Business & Lobbying

Dem lobbyist Podesta steps down amid Mueller scrutiny

Greg Nash

Tony Podesta, the longtime Democratic rainmaker on K Street, is stepping away from the Podesta Group, a lobbying firm he founded almost 30 years ago.

Podesta and the firm have been pulled into the federal investigation into Russian interference in the presidential election, run by special counsel Robert Mueller.

In the wake of Podesta’s departure, a new firm will be formed without his name, CNN reported, citing an unnamed source. The Hill has confirmed that there will be a new entity, with a source familiar with the developments saying that the roll out will likely take place before the end of the week.

“They’ve been thinking about it and planning it for awhile; it’ll be quick,” the source told The Hill, asking for anonymity to discuss the events.

A source at the firm told The Hill that a small group is “now working to salvage as much of our current business as possible,” saying that the response has been positive thus far. The person asked for anonymity in order to discuss the sensitive topic.

“There are a bunch of people here who just want to get back to doing what we do best,” the person from Podesta Group told The Hill. “This group believes we should always win on the merits, and that whether we were sufficiently transparent with the government should never, ever, be an issue. We want this behind us.”

Politico first reported the news of Podesta stepping down. Kimberley Fritts, Podesta Group’s CEO, will be in charge of the new firm.

The news about Podesta came on the same day the Justice Department filed a 12-count indictment against former Trump campaign chairman Paul Manafort and his associate, Richard Gates.

Prosecutors charge that Manafort and Gates knowingly evaded foreign lobbying disclosure laws by doing work for a Brussels-based nonprofit called the European Centre for a Modern Ukraine, which falsely claimed to have no ties to Ukrainian government officials.

Both Podesta Group and Mercury worked for the European Centre for a Modern Ukraine from 2012 to 2014.

The Podesta Group earned more than $1.2 million from the client during that period, according to disclosures it filed with the Justice Department. Collectively, the two firms earned more than $2 million.

The firm had registered lobbyists for the group under domestic lobbying laws — which are less strict than ones required of those who work for foreign governments or political parties — but retroactively filed paperwork with the Justice Department earlier this year to report the foreign lobbying.

Manafort and Gates directed the lobbying firms on the advocacy strategy for the Centre, The Associated Press reported in August. The reports that surfaced about Manafort’s foreign lobbying ultimately led him to step down from the Trump campaign.

Monday’s indictment from Mueller’s team goes into more detail about what Gates and Manafort allegedly did to conceal the lobbying activity, including crafting false talking points about the origins of the nonprofit’s funding.

In response to Gates’s email with the talking points, sent last year amid media reports about the work, a person from Company B replied: “There’s a lot of email traffic that has you much more involved than this suggests,” according to the indictment. “We will not disclose that but heaven knows what former employees of [Company B] or [Company A] might say.”

The Justice Department does not name the Podesta Group or Mercury in its indictment against Gates and Manafort — referring only to Company A and Company B — but the context points to the firms.

Gates and Manafort had worked for the pro-Russian Ukrainian party, called the Party of Regions, and Ukraine’s president, Viktor Yanukovych, who was later forced out of the country amid protests over corruption.

The Podesta Group has previously said it had no idea that the Centre could be connected to the Ukrainian government. The firm said it had consulted lawyers about whether to file disclosures under federal laws governing foreign lobbying, and the Centre had certified to the firms that no foreign government or political party had funded it.

Another source familiar with the situation told The Hill that Company A is Mercury and Company B is the Podesta Group, a detail first reported by NBC News.

While Mercury made similar statements about certifying that the non-profit did not have foreign influence behind it, Mueller wrote in grand jury indictment that Gates told Company A that it would be “representing the Government of Ukraine in [Washington], DC.”

The indictment against Gates and Manafort alleges that they provided false statements to the Justice Department when questioned about the foreign lobbying, such as repeating comments made to the press that they had “served as a means of introduction of Company A and Company B.”

Company A and Company B were not paid by the nonprofit, the indictment says, but by offshore bank accounts run by Gates and Manafort.

Last week, Mueller reportedly began probing Podesta and his firm last week, NBC News reported, citing three unnamed sources.

A spokesman for the firm, in a statement, told NBC News it was cooperating fully with the special counsel’s office “and has taken every possible step to provide documentation that confirms timely compliance.”

“In all of our client engagements, the Podesta Group conducts due diligence and consults with appropriate legal experts to ensure compliance with disclosure regulations at all times — and we did so in this case,” the firm’s statement continued.

In August, Mueller issued grand jury subpoenas to six public relations and lobbying firms who had worked with Gates and Manafort for the Centre — including Mercury and Podesta Group, NBC News reported.

Podesta is the founder and chairman of the Podesta Group, which he started in 1998 with his brother, John Podesta, the former campaign chairman of Hillary Clinton’s 2016 run for the White House.

It has since grown to one of the top lobbying firms in Washington, with dozens of well-connected lobbyists from both parties. The firm also runs lobbying and public relations campaigns for blue-chip clients and foreign governments.

Podesta is also a prolific Democratic donor, having given $260,425 to lawmakers, the Democratic Party or federal candidates for office during the two-year 2016 election cycle, according to data compiled by the Center for Responsive Politics.


— Updated at 6:56 p.m.

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