(Bloomberg) -- His name appears nowhere in the indictment rocking Washington -- the one that accuses Paul Manafort of spiriting millions through secret accounts and shell companies.
But Manafort's fraught relationship with Oleg Deripaska, the Russian oligarch who once did business with Trump's former campaign manager, is essential context for the federal investigation of Manafort and Russia's meddling in U.S. politics.
Some of the dozen shell companies that the indictment asserts Manafort used to launder money and conceal work for pro-Russia figures in Ukraine also were used for his dealings with Deripaska, an aluminum magnate with ties to the Russian government.
Deripaska, 49, hasn't been accused of wrongdoing, and there are no indications that U.S. authorities are seeking to interview him as part of the investigation into Russian interference in the presidential election. But the action taken Monday by Robert Mueller, the U.S. special counsel, has again brought to the fore his long relationship with Manafort. The Russian has long claimed that Manafort and his partners misused $19 million of his money for a failed investment in a Ukrainian television business.
Some of Manafort's and Deripaska's dealings involved bank accounts and shell companies in secretive tax havens such as Cyprus. According to the indictment, Manafort employed some of those same entities to launder money and evade taxes. He and a long-time associate, Rick Gates, have pleaded not guilty.
Investors' Spat
After the indictment was unsealed Monday, a spokeswoman for Deripaska said the allegations strengthened the Russian's claims against Manafort. It also showed her client had done nothing wrong.
“There is nothing in that document which would suggest he engaged in any wrongdoing,” Vera Kurochkina said. “To the contrary, it is entirely consistent with Mr. Deripaska's claims that Mr. Manafort misused funds which were paid to him for purposes of a Ukrainian cable television investment.”
A spokesman for Manafort pointed out that his client has pleaded not guilty. “He looks forward to having these allegations tried before a judge and jury,” said Jason Maloni.
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Manafort, 68, who advised a succession of Republican presidential candidates in the 1970s and '80s, later moved into lobbying and political consulting, working with foreign leaders to ingratiate themselves with Washington. His roster of clients, some with unsavory reputations, included deposed Ukrainian leader Viktor Yanukovych, an ally of Russian President Vladimir Putin. Along the way, he also accumulated a variety of business interests.
In 2007, Manafort and Gates set up a private-equity fund that they said would initially invest in a U.K. cable and internet company called Black Sea Cable. A Deripaska company put in $18.9 million for the purchase and paid Manafort $7.35 million in management fees.
But by 2014, Deripaska sued Manafort in the Cayman Islands, seeking an accounting of the money. Based on court filings, Cypriot records and interviews in Ukraine, it's unclear that the Manafort entities ended up owning Black Sea Cable or where the money went.
Lush Life
The indictment unsealed Monday accuses Manafort and Gates of failing to register as agents in the U.S. for political consulting they performed for Ukraine and for pro-Russian politicians there. It also claims Manafort laundered money from overseas to buy houses, cars, clothes, antiques and landscaping services. The indictment didn't specify where the money came from, apart from a broad charge that the pair sought to conceal millions of dollars from their work in Ukraine.
Mueller specified that Manafort laundered $18 million of the $75 million that passed through domestic and foreign companies and accounts he controlled.
Deripaska's payments and loans to Manafort appear to account for the bulk of the money that moved through those entities. Corporate records in Cyprus show that Deripaska-controlled companies loaned $52.8 million to Manafort's firms from 2009 to 2013.
Two of the Cypriot companies at the center of Mueller's indictment -- Yiakora Ventures Ltd. and LOAV Advisors Ltd. -- received a total of $33.9 million in loans from Deripaska's Oguster Management Ltd., a company registered in the British Virgin Islands, according to accounts filed in Cyprus and obtained by Bloomberg News. It's unclear what that money was for or whether the loans were repaid.
Deripaska's spokeswoman said the figures weren't accurate but declined to comment further.
International Transfers
The indictment listed Yiakora as the source of funds for 54 transactions by Manafort and Gates totaling more than $3 million million between 2008 and 2010, including payments for a Land Rover, to an antique-rug dealer in Alexandria, Virginia, and to a men's clothing store in New York. Mueller's team also listed LOAV as the funder of four of Manafort's transactions in 2008, including tens of thousands of dollars paid to a clothing store in Beverly Hills, California, and a home-improvement company in the Hamptons, the wealthy seaside enclave in New York.
The Ukrainian cable deal was still hanging over Manafort when he served as Trump's campaign manager in 2016. On July 7 of that year, Manafort emailed a foreign business associate to urge him to offer Deripaska “private briefings” on the election in an apparent effort to grab the billionaire's attention and resolve the case, according to people familiar with both men. The offer was never sent to Deripaska, the people said.
Another Cyprus company mentioned in the indictment -- Lucicle Consultants Ltd. -- loaned $9.9 million to Manafort's Delaware-based company, Jesand LLC, in 2013, according to company accounts. There's no indication that Deripaska is tied to Lucicle.
Lucicle received loans from a company connected to Ivan Fursin, a former politician in Ukraine. Lucicle was listed in the indictment as the source of $1.9 million in funds for Manafort to buy a house in Arlington, Virginia, in 2012, in addition to paying tens of thousands of dollars for goods and services.
To contact the reporters on this story: Stephanie Baker in London at stebaker@bloomberg.net, David Voreacos in federal court in Newark, New Jersey, at dvoreacos@bloomberg.net.
To contact the editors responsible for this story: David Gillen at dgillen3@bloomberg.net, Winnie O'Kelley at wokelley@bloomberg.net, Stephen Merelman
©2017 Bloomberg L.P.
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