Two K Street firms caught up in the web of Paul Manafort’s influence have hired outside counsel to look into whether a former client he referred to them lied about its source of funding.
Manafort, who resigned on Friday as Donald TrumpDonald TrumpJudge recommends criminal contempt charges for Sheriff Joe Arpaio Trump supporter says he was kicked out of rally ‘because I’m brown’ EXCLUSIVE Bardella: On Steve Bannon and why I’m voting for Hillary MORE’s campaign manger, has thrust the Podesta Group and Mercury into a controversy about undisclosed foreign lobbying.
The scrutiny is falling on the Brussels-based non-profit the European Centre for a Modern Ukraine, which Manafort introduced to the firms.
The organization had ties to the Party of Regions in Ukraine, led by then-President Viktor Yanukovych — for whom Manafort consulted. The Centre insisted to the lobby firms that it had no foreign government or political party exerting an influence.
The Podesta Group has hired the law firm Caplin & Drysdale, and Mercury has retained Skadden, Arps, Slate, Meagher & Flom, to handle the mounting controversy.
Podesta “has retained Caplin & Drysdale as independent, outside legal counsel to determine if we were misled by the Centre for a Modern Ukraine or any other individuals with regard to the Centre’s potential ties to foreign governments or political parties,” Podesta Group CEO Kimberley Fritts said in a statement on Friday.
Skadden, meanwhile, “has been engaged to look into the matter” for Mercury, said Kenneth Gross, who lead’s Skadden’s political law practice.
It is the latest wrinkle in the controversy surrounding Manafort and his associate Rick Gates, who still works on the GOP presidential nominee’s campaign.
Earlier this week, The Associated Press reported that introductions by Manafort and Gates that connected the Centre to the Washington lobby firms Podesta Group and Mercury resulted in $2.2 million in advocacy work between 2012 and 2014, according to public filings.
Manafort and his firm worked for the political party of Yanukovych, who was ultimately ousted as Ukraine’s president. He and Gates have said, however, that none of the work had to be disclosed under the foreign lobbying law, the Foreign Agents Registration Act (FARA).
The Podesta Group, which is one of the biggest lobby shops on K Street, said on Tuesday that it had secured a signed statement from the Centre attesting that it was not connected to any foreign governments or parties before starting any work.
The firm then detailed its work in disclosures under the domestic lobbying law, the Lobbying Disclosure Act (LDA), as sanctioned by an outside legal opinion, Fritts, of the Podesta Group, said.
“We relied on that certification and advice from counsel in registering and reporting under the Lobbying Disclosure Act rather than the Foreign Agents Registration Act,” Fritts said on Friday.
Disclosures under the LDA require much less information and detail than FARA filings. Lobbyists representing private organizations based abroad — such as corporations and non-profits — do not have to file under FARA, unless a foreign government has a monetary or influential stake.
Buzzfeed’s Rosie Gray first reported the news of the two firms bringing on outside counsel.
Every kind of response is on the table right now, Fritts said in her statement on Friday.
“We will take whatever measures are necessary to address this situation based on Caplin & Drysdale’s review, including possible legal action against the Centre,” she said.
The director of the Centre, Ina Kirsch, said that she had hired the firms on her own, with no help from Manafort and Gates, according to The AP. Kirsch also said that neither of the men had control of advocacy strategy.
Other sources cited by the AP — including emails obtained by the outlet — refute that claim.
– Updated at 6:09 p.m.