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McAuliffe Took Six-Figure Donation From Company Linked To Questionable Arms Deals

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AP Photo

LISCR works with ship owners to help them obtain registration in the country, which is a relatively lightly regulated and cheap place for a ship to call home. Because of this, Liberia is, after Panama, the second most popular "flag of convenience" for ships around the world. According to the LISCR website, the company provides Liberia with "day-to-day management" for its "ship and corporate registry," which "represents 11 percent of the world's ocean going fleet." This booming ship registration business is an important part of the Liberian economy and has been key source of cash for the country.

Taylor's government transferred the contract for managing Liberia's shipping registry to LISCR in 2000, three years into his six-year regime. At the time, a civil war was raging in neighboring Sierra Leone that lasted 11 years and left as many as 50,000 people dead. In 2012, Taylor was convicted of war crimes by an international court in The Hague for backing rebels in Sierra Leone. The rebels were accused of using child soldiers and murdering, raping, and enslaving civilians.

Taylor was the first national leader convicted of war crimes by an international court since the Nuremberg trials in the wake of World War II. Last Thursday, Taylor lost his appeal of the conviction and judges confirmed a 50-year jail sentence against him for his role in the alleged atrocities in Sierra Leone. Taylor has been held in a UN detention facility at The Hague since 2006 and is set to be sent to a British jail, though he had wanted to serve out his sentence in Sweden, Finland, or Rwanda.

In October 2001, a UN Security Council panel of experts found that some payments from LISCR ended up in accounts that were used to purchase arms for the rebels in defiance of sanctions. The panel's report was submitted to a committee that was established by a resolution demanding Liberia end its financial support of rebels in Sierra Leone. In it, UN investigators said they "obtained bank transfer details for two LISCR transfers" that went to a company based in the United Arab Emirates that had engaged in "sanctions-busting activities." These two transfers were made in 2000 and amounted to $925,000. The report went on to say LISCR "admitted" to the UN panel that "it had made four payments to non-government accounts in 2000" following "written requests" from Liberia's "commissioner of maritime affairs." The UN report said the payments from LISCR were used "for delivery of weapons including 1,000 submachine guns."

LISCR Chairman Yoram Cohen characterized the funds to reporters a little differently than the report did. He described them as three "wire transfers" of "less than $1 million" that "fell between the cracks." UN investigators said LISCR "should not have made those four payments to non-government accounts" and said the payments "showed a complete lack of due diligence." However, the UN panel of experts also reported that, after sending the four payments in 2000, LISCR became "increasingly uncomfortable" and resisted "political pressure" from the Liberian government to send further payments to non-governmental accounts. After December 2000, the UN panel of experts reported LISCR only made payments to "three recognized government controlled bank accounts."

Though UN investigators did not accuse LISCR of making payments to non-governmental accounts after December 2000, the report raised questions about what happened to the funds LISCR sent directly to the Liberian government. According to the UN panel of experts, Taylor's administration was able to draw from the accounts containing payments from LISCR "at will." UN investigators also determined there was "significant diversion of the maritime funds for extrabudgetary use" by the administration. As evidence of this, the UN report cited figures from the Central Bank of Liberia that showed revenues from the maritime registry dropped by more than 40 percent in the first half of 2000 compared to the same period in the prior year. The UN said the "extrabudgetary" diversion of funds by Taylor's office accounted for this "discrepancy."

In a telephone conversation with TPM on Monday, LISCR chief executive Scott Bergeron said the UN report showed no evidence of "wrongdoing" by the company. He also noted LISCR had no role in determining how the money it sent to the Liberian government was spent.

"During the time of our administration of the management company, the government of Liberia, there was a lot of international focus and criticism on what they did. One of the legitimate sources of revenue to the Republic of Liberia is the maritime registry, so there were, as you saw, an association between the revenues of the program and how the government chose to use those revenues," Bergeron said. "But the UN report you're talking about and all of the subsequent ones that continued through 2005, 2006 were quite clear that the registry actually had no wrongdoing or no role in the decisions made by the then government of Liberia."

Bergeron also pointed to a November 2003 addendum to another UN Security Council panel of experts report on Liberia that noted "LISCR management provided the Panel with comprehensive financial records." That addendum also noted the panel was "satisfied that LISCR management has managed Liberia's registries responsibly." It also said that, when asked by Liberia to send payments to non-government accounts, LISCR management "actively attempted to suppress such diversions of Government revenue." However, while it laid most of the blame for maritime registry revenues being diverted to arms deals on the Taylor regime, the panel of experts also placed some responsibility on LISCR. "While many of the very real financial problems that have been observed over the past years were caused by officials of the Bureau of Maritime Affairs, often on behalf of former President Taylor, the blame for the perception problems from which the operating agent LISCR continues to suffer is not entirely undeserved," the addendum said.

LISCR gave McAuliffe two separate $60,000 donations, one in December of last year and another in January. Virginia has no state limits on campaign contributions. Prior to contributing to McAuliffe, LISCR's last political donation was a $5,000 contribution to former Rep. Tom Davis (R-VA), made in May 2002. Cohen, the company's chairman, also made multiple political donations of less than $5,000 from 1998 until 2010, including a $1,000 contribution to former Sen. George Allen (R-VA).

Bergeron said the contributions to McAuliffe were made because of his relationship with Cohen.

"Just to be clear, that was done by the principal owner of our company, Mr. Cohen," said Bergeron. "He's a personal friend of Mr. McAuliffe's, so this wasn't your typical donation of a company to a candidate in as much as they have a history together and through our company a donation was made."

TPM pointed out that the donations came from the company and not from Cohen individually and Bergeron reiterated that the contributions were made "on the basis of the friendship."

"Generally, we're, from a political standpoint -- you'll notice we don't make political donations," Bergeron said. "The people who operate the company are more right leaning than they are left leaning. So, we're not a politically oriented company. We don't make donations to politicians."

When asked about the contribution from LISCR, McAuliffe's campaign declined to address it specifically but instead pointed to donations Cohen and the company have given to Virginia Republicans. McAuliffe campaign press secretary Josh Schwerin also pointed out Davis' campaign fund made a $1,000 contribution to Cuccinelli in 2002 when he was running for state Senate.

"This is a Virginia company that has donated to Virginia Republicans like George Allen and Tom Davis, who in turn gave to Ken Cuccinelli," said Schwerin.

About The Author

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Hunter Walker is a national affairs reporter for TPM. He came to the site in 2013 from the New York Observer. He has also written for New York Magazine, Gawker, the Village Voice, Forbes, The Daily, and Deadspin. He can be reached at hunter@talkingpointsmemo.com