Decades Ago, Paul Manafort Played a Leading Role in a Pioneering Operation to Secretly Funnel Foreign Money Into U.S. Politics

On October 30, 2017, former Trump campaign manager Paul Manafort and his associate Rick Gates surrendered to federal authorities in Washington. The two are the first to be indicted in Special Counsel Robert Mueller’s probe into Russian attempts to interfere in the 2016 presidential election. Their 12 charges include conspiracy and money laundering. The Intercept previously looked at Manafort’s work in the early 1990s, when he helped pioneer a scheme to funnel foreign government money into the United States through a non-profit partner. Here’s our story:

Former Donald Trump campaign manager Paul Manafort was a major player in a transnational operation that was both pioneering and innovative during its time, according to court documents and interviews with key figures. This decades-old scheme may fit the same pattern investigators are probing in regard to Russian government’s influence on the 2016 campaign.

When Manafort joined Trump’s campaign, a flurry of stories was written about the shady clients the lobbyist had represented over his long career. But by shifting the focus from who he represented to how, a more interesting picture begins to emerge.

Trump accepted Manafort’s resignation in August 2016 — just three months after he joined the campaign — after reports of Manafort’s ties to a pro-Russian Ukrainian became too much to stomach. He is known to have worked for a series of controversial clients, including an international arms dealer. A closer look into one of Manafort’s former clients, as well as details from a past top official of that organization, provides insight into a scheme to funnel foreign government money into the United States through a nonprofit partner, evading the notice of authorities.

In the early 1990s, Manafort’s lobbying firm, Black, Manafort, Stone, and Kelly, worked for the Kashmiri American Council, a group that tried to influence U.S. policy toward the disputed territory of Kashmir. Later, the group, led by Kashmiri native Syed Ghulam Nabi Fai, was proven to be a front for Pakistan’s intelligence agency in Washington. The KAC hired Manafort in October 1990, just months after its founding.

Two decades later, the Department of Justice charged and convicted Fai of conspiring to secretly act as an agent of the Pakistani government in the U.S., the result of a long-running investigation. The reason: Inter-Services Intelligence, Pakistan’s intelligence agency, had been secretly funding and directing the KAC’s work in violation of federal law since its inception.

Over the course of five years, Manafort’s lobbying firm took in $700,000 from the KAC to set up the operation. It was just a fraction of the $3.5 million Fai admitted the KAC received from the Pakistani government between 1990 and 2011, but it came at a crucial time for the organization.

The FBI launched an investigation into Fai in 2005, following years of allegations from the Indian press that the KAC, which advocated for Kashmiris’ right to self-determination, was a front for the Pakistani government. The investigation started with a tip from a confidential informant that Fai and an associate in Pakistan, Zaheer Ahmad, were ISI agents, according to an FBI affidavit. In July 2011, the Justice Department charged Fai and Ahmad with conspiracy to act as agents of the Pakistani government in the U.S. without disclosing their affiliation as required by U.S. law. In December of that year, Fai pleaded guilty to conspiracy and related tax violations. (Ahmad was not arrested when the charges were brought because he was in Pakistan, where he died in October 2011.)

The investigation unveiled an elaborate scheme on the part of the Pakistani government to influence Washington policymakers while hiding behind a seemingly innocuous nonprofit organization. Under U.S. law, an organization doing the bidding of a foreign government must register as a foreign agent. But, as the KAC learned, it was possible to circumvent the rules by hiding behind donors seemingly sympathetic to the organization’s mission. The money could be used to make campaign contributions to lawmakers who, in return, would make public statements about Pakistan’s rightful claim to Kashmir. And who better to help the KAC make inroads with members of Congress than Manafort, a longtime lobbyist and darling of the Republican Party. (Rep. Dan Burton, a Republican who represented Indiana’s 5th District from 1983 to 2013, was the KAC’s chief supporter in Congress and received at least $10,000 in contributions from Fai, according to Politico.)

As KAC director, Fai submitted annual budget requests to the government of Pakistan, which partially funded Fai’s work through money delivered to Ahmad, who arranged for the funds to be delivered to Fai through a network of straw donors in the U.S., according to court documents. The KAC provided the straw donors with letters documenting that the transfers were tax deductible. At no point did Fai register his group as a foreign agent of Pakistan, as required under the Foreign Agents Registration Act, nor did he disclose to the IRS that the money the KAC received from the donors actually came from Pakistani officials.

The reporting on Manafort’s work on Kashmir has focused on the identity of the client. But setting that aside and foregrounding the operation itself reveals something simpler: The use of a nonprofit to funnel foreign money into Washington.

In 1994, Manafort and his coworker, K. Riva Levinson traveled to Kashmir, arriving in India on tourist visas with no indication that they worked for the KAC. The Indian government accused them of posing as CNN journalists while gathering footage in the Himalayan region and notified CNN’s Atlanta headquarters. Manafort and Levinson denied the accusations, and a colleague said their footage was never used, according to the Associated Press. Levinson, who declined to be interviewed for this story, described Manafort as “arrogant, narcissistic, egotistical, brilliant” in her 2016 memoir, “Choosing the Hero: My Improbable Journey and the Rise of Africa’s First Woman President.”

“But it is Paul’s mercenary attitude that puts us at odds,” she wrote in her book.

Gordon D. Kromberg, the assistant U.S. attorney who prosecuted Fai’s case, told Yahoo News last year that Manafort’s knowledge, if any, of the source of Fai’s money was not part of the Justice Department’s investigation. (The DOJ did not respond to a request for comment.) In December 1995, the ISI officer responsible for handling Kashmiri affairs in the mid-1990s, Javeed Aziz Khan, criticized Fai for renewing a contract with a public relations firm without prior authorization from the ISI; at Fai’s sentencing hearing, Kromberg identified the firm as “Black, Manafort, and Stone,” according to court records.

Peter Kelly, a partner at the lobbying firm, confirmed to The Intercept that Manafort brought the KAC in as a client, but he said he does not know much about Manafort’s role with the group. “Frankly I never worked with Paul on it at all,” Kelly said. “We never communicated on it. I don’t think there was anything, frankly, unique about it.” He said he was unaware of the KAC’s connection to the ISI until The Intercept brought it to his attention.

But a former KAC employee said he does not think Fai could have come up with the operation to covertly use Pakistani funds to sway U.S. foreign policy without the firm’s help. “Manafort set it up,” speculated David Wolfe, who was the KAC’s chief government relations liaison from 2005 to 2009. “He found those loopholes, because people don’t look at nonprofits.”

Wolfe joined the KAC a decade after Manafort stopped providing services to the organization. He met Manafort a few times during his work at the KAC, he said, but was not aware at the time of what exactly Manafort’s role with the group had been. But when reports emerged in 2016 that Trump’s campaign manager was linked to a group that was acting on behalf of the ISI and that Manafort had also lobbied on behalf of Saudi Arabia in the 1980s, Wolfe said he started to connect the dots. “When you start putting the two together about what was going on with the Saudis with Pakistan and Afghanistan at the time of the ’80s, and what the KAC was taken down doing … it really all started to make a lot of sense,” Wolfe told The Intercept. Fai also has ties to Saudi Arabia dating back to the 1980s, and it was the Saudis who bankrolled his emigration to and education in the U.S., according to a 2011 ProPublica report.

During his tenure at the KAC, Wolfe was suspicious of large payments the group received without doing public fundraising in the U.S., and he said he could tell the scheme had been in place for some time, likely with some outside help. “He’s not that clever, which is I think probably why he got caught,” Wolfe said of Fai. He had questions but was not concerned enough to leave his job. “An organization that had that type of money that was coming in without doing any type of proactive fundraising is also a red flag — which I personally knew was a red flag — but I was in it to try to solve the Kashmir crisis,” Wolfe said. Eventually, the FBI contacted Wolfe and asked him to spy on his boss, which he did for about two years. (Both Fai and the FBI declined to comment for this story.)

FBI Special Agent Sarah Linden, who led the investigation into Fai, wrote in her affidavit in support of his arrest that “the KAC does receive some legitimate donations,” but the majority of its funds came from a small group of individuals closely associated with Ahmad, Fai’s accused co-conspirator. Court documents show that Fai eventually admitted to receiving money in sums ranging from $4,000 to $595,193 from the ISI between 1993 and 2011 through Ahmad and a series of middlemen.

Trump brought on Manafort, a longtime political consultant, at no cost in March 2016 to recruit delegates for the upcoming Republican National Convention. Two months later, the then-candidate named Manafort his campaign adviser, again without an official salary. Manafort never asked for one. He did not last long, though, at least not officially; Trump removed Manafort in August amid internal campaign discord and following reports of Manafort’s business dealings with Russian-aligned individuals in Ukraine, including Viktor Yanukovych, the former Ukrainian president and ally of Russian President Vladimir Putin. On June 9, 2016, 11 days before he was named campaign chair, Manafort, along with Donald Trump Jr. and Trump’s son-in-law Jared Kushner, met with Russian lawyer Natalia Veselnitskaya at Trump Tower.

Special Counsel Robert Mueller III has focused on Manafort. When Mueller was appointed to lead the Trump-Russia probe in May, he began to draw from ongoing investigations into Manafort’s business dealings, including one by federal prosecutors in Manhattan and a review of Manafort’s late filings to comply with FARA. The FBI raided the political consultant’s Virginia home in July to secure documents related to the Russia probe and in August, Mueller subpoenaed Manafort’s bank records.

Top photo: Paul Manafort, former campaign manager for then-presidential candidate Donald Trump, is interviewed on the floor of the Republican National Convention at the Quicken Loans Arena in Cleveland on July 17, 2016.