents picked the lock on Manafort's front door. They took binders, stuffed with documents, and copied his computer files, even photographed the expensive suits in the closet. Which is what's kind of fascinating, because Donald Trump hired as his campaign chairman a guy who made it his business to lobby for foreign powers in Washington. And now Donald Trump is being investigated on suspicions that he colluded with some of the same foreign powers to influence American policy. This all kind of comes full circle. I think in a way that Paul Manafort is on trial for his business model and that his business model was collusion of a sort. Even though technically his trial is about how he managed his money, there is this kind of larger backdrop of working with foreign governments to influence United States politics.

That's right. Look, he's on trial because of the way he tried to hide the wealth he generated from this business, tried to shield himself from some of the consequences of the business, tried to keep it all secret. But really what's on trial here, what we're learning from the trial, is how his business worked, what the business model was. And the business model was extending the influence of foreign powers back home in Washington.

I see real thematic similarity between the thing that Manafort made his fortune doing and the thing that Donald Trump is being investigated for. So with Manafort on trial this week, where do things stand for him now? I think the Manafort trial is kind of a tragic comedy, right? If the Mueller investigation had never happened, after Trump's victory, Manafort could have been the most powerful lobbyist in Washington. He could have taken his business there.

He could have had almost any client he wanted. And instead, this trial and the prosecution of Manafort are going to destroy the business model he created. In other words, this thing he created in Washington, Paul Manafort, and he brought abroad and he took home, it's now been exposed in a way that means it will never be the gold mine that it was for him, for everybody else. This business model that he pioneered, that he created, that he exported, that he then imported back, is now history. Thank you, Nick.

Thank you, Michael. Today marks the fourth day in the federal trial of Paul Manafort on charges of financial fraud connected to millions of dollars in income he received from the Ukrainian government and Ukrainian oligarchs. Here's what else you need to know today. On Thursday, the Trump administration released its long-awaited plan to roll back the fuel economy standards for automakers that were put in place by President Obama to combat global warming. placing it with a much lower requirement of 37 miles per gallon, and revokes the right of states like California to set their own higher fuel economy standards. In explaining the plan,

the Trump administration said that the Obama fuel efficiency standards, which would significantly cut greenhouse gas emissions and save billions of barrels of oil, would raise car prices and hurt consumers. And since the beginning of his administration, President Trump has implemented a whole of government approach to safeguard our nation's elections. The president has made it clear that his administration will not tolerate foreign interference in our elections from any nation, state or other dangerous actor.

On Thursday, top national security officials, including the Director of National Intelligence, Dan Coats, made an unusual appearance in the White House briefing room to warn that Russia continues to target U.S. elections and outline their plans to combat that interference. In regards to Russian involvement in the midterm elections, we continue to see a pervasive messaging campaign by Russia to try to weaken and divide the United States. We also know the Russians try to hack into and steal information

from candidates and government officials alike. In the weeks since President Trump's summit with President Putin, national security officials and congressional Republicans have made an effort to be clear that they believe Russia is an ongoing threat to be taken seriously. Are we talking about rogue Russian individuals or are we talking about the Kremlin? Both and even add to that, Russia has used numerous ways in which they want to influence

through media, social media, through bots, through actors that they hire, through proxies, all of the above and potentially more. I can't go into any deep details. The Daily is produced by Theo Balcom, Lindsay Garrison, Rachel Quester, Annie Brown, Andy Mills, Ike Streets-Conneracha, Claire Tennesketter, Paige Cowan, Michael Simon-Johnson, and Jessica Chung,

with editing help from Larissa Anderson. Lisa Tobin is our executive producer. Samantha Hennig is our editorial director. Our technical manager is Brad Fisher. Our engineer is Chris Wood. Thank you. That's it for The Daily. I'm Michael Barbaro. See you on Monday.