Russia Hired Edelman In 2016 To Help Deal With Yukos Fallout

by Ashley Balcerzak

A former national security adviser was paid more than $500,000 last fall by a group linked with the Turkish government to discredit exiled preacher Fethullah Gülen, an enemy of the Turkish president. An Egyptian intelligence agency hired public relations firms Weber Shandwick and Cassidy & Associates to improve its image. Iraq sent letters to top Trump officials  such as Secretary of State Rex Tillerson and Secretary of Defense James Mattis requesting meetings in the wake of the new president’s first travel ban, which included Iraq. The second iteration of the ban took Iraq off the list.

These stories could not have been told without the help of filings required by FARA, or the Foreign Agents Registration Act . Passed in 1938 in response to secret Nazi propaganda efforts in the U.S., the law requires anyone representing a foreign government or quasi-governmental agency (as well as individual citizens of other countries and sometimes foreign companies) to file extensive reports with the Justice Department. The filings must disclose who they’re representing, how much they’re being paid, what they’ve been hired to do, the meetings and other contacts they’re having, the content of materials they’re distributing and more. But the data is normally locked in PDFs with limited search functions.

In the spirit of Sunshine Week, the Center for Responsive Politics today releases a tool that makes looking through FARA filings a whole lot easier: Foreign Lobby Watch . We standardized registrants, foreign principals and locations, and parsed the PDF text to allow for full-text searching. (We inherited this project from the Sunlight Foundation, which previously hosted a tool called Foreign Influence Explorer.)

For example, a quick search of “Russia” in our database found 77 firms represented 170 governmental or pseudo-governmental entities, pulling up 274 records since 1950. The last Russian lobbying registration shows that a group created by the Russian Federation hired the PR firm Edelman last year to help influence U.S. opinion on a massive court verdict involving the oil giant Yukos.

That ruling was the latest twist in a complicated set of events that started in the early 2000s, when the Russian government dismantled and sold off Yukos, Russia’s largest fully privatized oil company after the fall of the Soviet Union. The Kremlin jailed two high-ranking Yukos executives, including its head, Mikhail Khodorkovsky, an act that was seen as retribution for Khodorkovsky’s political opposition to Vladimir Putin. (Khodorkovsky was freed and pardoned  in 2013 and lives in exile .)

Yukos went bankrupt after the Russian government charged it with tax evasion, embezzlement and money laundering. Its former stakeholders sued the government, winning a $50 million verdict in 2014 at The Hague, the largest arbitration penalty ever. But a higher court overturned the award two years later.

Yukos stakeholders are appealing the ruling and have pending enforcement lawsuits in a half-dozen countries, including the U.S., in efforts to collect Russian assets. The D.C. case in the district court of appeals has been put on pause until 2019, as the Netherlands case will impact what happens in the U.S. proceedings.

Amid the wrangling, the Russian Federation created a task force, the International Centre for Legal Protection, headed by a former director in the Russian Ministry of Foreign Affairs, Andrey Kondakov , to help coordinate the various ministries involved in the case. And the task force hired Edelman to help turn the tide of public opinion — often suspicious of anything Russia — in their favor. Kondakov did not respond to a request for comment by time of publication. 

Signing the contract on Edelman’s side was Randall Corley, the firm’s global compliance officer.

Filings can fall short

FARA filings are only as good as the filer, of course. We see Edelman was hired for public relations work, including drafting press releases, media outreach, helping build a website and “strategic counsel.” However, it’s not clear from the reports alone how much Edelman did. According to the FARA file, ICLP issued just one press release, on Aug. 8, which also appeared on PR Newswire : “Key Yukos Insider Reveals Billion-Dollar Bribery Scheme.”

The release describes a filing in the D.C. case from a Yukos insider, Dmitry Gololobov, who learned firsthand how the Oligarchs rigged the Russian governments loans-for-shares auctions in 1995 and 1996 to illegally acquire ownership of Yukos.

Mr. Gololobovs testimony represents another step forward, said Kondakov in the press release. It confirms the corruption, fraud and bribery perpetrated by the Oligarchs at the expense of the Russian people and it validates the position that the Russian Federation has maintained throughout the Yukos case that the Oligarchs arguments are just lies about lies.

As for media outreach, Kondakov is quoted in a New York Times piece reporting the overturning of the arbitration fine, but that was published before ICLP hired Edelman in June 2016. Filings and the press release show at least nine people at Edelman were affiliated with the project, and the agreement was terminated on September 30, 2016 .

An Edelman representative said that they do not comment on clients, and that they filed all the necessary paperwork with FARA.

The original filing said Work for client has begun and the contract is still being negotiated. This filing will be amended to included the contract once a signed copy is executed. Yet OpenSecrets Blog found no amendment or contract in the filings that followed. And an August filing that lists receipts and disbursements for other clients showed no line items for ICLP from Feb. 1 through July 31, 2016. Its unclear, without the inclusion of the required contract, how much Edelman was paid.

If you comply with FARA, the information is very extensive and does tell the public and the press most of what they would want to know, said Joseph Sandler, Democratic attorney and FARA expert. But there could be holes with what they actually include, or could include filings from nonprofit front groups and think tanks that are hard to immediately understand who is backing them.

A history of Russian lobbying

There are plenty of other Russia-related nuggets in the FARA files. For instance, billionaire Oleg V. Deripaska paid Endeavor Group a $40,000 monthly retainer in 2009 and 2010 to provide general legal advice involving his U.S. visa, as well as commercial transactions. The State Department had revoked Deripaskas visa in 2006 due to concerns about his possible links to organized crime ties, which Deripaska has denied.

Endeavor Group expects to engage with the U.S. government regarding the status of the foreign principals visa application; interact with the United States Trade Representative office to encourage U.S. participation in the intra-governmental global aluminum discussions; and engage with the Department of Treasurys Auto Task Force regarding the prospective acquisition of General Motors European operations, the FARA filing says .

Russias foreign minister, Sergey Lavrov, also wrote a letter to Adam Waldman, the founder of Endeavor Group, asking for updates on the case and saying he appreciates the work the firm is doing.

[O]ver the past several years, there has been certain ambiguity upon his visa status in the United States, Lavrov wrote. A persistent state of limbo regarding Mr. Deripaskas ability to travel freely between our two countries has become an impediment to the promotion of mutually advantageous contacts between the business communities of the two countries.

State-owned banks also hired up in an effort to ease sanctions levied in 2014 after Russia annexed Crimea. One of them, VTB Group , a financial services firm owned by the Russian government, brought on board Emaunuel Manatos (a lobbyist who bundled almost $40,000 for Hillary Clinton this election) in May 2016 for $17,500 a month to lobby Congress and Executive that affect imposition of US sanctions on Russian-affiliated banks.

And the name that crops up again and again is that of the PR firm Ketchum Inc., which has earned more than $60 million working for Russia over the past decade or so, according to a POLITICO analysis of FARA filings .

The Russians first enlisted Ketchums help for communications support when it hosted the G8 summit in St. Petersburg in 2006, paying the company $2 million. (The country was in need of a media revamp after Russias energy company Gazprom cut off natural gas to Ukraine .)

Ketchum also works with subcontractors such as Alston & Bird to monitor foreign policy legislation , and Clark & Weinstock and Venable LLP to lobby on behalf of Gazprom and keep an eye on energy policy.

ProPublica reported in 2012 that the Huffington Post and CNBC published pro-Russia op-eds linked to Ketchum without noting the connection to the Russian government in the pieces. A year later, Ketchum placed an op-ed by Putin in the New York Times.