Skadden Arps, Slate, Meagher & Flom, the US law firm, has agreed to pay $4.6m as part of a civil settlement for its role in a 2012 Ukrainian influence campaign led by Paul Manafort, Donald Trump’s former campaign chairman.
The law firm had failed to register as a foreign agent as required under the Foreign Agents Registration Act, the US Department of Justice said on Thursday. The firm agreed to retroactively register as a foreign agent for the government of Ukraine in that year.
The settlement is a black mark for the powerhouse law and lobbying firm, whose former partners occupy senior positions in Mr Trump’s administration. The firm’s work for the Ukrainian government was led by Greg Craig, a former White House counsel in the Obama administration who left Skadden last year. An attorney for Mr Craig declined to comment.
The resolution stems from a 2012 report the Ukraine government commissioned Skadden to write as part of an effort to head off US and European criticisms of the prosecution of Yulia Tymoshenko, the former Ukrainian prime minister and political opponent of Viktor Yanukovich, who was the country’s president at the time.
Mr Yanukovich, the pro-Russian Ukrainian leader, was a longtime client of Mr Manafort, who last year pleaded guilty to charges brought by Robert Mueller, the special counsel, in connection with his lobbying work in Ukraine. Mr Manafort and Ukraine used Skadden’s report, which was criticised by some as a whitewash, as proof that Ms Tymoshenko’s prosecution was not politically motivated.
On Thursday, the justice department said that Skadden, soon after it began its work, became aware of Ukraine’s intentions for the report and that its lead partner, which the DoJ did not name, had participated in the public relations campaign. The DoJ also said the law firm had failed to disclose in its report that Skadden had also been hired by Ukraine to advise on a second prosecution of Ms Tymoshenko.
The firm, relying on information from the lead partner, later misled the justice department unit tasked with determining whether lobbying and law firms must register as foreign agents for their activities, according to the DoJ. Skadden had made no effort to confirm the information from the lead partner before providing it to the Fara unit, the DoJ claimed.
“Law firms should handle inquiries from the federal government the same way they would counsel their clients to: with appropriate due diligence to ensure the honesty of their response,” said John Demers, the head of the DoJ’s national security unit, in a statement.
“Skadden’s failure to do so, and reliance on only the representations of the lead partner on the matter, hid from the public that its report was part of a Ukrainian foreign influence campaign,” he added.
Skadden said in a statement that the settlement had brought “closure” for the firm regarding issues relating to the 2012 report it produced for the Ukrainian government. “We have learnt much from this incident and are taking steps to prevent anything similar from happening again,” the statement said.
The law firm is best known for its mergers and acquisitions advisory work, and has built a significant business counselling wealthy businessmen from the former Soviet Union who made their wealth in the 1990s.
In the US, the firm’s former partners are helping to lead the Trump administration’s trade wars. Robert Lighthizer, the US trade representative, and several of his deputies, previously worked at the firm.
The money Skadden has agreed to pay the US Treasury reflected the fees and expenses it received for writing the report. Skadden received over $4.6m, the DoJ said, even though its contract with Ukraine’s ministry of justice said its fees would be just $12,000, below the level at which Ukrainian law would have required a public tender process.
The money was paid by a Ukrainian business person, via a Cypriot bank account, to an entity Mr Manafort controlled, according to the justice department.
The lead partner’s role in the public relations campaign involved reaching out to a journalist at a US national newspaper to set up a call with a lobbyist for Ukraine about the report, said the DoJ.
Shortly before the report’s release in December 2012, the partner contacted the same journalist and arranged for the report to be leaked to them via email and in person, according to the DoJ, which said the partner also provided an on-the-record quote to the newspaper the day before the report’s public release.
The justice department said the activities of the lead partner meant Skadden was required to register under Fara, a historically lightly enforced statue that has gained prominence since Mr Mueller indicted Mr Manafort for Fara violations in 2017.
“If Skadden had registered, it would have had to disclose, among other things, the full amount it was being paid, the source of those payments, and the full scope of the work it was doing on behalf of the [ministry of justice],” said the justice department.
The settlement is the latest in several actions brought by US authorities in connection with the 2012 report. In addition to Mr Manafort, who is still awaiting sentencing, the special counsel also indicted Alex van der Zwaan, a former Skadden lawyer who worked on report, for lying to Federal Bureau of Investigation agents.
Mr van der Zwaan pleaded guilty and served 30 days in jail last year.