WASHINGTON — A high-profile American lawyer, Gregory Craig, who was paid by cronies of former Ukrainian President Viktor Yanukovych for an investigation they hoped would hush criticism of the imprisonment of opposition leader Yulia Tymoshenko, was acquitted on Sept. 4 of charges he had lied about the work to the U.S. Justice Department.
Although Craig was found not guilty by a jury in federal court at the end of a trial which began Aug 12, the case raised the lid on a grubby world where lawyers, political spin doctors, lobbyists, and others eagerly grab lucrative fees for working on behalf of unsavory or downright tyrannical regimes or individuals.
There was testimony at trial that Ukrainian billionaire oligarch Victor Pinchuk provided the money to try to dampen Western criticism of Yanukovych for the political persecution of Tymoshenko, who was jailed in August 2011 and not set free until Kremlin-backed Yanukovych fled to Russia at the height of the EuroMaidan Revolution on Feb. 22, 2014. Pinchuk did not respond to requests for comment.
Craig, 74, and the international legal firm he worked for until last year, Skadden, Arps, Slate, Meagher and Flom, came to the attention of prosecutors in the fallout from the investigation by U.S. Special Counsel Robert Mueller into Russian interference in the 2016 U.S. presidential race and whether there had been collusion between the Kremlin and the campaign of Donald Trump, the eventual winner.
Mueller had focused much of his investigation on Paul Manafort, the public relations operative who was credited with rescuing Yanukovych from political oblivion after he lost his 2004 presidential bid when the initial results were overturned because of massive electoral fraud engineered by the Yanukovych camp.
After losing his patron Yanukovych, Manafort found a new job as Trump’s campaign chief. He was forced to leave after his role for Yanukovych surfaced and a Ukrainian journalist revealed documents listing millions of dollars in payments to Manafort that he had not declared to U.S. tax authorities.
The Mueller investigation led to Manafort being charged with evading U.S. taxes on millions of dollars paid to him into shady offshore accounts by Yanukovych’s people. He was found guilty at two trials and is currently serving a seven and a half year prison sentence.
Manafort groomed Yanukovych’s political image, and even literally his appearance, advising him on clothes and haircuts to drop his Donetsk-gangster persona to make him electable in the 2010 presidential race, in which he beat Tymoshenko by 3.5 percentage points.
After he came to power, Yanukovych arranged for the arrest, trial and imprisonment of the politician he had narrowly beaten in the presidential election, Yulia Tymoshenko. That caused outrage around the world with the European Union, America, Canada and many other countries condemning the proceedings as a show trial and selective punishment.
Manafort, an extravagantly-paid political guru to Yanukovych, tried to ease the mounting pressure on Kyiv by hiring Skadden, for $4.6 million, to produce a report he hoped would show Tymoshenko’s trial had been conducted properly.
Craig led the team that investigated Tymoshenko’s experiences at the hands of Ukrainian justice and compiled a report distributed in December 2012. Although it noted some deficiencies in the legal procedures around her trial, which did not match American standards, it largely portrayed Tymoshenko’s conviction as justified on the basis of the evidence presented to the Ukrainian court.
Yanukovych’s camp then used the report as a key ingredient of its propaganda campaign to push back against condemnations of the Tymoshenko trial. His supporters even set up a bogus “independent” think tank, the European Centre for a Modern Ukraine, which exploited the report and paid European politicians, who later claimed they did not know of connections to Yanukovych, to polish up his image. Court documents named Andriy Klyuyev, then Ukraine’s first vice prime minister, as the person pulling the strings of the puppet think tank.
Tymoshenko’s lawyers and her supporters accused Skadden of taking lavish payments to produce a skewed report designed to justify what most western governments regarded as politically-motivated revenge against Tymoshenko, who at that time represented the most powerful opposition to Yanukovych’s deeply corrupt and kleptocratic regime, which had embarked on a massive looting spree against the state treasury and any private businesses they desired.
Craig’s willingness to take part in Manafort’s efforts to whitewash the Yanukovych regime’s actions raised eyebrows when Skadden’s involvement came to light because he is regarded as an eminent lawyer who served two presidents, including Barack Obama, as a White House counsel, a senior legal adviser.
But the charge leveled at him was that he had deliberately misled U.S. Justice Department officials who enforce rules about complying with the Foreign Agents Registration Act (FARA) which requires people working as lobbyists for foreign countries to register that fact.
Mueller’s investigations into Russian interference in the 2016 U.S. elections caused alarm at how much concealed foreign influence was at work in the American capital. That led to FARA becoming a powerful instrument for the Special Counsel and other prosecutors using it to crack down on people concealing that they were working for foreign governments, some whose behavior was inimical to the United States.
Craig was not accused of violating FARA itself but of lying to avoid registering as a foreign agent. The charge revolved around the extent to which Craig had tried to get the report publicized by media, including the New York Times, a role that prosecutors claimed strayed from a legal investigation into the realms of lobbying.
His acquittal may mean a setback to the use of FARA to combat malevolent foreign influence by Russia and other bad actors in the U.S.
Craig’s defense was that he had not sought to deceive in two letters and a meeting with Justice Department officials six years ago and that charges against him were based on a few minor omissions of things that he had not been obliged to divulge.
One of his lawyers, William Murphy, said: “Mr. Craig is not the kind of person who would lie to a U.S. government agency, not after a 50-year career based on character and trust.”
But prosecutors described one of the letters as a “masterpiece” of lies and half-truths which displayed “contempt for the FARA unit.”
They alleged Craig concealed his role in providing the report for media use because that would have required FARA registration.
They said Craig did not want to register because he thought it could hamper him and the other Skadden team members getting future government work. The prosecution also alleged Craig did not want to endanger his or the firm’s reputation by disclosing that Ukrainian oligarch Viktor Pinchuk had paid the firm $4.15 million to conduct the report for the Yanukovych government.
However, the prosecution’s case was weakened because Justice Department officials who dealt with Craig did not keep notes of the discussions with him in which they claimed he lied.
Craig told the judge and jury that his work for Yanukovych was purely legal and did not involve advocacy on behalf of the Ukrainian government. He said: “I did not lie……I did not withhold or conceal any information.”
A prosecution witness, former Manafort deputy, Rick Gates, testified that it was Craig’s idea to provide the report to the New York Times. Craig denied that and said he spoke to journalists only to correct distortions in the Ukrainian government’s version of the report which he said made it seem Skadden was “bought and paid for” to whitewash Tymoshenko’s prosecution.
Steel magnate Pinchuk did not appear at the trial. But witnesses and court documents indicated he paid $4.15 million of the fee received by Skadden.
Craig flew to Kyiv for breakfast at Pinchuk’s house to discuss payments. At one point Pinchuk told Craig that Yanukovych’s office had not yet authorized him to pay half the fee as an advance. Craig threatened to pull out of the project. Manafort promised to get the money which was transferred to Skadden via a Cyprus account in Manafort’s name.
Craig said: “It was Pinchuk’s money but it was transferred through Manafort.”
Initially, the Ukrainian government claimed it was only paying Skadden a $12,000 fee – the legal limit for outside contracts. But an editorial in August 2012 in the Kyiv Post called that sum “ridiculous,” saying that would pay for only some 12 hours of Craig’s work at Skadden ’s going rate.
That, according to court documents, embarrassed Manafort into saying Skadden was being paid $1.25 million and Craig submitted a new invoice for that amount although his firm had already received more than $4 million from Pinchuk. Manafort asked Craig to backdate the invoice to before the Kyiv Post’s editorial, entitled “Skadden Stink” was published.
The Kyiv Post asked Pinchuk why he agreed to pay for the investigation and did he think it is acceptable to use his wealth to try to influence or obscure the truth in matters of justice. No reply was received by publication time.
Pinchuk previously paid for American investigative company Kroll to look into the alleged role of his father-in-law, President Leonid Kuchma, in the murder of journalist Georgy Gongadze. The resulting report was labeled by many an attempt to whitewash Kuchma.
Skadden apparently developed an appetite for servicing the needs of Ukrainian oligarchs with opaque sources of wealth. Its London branch has been acting for the business partner of Igor Kolomoisky, Gennadiy Boholyubov, former owners of Ukraine’s largest bank, PrivatBank. The Ukrainian government nationalized it in 2016 and was forced to inject $5.5 billion in public money to replace funds that went missing under the stewardship of Kolomoisky and Boholyubov.
The new Ukrainian government-appointed owners of PrivatBank opened procedures in the English courts to freeze the two oligarchs’ funds prior to eventually retrieving billions of dollars.
Skadden earlier this year agreed to a settlement with the Justice Department that allowed the firm to avoid prosecution by registering under FARA and paying some $4.6 million.
