We have addressed what Russians call kompromat a number of times before, Why is Donald Trump Putin’s Bonbon? but a recent piece from the New Yorker https://www.newyorker.com/news-desk/swamp-chronicles/a-theory-of-trump-kompromat adds a much more sophisticated spin. The use of kompromat reveals it is more than simply transactional, like we think of blackmail. Most of us have not lived in an authoritarian state where state police has its eye on every citizen and rewards citizens for providing information on their neighbors. Citizens see it as part of their patriotic duty to come forward with information as well as answer requests by the state to do their bidding. A citizen travelling abroad would not be uncomfortable answering questions for intelligence agents about their trips and what they observed. As oppressive as our government has been, these activities would be unthinkable here; indeed, we have legal protections against it.
Adam Davidson, in “A Theory of Trump Kompromat”, lays out some complexities in the use of kompromat. It is used daily in routine interactions throughout Russia among businesspeople, political figures and intelligence agencies to curry favor or improve a negotiating position and even to change opinions. Adamson cites Keith Darden, a professor of international relations from American University, explaining that the former Soviet Union could be characterized as the “blackmail state”, the practice is so powerfully entrenched.
Kompromat can be a single act of misconduct, like let’s say the acts depicted on the infamous pee-pee tape or Scott Pruitt’s first class travel, which is used to control the perpetrator. The Kremlin has been known to manufacture embarrassing sexual situations to discredit political enemies. That fatal male flaw, thinking with their dicks, has been a recurring theme throughout history.
While 45 has his own sordid public history of sexual misconduct, Stormy Daniels and Karen McDougal being the most recent to surface, it seems unlikely that the Kremlin would try to leverage Trump with that. Russian intelligence is certainly well informed enough to know that as well as the piece that Trump supporters don’t care and haven’t since the first inklings during the campaign.
But Trump’s history of shadowy financial dealings and money laundering, a telltale record of financial misconduct, possibly dating back decades, seems like more fertile territory. Outside of New York and Miami, Trump deals in Panama and Toronto exhibit the telltale signs of money laundering through shell companies obscuring the identities of the actual purchasers. But financial crimes, particularly involving foreign actors where US law enforcement lacks subpoena power, have seldom been prosecuted. It also speaks to one of the quirks of the US justice system; white collar crime is less vigorously pursued because it involves the double privileges of white skin and wealth. Oh yeah, and male gender, just ask Martha Stewart.
An informal hierarchy sistema, relies on ambiguity to control its members; no one person really knows where he stands, no one except Putin,
But Adamson goes on to say that kompromat is powerful in Russia because the legal system throughout the countries of the former Soviet Union was weak. In the absence of institutional rules, the power that presaged wealth circulated around and through networks of political figures and business associates through unspoken rules. Alena Ledeneva from the University College London has called this informal hierarchy sistema. Sistema relies on ambiguity to control its members; no one person really knows where he stands, no one except Putin, and even he, with all the resources of the state at his disposable, is constantly swatting flies. Uncertainty breeds caution and the need for constant monitoring of rivals and friends.
Ledeneva contends that Trump never dealt with anyone close to Putin or the Kremlin, only peripheral figures, often in networks drawn from common ethnic or national roots. I remain skeptical of that though, in view of Trump’s extensive financial dealings and real estate transactions with Russians and others from former Soviet satellites. A number of names keep resurfacing in different stories, including people like Putin’s Judo partner. Still even peripheral associations can be damaging and become slips of kompromat, one never knows.
In sistema, damaging information can come from rivals as well as partners. It may be that a number of different businesses in other countries as well as Russia all hold pieces of kompromat on Trump independently. For instance, his Azerbaijani partners were linked to senior officers in the Islamic Revolutionary Guard Corps. Without knowing that Trump would become president, evidence of communications and transactions from one business deal could provide leverage for others. Perhaps, the appearances of various Russians at CelebrityTVPresident events are sistema reminders to secure influence within the current administration rather than indicators of support as we tend to think of it.
The various bits and pieces of Trump’s kompromat may have been communicated to Putin as well as Trump. Putin knows, as does Trump, that he may be able to scratch up as much kompromat as he desires or even create some. The image of Putin as a well established dictator who rules Russia with an iron fist fitted in a glove monogrammed “democracy”, is contrasted as Adamson quotes Pavlovsky, a Russian writer, “[Putin] has never managed to build a bureaucratically successful authoritarian state. Instead, he has merely crafted his own version of sistema… that will outlast Putin himself. Putin has mastered sistema, but he has not replaced it with…a ‘Putin system’. Someday Putin will go. But sistema will stay.” He adds, “Under Putin, sitema has become a method for making deals among businesses, powerful players, and the people. Business has not taken over the state, nor vice versa; the two have merged in a union of total and seamless corruption.”
Anxiety in sistema is its most effective weapon. Each actor is aware that there are others out there who could potentially destroy their business or reputation, and it is that constant uncertainty that keeps each actor in line. At the same time, each actor has the potential to destroy others, and yet, the use of kompromat could boomerang back on them. Kompromat is powerful when the actors aren’t quite sure how much destructive information is out there. The true power of kompromat lies in holding onto it because if people are not sure what and how much is out there, they are less likely to step out of line. The actors may wander into sistema, but most of them are doing something they shouldn’t.
Adamson lays out a scenario which starts with a naive Donald Trump, desperate to revive his business while shut off from borrowing from standard financial sources, may have laundered money for a Russian oligarch or a business partner from Russia or its former satellite countries. Or he may have committed some other financial crime. In doing so, he wandered into sistema, where he continued to conduct business with other members of a select group of former Soviet satellites. The supposedly astute businessman has been stuck since. Only now, after becoming president, he dreads an unspecified amount of kompromat out there. What it is, who has it and what is the spark that will prompt its use is something that Trump can’t get his head around. Trump’s best move is to maintain his alliances, something he’s had difficulty doing within the administration and internationally as well as his past business relationships. For all we know, he may be responding to kompromat in breaking alliances, although it just feels like who Donald J Trump is. If they’re not one of his children, Trump associates should watch their back.
Here’s where the narrative gets tangled. The number of oligarchs from former Soviet Union countries is limited, controlled to some extent through Putin’s circle of influence. Because of that, some names keep popping up in stories surrounding the Mueller investigation.
One of those names is Oleg Deripaska, an aluminum magnate who rose to power in the 1990s surrounded by rumors of deaths among rivals. Deripaska and his partner, Nat Rothschild, a British born financier were former clients of Paul Manafort, at least until they had a falling out over the disappearance of $18.9 million Deripaska gave Manafort to invest in 2006.
Deripaska, like many around Putin, always had an eye out for anything that would endear him with his president. Deripaska’s financial interests dovetailed with Putin’s political interests in the Ukraine in 2004 when political unrest threatened his aluminum smelter; Deripaska and Rothschild sent Manafort ot Kiev to assess the situation. Once there, Manafort took Viktor Yanukovych under his wing, after he lost the election. He molded and rebranded him and his party, scripting their way into a Yanukovych presidency in 2010.
As a close advisor to Yanukovych, Manafort had access to both Russian and Ukrainian oligarchs which he saw as his ticket to the mega-income of a businessman, not simply rich consultant. He formed a private equity firm, Pericles, with Rick Gates at the helm to acquire assets in Ukraine. Gates is currently testifying in the Manafort trial. He also pitched a plan that would increase his friend’s influence with Putin through a campaign that would benefit the government in Moscow. Apparently, Deripaska passed. But by 2007, Manafort tapped Deripaska for a commitment of $100 million. In turn, Manafort helped clean up Deripaska’s image from murdering thug, to acceptability in circles where investors, politicians, including US Congressmen and Senators, diplomats mixed and mingled.
The 2008 crash plummeted Deripaska’s net worth $28 billion, enough for him to ask for a $4.5 billion bailout from a Russian state bank. As part of his efforts to stabilize his finances, the Russian asked Manafort to liquidate Pericles and return his share, but that didn’t happen, just as the audit of the firm never happened either. Manafort’s answer was to stop responding to Deripaska. Ultimately the Russian filed a petition in the Caymans in 2014 in an effort to recover his millions. The debt is the source of ongoing enmity between the two.
Deripaska himself had become a persona non grata in the US; he was denied business visas several times because of allegations that he was connected to circles of organized crime. The Kremlin, however, provided him with a diplomatic visa which he used for several trips to the US. As he testified in a lawsuit in Manhattan, between 2011 and 2014, he made 8 trips to the US, in connection with meetings at the UN and the G-20. He denied having conducted business during his brief visits, but his companies have offices in Manhattan. His holdings have grown over the last 10 years to include a major stake in a Russian language paper in New York bought in 2014 and the purchase of two high priced Manhattan townhouses, purchased through shell companies.
Because Manafort remained allied with Yanukovych until he fled the country for Moscow in 2014, the FBI uncovered information on Manafort’s financial maneuvering while investigating Yanukovych. In the meantime, Manafort had a nervous breakdown as his financial empire collapsed before it began and his marriage fell apart with his wife’s discovery of a long time affair. In recovery, he sought a way out of mounting debt through volunteering as campaign manager for Donald Trump.
One of the first things Manafort did after taking that volunteer position with the Trump campaign, was to contact Deripaska through an intermediary, Konstantin Kilimnik, a long time Russian business associate in the Ukraine, believing that he would somehow get back on the gravy train. It’s rumored that he offered to provide Deripaska private insider information and access. No one at that time could have believed that Trump would win, so he couldn’t have promised influence in the administration but he could have anticipated some lobbying in a friendly GOP Congress, many of whom Manafort already knew. He could also add another revamp of the oligarch’s image. On the other hand, perhaps Deripaska was aware of the efforts in his country that would score victory for Trump.
It was during this period that the New York Times launched an investigation into Manafort and his business with Kilimnik. That investigation stumbled across a ledger documenting secret payments to Manafort which eventually led to his resignation as Trump’s campaign manager and the FBI investigation that has resulted in his indictment and trial taking place right now.
At one point, the oligarch offered to testify before congressional committees investigating Russian meddling, certainly an opportunity to lay out some kompromat payback. The legislators declined to accept his demand for complete immunity to appear which could have complicated any criminal investigations.
Sanctions against Deripaska, owner of Rusal, Russian aluminum company and Manafort business investor have been softened and may be ended
Deripaska’s name popped up when both he and his aluminum company Rusal appeared on the list of Russian oligarchs sanctioned in April, levied by the Trump administration in response to Russia’s ongoing action in Ukraine and Syria as well as the attempted assassination of Sergei Skripal in London and maybe for meddling in the 2016 election. That last one is sometimes part of the rationale, like when Mnuchin talks about them but his boss is less likely to include election meddling except when he’s pretending that he’s been tougher on Moscow than previous presidents in front of his MAGA rallies.
Can it be that sistema was triggered by the sanctions? Deripaska was forced to resign from Rusal and its holding company En+ after the sanctions dropped its stock price by 50%. But soon after the announcement, the Treasury extended the deadlines and not just once. The company had hired a lobbying firm, Mercury Public Affairs, the same firm that Manafort had used to lobby members of Congress on behalf of Ukraine and Viktor Yanukovych for $1.1 million. The firm has tried to massage ambassadors from France, Australia and Germany into endorsing lifting the sanctions.
Mercury filed successfully with the Justice Department to extend the deadline for Deripaska to get below 50% ownership of En+ and the deadline was extended for the second time to July 31. This coincidentally (wink, wink) followed the infamous Surrender at Helsinki on July 16. Treasury Secretary Mnuchin has taken it a step further, musing that he should lift the sanctions on Rusal because it was punishing hard working Russians? Strange that this should be a concern of the America First administration.
The tale of Deripaska and Manafort is just one example of kompromat within sistema involving many players from the lawyers who create the shell companies, those involved with offshore cash stashes, the lobbyists, associated oligarchs, Russian intelligence, dealmakers, partners and customers and on and on. Each individual may have a stake in keeping the secrets least they blow back on them. Each is probably ignorant of the others who are playing in the pond with them. They are all apprehensive hoping to avoid the ax or get ahead of it by pulling the trigger before someone else does. How much of Trump’s tweeted “frustration” and rage is firing his campaign to double down on trashing Robert Mueller and his investigation before his beloved at Trumpophant rallies.
The sistema web may be what’s sustaining Manafort in his resolve to remain mute during his trial, not his belief in a Trump pardon. One false move and Trump could cast him out into the cold, but at the possible cost of a stream of evidence that could doom Trump. Not just from Manafort but other actors in the sistema web. Trump doesn’t believe it for a second.
He believes he can outrun any evidence; he’s got Republicans who own the government to actively defend him against any attempt to dislodge him from the White House. He’s got his base which he can whip up to raise hell, perhaps even violence. He’s got Trump-state TV, better known as Fox News, and the conservative news bubble across platforms.
And he’s got Robert Mueller himself. Trump doesn’t actually need to stop the investigation. Mueller has said he will turn over his report to the Justice Department and Congress. Those two are free to release only what they want, “interpret” the findings or even try to bury the report. It’s clear that impeachment is not even on their radar.