UPDATE 3-Mnuchin testifies in Trump ally Barrack's defense, cites Qatar blockade

(Adds details from testimony)

By Luc Cohen

NEW YORK, Oct 20 (Reuters) - Former U.S. Treasury Secretary Steven Mnuchin on Thursday took the witness stand in the defense of onetime Donald Trump fundraiser Tom Barrack, who is on trial on charges he illegally acted as a foreign agent for the United Arab Emirates.

Mnuchin testified that Barrack supported Qatar in a blockade brought against the country by the United Arab Emirates, Saudi Arabia and others in 2017. The testimony could help undercut charges by federal prosecutors in Brooklyn that Barrack, 75, used his influence with the former U.S. president's campaign and administration to push the UAE's interests without notifying the U.S. attorney general, as required by law.

Barrack has pleaded not guilty. His lawyers have said his interactions with Middle Eastern officials were part of his role running private equity firm Colony Capital, now known as DigitalBridge Group Inc.

Mnuchin testified that after Trump publicly expressed support for the blockade by Qatar's regional rivals, Barrack came to his office and said he thought the president had made a "mistake."

"His position was clearly in support of Qatar," Mnuchin testified, adding that Barrack asked him to pass the message along to Trump. "I recall him telling me that he believed Qatar was an important ally of the United States."

Prosecutors say that during the blockade, Barrack told Rashid Al Malik - an associate also accused of being an Emirati agent - that the United States was considering hosting a summit to resolve the conflict. Al Malik, who is at large, then told UAE officials about the possible meeting, prosecutors say.

Mnuchin is not the first former Trump administration official to take the stand in the case. Former U.S. Secretary of State Rex Tillerson testified as a prosecution witness on Oct. 3, stating he was unaware of the role Barrack played in U.S. foreign policy toward the Middle East.

Tillerson said on the stand he was not aware of Barrack's involvement in internal U.S. government discussions about the blockade of Qatar and that the contents of those talks would be considered sensitive.

Under cross-examination on Thursday, prosecutors asked Mnuchin whether he ever asked or directed Barrack to share information with the UAE's "national security apparatus." Mnuchin said he did not.

SOVEREIGN WEALTH FUNDS

Before the jury entered the courtroom on Thursday morning, U.S. District Judge Brian Cogan said the UAE was a "very important client" for Mnuchin, who started a private equity fund after leaving office in 2021.

Cogan said there was therefore "some indication of bias" from Mnuchin's testimony given that the UAE would likely not want a jury to convict Barrack. He said he would nonetheless limit prosecutors' ability to detail the "mind-boggling" amounts of money involved in Mnuchin's dealings with the UAE.

Under cross-examination by prosecutors, Mnuchin acknowledged his fund, Liberty Strategic Capital, includes investments from UAE sovereign wealth funds.

Prosecutors had displayed documents for the jury indicating that UAE sovereign wealth funds invested $374 million in Barrack's Colony Capital in 2017 and 2018 after investing nothing in the years prior, while Qatar invested no new funds from 2015-2018 after investing hundreds of millions of dollars in previous years.

The trial began on Sept. 19, and prosecutors rested their case earlier this week.

(Reporting by Luc Cohen in New York; Editing by Noeleen Walder and Lisa Shumaker)