Progressive lobbying firm the Podesta Group is on the verge of collapse. According to a report at CNN, the company’s CEO announced this week that employees would be out of work next week and the entire company would fold by the end of the year:
Kimberley Fritts, the chief executive of the Podesta Group, told employees during a Thursday staff meeting that the firm would cease to exist at the end of the year, according to two sources. Employees were asked to clear out their desks and were told they may not be paid beyond November 15, multiple sources said.
Fritts told the employees the Podesta Group may try to provide health care through the end of the year, according to two people in the meeting…
Talk of potentially closing the Podesta Group marks a dramatic downfall of one of K Street’s most iconic and well-connected firms. In its heyday, Podesta Group was the largest non-law firm lobbying organization in Washington. Tony Podesta, the firm’s founder and chairman, helped fuel the company with work for foreign governments. He and his brother, John, founded the company almost three decades ago. (John Podesta chaired Hillary Clinton’s 2016 presidential campaign. He left the firm in 1993.)
However, a report at Bloomberg suggests the situation isn’t quite as dire as it appears. CEO Fritts apparently plans to take the Podesta Group’s clients and much of its staff and start a new firm:
Chief Executive Officer Kimberly Fritts told employees Thursday afternoon she is working on launching a new firm that would take many of Podesta’s staff and clients with her, said two people familiar with the meeting.
Tony Podesta stepped down from the company nearly two weeks ago after it became clear that special counsel Robert Mueller was investigating work his company did for Paul Manafort on behalf of an organization called the European Centre for a Modern Ukraine. The ECMU supported Ukrainian President Viktor Yanukovych who was closely tied to Russia. In 2014, Yanukovych fled to Russia and later received Russian citizenship.
As Ed pointed out here, the Manafort indictment indicates that Manafort was in frequent contact with Yanukovych in 2012. Manafort passed information back to two lobbying firms later identified as the Podesta Group and Mercury. However, neither of those firms registered the lobbying work under the Foreign Agents Registration Act as required by law. As the Atlantic pointed out, prosecution under FARA is usually reserved for foreign spies:
The highest-profile recent fara prosecutions in recent decades include the ring of Russian spies arrested in 2010, who were charged with violating the law, and the Cuban 5 spy ring in 1998. But for highly paid Washington lobbyists representing foreign governments, these prosecutions are rare…
“It’s without a doubt the biggest fara prosecution ever, and I think the facts outlined in the indictment raise big questions for the two firms,” said Matthew Miller, a former DOJ spokesman. “It wouldn’t surprise me to learn that people with either firm have been cooperating with Mueller, and we may see more guilty pleas in the near future.”
So it seems the cloud of this looming prosecution is going to doom the Podesta Group, though some version of it will survive under another name.