Amid swirl of controversy, Democratic power lobbyist Podesta steps down

Tony Podesta, a Democratic power lobbyist, announced to colleagues Monday that he is stepping down amid a series of indictments that cast a shadow on work his firm had done with Paul Manafort that may have benefited a Ukrainian regime friendly to the Kremlin.

The Podesta Group is not named in the newly released indictments, but the company is one of two indirectly referenced in the charges. Podesta and another lobbying firm, Mercury LLC, were working with Manafort and his partner, Rick Gates, from 2012-2014 in lobbying to improve the image of the Ukrainian government. In the indictment they are referred to as "Company A and Company B," according to people familiar with the companies' involvement.

Manafort and Gates turned themselves in to federal authorities Monday while facing a 12-count indictment on a range of charges, including misleading the government about their secret work for a foreign government.

Later in the day, Podesta announced his resignation at a staff meeting at the Podesta Group's Washington headquarters.

"It is impossible to run a public affairs firm while you are under attack by Fox News and the right wing media," he told his former employees, according to a person familiar with his remarks.

Podesta is the brother of John Podesta, a longtime Democratic adviser who led the presidential campaign of Hillary Clinton. The resignation of one of Washington's most prominent Democratic lobbyists shows how the investigation of special counsel Robert S. Mueller III is reverberating across both parties.

It's unclear how much the Podesta Group or its principal founder knew about the funding for the client they represented.

The Podesta Group and Mercury claimed in lobbying disclosure reports that they represented a Brussels-based nonprofit, the European Center for a Modern Ukraine, that sought to help Ukraine improve its image in the West from 2012 to 2014. However, behind the scenes, the lobbying work was actually being directed by Manafort and Gates, prosecutors allege. Their real client was the government of Ukraine, the indictment says. Gates and Manafort for many years represented the Party of Regions, a Russia-friendly political organization in Ukraine that was led by Viktor Yanukovych, former president of the Ukraine who fled to Moscow in 2014.

"In 2012, Manafort and Gates solicited two Washington DC firms (Company A and Company B) to lobby in the U.S. on behalf of Yanukovych and his party,'' the indictment said.

The Podesta Group fully disclosed its representation of the European Centre for a Modern Ukraine and complied with federal disclosure laws "by filing under the lobbying disclosure act over five years ago," said Molly Levinson, a spokeswoman for the firm, in a statement. "The Podesta Group has fully cooperated with the Special Counsel's office and taken every possible step to provide documentation that confirms compliance with the law. Based on our due diligence and on the recommendation of definitive legal experts, the firm filed the appropriate public disclosures of its representation of the ECFMU over five years ago, and in eight subsequent public filings. The Podesta Group's work for ECFMU, a nonprofit, was in support of Ukraine's admission to the E.U., a position supported by foreign policy experts at the time. The ECFMU provided formal certification that it was neither funded by nor directed by a government or political party." Mercury LLC did not respond to a request for comment.

While claiming that the European Centre for a Modern Ukraine was the client, that organization was actually "under the ultimate direction of the Government of Ukraine, Yanukovych and the Party of Regions," the indictment said. "Company A and Company B were paid for their services not by their nominal client, the Centre, but solely through off shore accounts associated with Manafort-Gates."

Podesta and Mercury came into focus for prosecutors as they delved deeply in to Manafort's finances earlier this year.