Foreign Agent Men

Flynn Foreign Agent Registration If former national security advisor Michael Flynn is indeed cooperating with special counsel Robert Mueller, the conversation with prosecutors likely includes information about clandestine lobbying for foreign powers by officials connected to Trump. This reflects a deeper corruption in Washington, D.C. beyond the self-interested actions of a single individual. Accepting foreign cash to influence U.S. policy has long besmirched both political parties. It is a recurring theme in Mueller’s Trump-Russia investigation.

Last March, after Flynn was forced from his position in the White House, he publicly revealed Turkish interests had secretly paid him. Flynn’s company took $530,000 in August 2016 from a Turkish businessman in part to lobby the US government to extradite the cleric, Fethullah Gulen. Despite the payment, Flynn failed at that time to register as a foreign agent as required by law.

Turkish President Recep Tayyip Erdogan blames Gülen, who lives in Pennsylvania, for the attempted coup against him in the summer of 2016. Gülen’s followers have indeed been influential in Turkey’s government bureaucracy and throughout Turkish society. They represent a force in Turkey outside of Erdogan’s control. However, the Turkish government did not produce sufficient evidence of wrongdoing to convince the Obama administration to extradite Gülen to a country where the justice system is increasingly rigged to favor the executive branch and torture is common.

On the day Trump was elected president, the Hill published a hyperbolic op-ed by Flynn, who was at the time a Trump campaign surrogate secretly shilling for Turkey. Flynn compared Gülen to terrorists like Osama bin Laden and urged his extradition.

“The forces of radical Islam derive their ideology from radical clerics like Gülen, who is running a scam,” wrote Flynn. “We should not provide him safe haven. In this crisis, it is imperative that we remember who our real friends are.”

The Wall Street Journal has reported that the FBI is investigating whether Flynn was prepared to do much more than pen an opinion piece. He and his son, Michael Flynn Jr., allegedly participated in discussions about kidnapping Gülen and ferrying him via private jet to the Turkish prison island of Imrali. The Flynns allegedly offered to provide this service in return for $15 million.

Flynn was not the only influential member of the Washington establishment advocating for Gülen’s extradition. Former U.S. Ambassador to Turkey beginning in the Bush administration, James F. Jeffrey, also became a prominent voice promoting the Erdogan line. Jeffrey offered advice to the Trump transition team on Turkey from his perch at the nonprofit Washington Institute. He urged the new administration to extradite Gülen to reset relations with Turkey.

A confidential diplomatic cable leaked by Wikileaks from 2009 shows Jeffrey wrestling with the Gülen issue as ambassador. In the document, he details the history and scope of Gülen’s influence in Turkey. Jeffrey was clearly wary of Gülen but did not recommend the cleric’s deportation.

By August 2016, Jeffrey’s position had evolved. He is quoted in a Turkish newspaper exactly a month after the coup that “most indications, not just the Turkish government’s statements, point to the Gülenist movement,” as behind the uprising.

Just how far Jeffrey was willing to go to present the case can be seen in another Wikileaks release, this one from the private emails of Mehmet Ali Yalcindag, a wealthy Turkish business partner of Donald Trump. The two collaborated on the Trump Towers Istanbul. Yalcindag married into one of Turkey’s most prominent families, which controls media, real estate and oil interests through the Dogan Group. The family conglomerate has been under attack by Erdogan for its media coverage of the regime and over allegations of tax evasion.

Yalcindag, who is desperate to curry favor with Erdogan, forwarded an email with an opinion piece written by Jeffrey that was published in the German newspaper Die Zeit. The article forcefully called for the extradition of Gülen.

“Interesting insights about Gulen,” said the forwarded email. “The German public is slowly starting to understand the situation!”

Yalcindag sent the email to Serhat Albayrak, the brother of Erdogan’s son-in-law, Berat Albayrak, who is the Turkish minister of energy and is mentioned as a potential successor to Erdogan.

Six months later when U.S. Secretary of State Rex Tillerson traveled to Turkey, Jeffrey was quoted in a CBS News report accusing the Gülenists of being a threat to the US relationship with Turkey and the stability of the Middle East. Interestingly, Jeffrey had worked as an advisor to ExxonMobile when Tillerson was CEO of the oil company.

Reached by phone, Jeffrey said that he has not received money from the Turkish government or people acting on its behalf. He is not registered as a foreign agent nor does he have any plans to do so. Jeffrey denied having any contact with Michael Flynn. While he cannot provide proof of Gülen’s involvement in the coup attempt, Jeffrey holds fast to the desirability of extraditing the cleric.

Past efforts to influence U.S. policy by foreign governments and their proxies has shown that there are any number of ways to spread the money around to achieve the desired result. Case in point was the Azerbaijan America Alliance, for which former Indiana Republican Congressman Dan Burton, acted as the front man. The Alliance spent more than $12 million showering cash on politicians in Washington, lobbying for them to be friendly to Azerbaijan. It held gala dinners with attendees like Speaker of the House John Boehner and met privately with Senator John McCain and House minority leader Nancy Pelosi. With the avalanche of money came fulsome praise for the corrupt and autocratic regime from both Democrats and Republicans in Congress.

It is clear that the existing rules to bring some transparency to the policy-for-sale ethos in Washington has failed miserably.

The Foreign Agents Registration Act was first passed to flush out Nazi propaganda back in 1938. It requires agents representing the interests of foreign powers in a political or quasi-political capacity to disclose that relationship, including financial details. Potential penalties include fines and jail time. Unfortunately, the Justice Department sees it as voluntary and hasn’t bothered to enforce the law. Circa reported in March that the DOJ had only prosecuted four cases involving violation of the law in the past ten years.

Special counsel Mueller is signaling a break with tradition.

Unregistered lobbying was the lynchpin of Mueller’s indictment against Paul Manafort and Richard Gates. Mueller charged that Manafort and Gates had created a limited liability company to engage in lobbying, consulting and public relations for the Government of Ukraine. The alleged laundering of money by Manafort, some $18 million, was to hide the profits from his work as an unregistered foreign agent.

It’s worth quoting from the indictment at length on the matter:

It is illegal to act as an agent of a foreign principal engaged in certain United States influence activities without registering the affiliation. Specifically, a person who engages in lobbying or public relations work in the United States (hereafter collectively referred to as lobbying) for a foreign principal such as the Govennnent of Ukraine or the Party of Regions is required to provide a detailed written registration statement to the United States Department of Justice. The filing, made under oath, must disclose the name of the foreign principal, the financial payments to the lobbyist, and the measures undertaken for the foreign principal, among other information. A person required to make such a filing must further make in all lobbying material a “conspicuous statement” that the materials are distributed on behalf of the foreign principal, among other things. The filing thus permits public awareness and evaluation of the activities of a lobbyist who acts as an agent of a foreign power or foreign political party in the United States.

Trump’s First Appearance in the Panama Papers

Trump Secrecy WorldThe earliest appearance of Donald Trump in the Panama Papers shows how operating in the secrecy world is a game rich people play to hide their activities. For government officials, journalists and even ironically, the law firm behind the Panama Papers, determining who is behind a given shell company could be difficult. And as with many cases involving Mossack Fonseca companies, the files are incomplete.

The story involves a Panamanian company called Process Consultans, Inc. No, that’s not a typo. There is no final “t” in Consultans. Except sometimes in the documents, including in letterhead, it is spelled with the “t.” Whether this was due to incompetence, necessity or purposeful muddying, the result is a company that is harder to track.

Process Consultans was owned through bearer shares. These share certificates were pieces of paper and whoever physically possessed them owned the company. For example, if Process bought an apartment in a Trump development, the company was the titleholder. Process itself was owned through two share certificates. If someone handed you those two pieces of paper, you would be the owner of the apartment. Bearer shares could be used to transfer assets completely anonymously. They were favorite tools of money launderers. For Mossack Fonseca, bearer shares were popular add-ons, a lucrative secrecy selling point.

The directors of Process Consultans were employees of Mossack Fonseca, including Jürgen Mossack himself. They acted as “nominee directors. These were fake directors, an extra service offered by the firm, which had the benefit of hiding who was really making decisions for the company. Nominee directors are a common ploy in the secrecy world.

Now, just because Process Consultans used bearer shares, nominee directors and had a fluid name doesn’t necessarily mean it was doing anything illegal. Figuring out who actually owned the company and where the money came from – and whether it was up to something improper – that’s where the fun usually began for journalists delving into the files.

There is nothing in the Panama Papers that explicitly states who is behind Process Consultans. The company was created in 1985 and back then Mossack Fonseca truly did not care who owned their companies, nor was there much legal obligation in Panama for them to do so. Instead the firm created a company – usually for a lawyer or a banker who solicited it on behalf of their client – stuffed the registration form in a file and forgot about it until a year passed and it was time to send an invoice for a renewal.

Nonetheless, it appears Process Consultans was originally created by Dresdner Bank LatinAmerika AG in Panama for a client. This person may have been a German-Ecuadorian industrialist, who found his way to the law firm through its Guayaquil franchisee. At some point, the law firm’s internal documents began to identify the company as originating in Luxembourg and connected to a branch of the Swiss bank UBS in Germany.

In 1991, Process Consultants, Inc. bought a unit in the newly constructed Trump Palace on 200 East 69 Street in Manhattan. The 54-story skyscraper was the tallest building above 60th Street.

“Trump Palace makes little effort to fit into its surroundings. It wants to stick out on the skyline like a prima donna… The truth is that Trump Palace is less an homage to the 20’s and 30’s than it is a hangover from the 80’s,” sniffed the New York Times.

The Trump Palace was open for business for foreign buyers and sellers, some of them hiding behind anonymous shell companies.

The person or persons behind Process Consultans decided to sell his condo in 1994. Trump Corporation was the exclusive broker. It was The Donald’s palace, after all. In September 1994, a document in the files details an agreement for the apartment, sale price $395,000. (Later, the price appears to have been whittled down to $355,000.)

The buyer of the apartment may have been from Hong Kong. There is a woman with the same name as the individual identified in the files as the person to whom the property was “transferred, ” that pops up in a previous offshore leak reported by ICIJ.

Unfortunately, the New York City Department of Finance online database ACRIS only has information on the apartment after 2005. At that point, it was owned by a Brazilian from Sao Paolo. He used his real name. That year he sold it for $795,400.

But the Process Consultans story does not end with the sale of the Trump apartment. In 2006, Mossack Fonseca contacted the Ecuadorian industrialist about his company. It appears the firm lost touch with the owner and believed he wanted the company dissolved. Mossack Fonseca went to UBS, which rejected any responsibility for the matter.

By 2008, Mossack Fonseca had created more than 160,000 offshore entities. This torrent of secret companies, particularly the older ones, had become difficult to manage. Still, as long as everyone got paid – including Donald Trump – nobody asked too many questions. Now, Mossack Fonseca wasn’t sure who to bill. It contacted the industrialist inquiring what was going on.

The Ecuadorian wrote back:

Gentlemen:
 
I do no understand what you mean with this message.
The company PROCESS CONSULTANTS INC. was established in Panama almost a cuarter of a century ago. Since then you send me the annual bills for the administration fees which I always paid to you. Why does the administrator (for me: YOU), suddenly come up with this strange comment?  If there was any change concerning the registry or administration of PROCESSS CONSULTANTS INC. I would have been the first to know (and ACCEPT) it.
Please enlighten me on the subject.

 

This blog post has been updated. I have replaced the word “first” with “earliest” in the first sentence to avoid any confusion. The Donald Trump organization appears elsewhere in the Panama Papers. Chronologically, this is the first instance of that I found.