The Party’s Over for Washington’s Foreign Lobbyists

Special counsel Robert Mueller’s indictment of Paul Manafort and Rick Gates isn’t just making the White House anxious, it’s also drawing some scorn a few blocks away from 1600 Pennsylvania Ave. on the famed K Street lobbying corridor.

That’s because two of the included charges are for violations of the Foreign Agents Registration Act (FARA), a provision of federal law that requires lobbyists to disclose ties to foreign clients. FARA has become a bit of a headache for individuals in President Donald Trump’s orbit, several of whom have seemed to struggle with complying with the law.

FARA has been popping up all over the investigation into Russian interference and possible collusion in the 2016 election. Even before the Manafort-Gates indictment, FARA registration questions surrounding Russian propaganda outlets RT and Sputnik made headlines, as did the news that former Trump national security advisor Michael Flynn was forced to belatedly disclose lobbying activity he had conducted on behalf of entities tied to the Turkish government. (See, for example, Steve Vladeck’s primer on the law from back in April).

Still, few could have seen Monday’s stunning indictments coming. Washington lobbyists — many of whom regularly represent the interests of foreign governments, companies, or individuals — are crying foul over the apparently selective indictment of Manafort and Gates for their violation. As one writer noted:

Manafort is hardly the only Washington lobbyist who appears to have flouted the FARA rules. Evading registration is child’s play for Washington pros.

Why? Because even though it’s been commonplace for firms and individuals to sidestep filing requirements for decades, FARA’s 79 years on the books have produced few prosecutions and, since heavy revisions in 1966, precisely one criminal conviction. Given that enforcement history, it’s easy to understand why some are so baffled by the Mueller team’s approach in indicting Manafort for the FARA violations and why they might be suddenly concerned about their own legal liability.

But any shifts in FARA enforcement pertaining to Manafort become clearer when considered against the background of how the law has been enforced until now, and why.

FARA says that “No person shall act as an agent of a foreign principal unless he has filed with the Attorney General a true and complete registration statement and supplements thereto.” This means that anyone who qualifies as the agent of a foreign principal — not to be confused with an agent of a foreign power under the Foreign Intelligence Surveillance Act — must submit a registration filing with an array of information including names and business addresses, plus copies of contractual arrangements with and contributions from foreign principals. (For an example of the requirements, see this summary of Paul Manafort’s 87-page filing , the statutory provision listing the requirements, 22 U.S. Code § 612 , or check out Steve Vladeck’s primer from back in April.) Registrants must make supplemental filings every six months to update the Department of Justice on their status. All registrants must attest to the truth of their statements under oath, which makes any false or incomplete FARA statements a crime.

So who qualifies as the agent of a foreign principal? Section 611(c) defines an agent of a foreign principal as:

As to foreign principal, 22 U.S. Code § 611(b) says they may be:

Foreign governments or political parties

Persons located outside of the United States who are not U.S. resident citizens

A foreign company, including “a partnership, association, corporation, or other combination of persons organized under the laws of or having its principal place of business in a foreign country

And for the purposes for FARA, Section 611(a) says, “‘persons’ includes an individual, partnership, association, corporation, organization, or any other combination of individuals.”

Nearly every agent of a foreign principal must register with the Justice Department, with exceptions for people like diplomats, foreign dignitaries, lawyers engaged in the legal representation of a registered foreign principal in U.S. courts, priests, artists, and perhaps most notably, “any news or press service organized under the laws of the United States.” (So a law firm lobbying on behalf of a foreign government to change import tariffs probably has to register, but the BBC? No need.)

Keep in mind: FARA does not prohibit foreign agents from any specific actions (besides lying on a FARA registration form). It merely creates a system that lets the Justice Department monitor the political activity of foreign agents within the United States and creates criminal liability — to the tune of up to five years in prison — for those who don’t do so.

Why, then, are some observers questioning the propriety of charging Manafort — who doesn’t obviously qualify for any of the above exceptions — with a FARA violation? The answer has to do with how the Justice Department has enforced FARA in the past.

The Foreign Agents Registration Act was originally enacted in 1938 as a measure to monitor foreign propagandists, especially from Nazi Germany, in the United States. Early enforcement practice was to send letters to potential agents of foreign powers advising them of their possible obligation to register. As the U.S. Attorneys’ Manual entry on FARA enforcement notes:

The practice was not without its enforcement significance, since receipt of the letter could sometimes be used to help prove the willfulness of the failure to register, as, for example, in United States v. John Joseph Frank.

But as the United States and Soviet Union entered the Cold War, Congress’s priorities for FARA changed: A cadre of amendments in 1966 refocused the law on targeting agents engaged in “political activity” to influence U.S. government decisionmaking for their foreign principal’s advantage. The higher burden of proof arising from the “political activity” standard, along with other administrative procedures that the Justice Department uses in FARA enforcement, “drastically reduced the incidence of criminal FARA prosecutions and increased civil and administrative resolution of FARA questions.” Since the amendments, as the U.S. Attorneys’ Manual explains, “the cornerstone of the [National Security Division] Registration Unit’s enforcement efforts is encouraging voluntary compliance” where there is no evidence of bad intent.

Potential or current registrants may also ask the National Security Division about its intentions to enforce FARA under 28 CFR 5.2 (colloquially called “Rule 2”). That provision says:

After submission of a review request, the National Security Division, in its discretion, may state its present enforcement intention under the Act with respect to the proposed conduct; may decline to state its present enforcement intention; or, if circumstances warrant, may take such other position or initiate such other action as it considers appropriate.

Modern practice under current department policy has been that if, through Rule 2 guidance, the Justice Department informs a current or potential agent that they’re violating FARA, the department typically allows some period of time for the party to come under compliance before considering further action.

Given that the department hasn’t been enforcing the criminal provisions of the law, is the special counsel giving Manafort and Gates an unfair shake by charging them with FARA violations?

Some of that depends on facts we still don’t know. But we do know that according to the indictment, Manafort and Gates lobbied members of Congress on behalf of the party and government of former Ukrainian President Viktor Yanukovych — entities that clearly fall within 22 U.S. Code § 611(b)’s definition of a foreign principal — about political repression in and U.S. sanctions on Ukraine. They were paid many millions of dollars for the effort. And both failed to register in a timely manner under FARA.

At least some of those facts line up with the common threads in recent FARA investigations. Though, as many are noting, criminal investigations under FARA are infrequent, the U.S. Attorneys’ Manual states that recent investigations tend to involve:

“Millions of dollars in receipts or expenditures by the prospective defendants”

“‘Core’ violations of FARA with jury appeal”

“Evidence of willfulness”

(We don’t know how many such investigations resulted in filed charges.)

Moreover, a change in Justice Department enforcement priorities may have been in the pipeline anyway. A September 2016 audit by the Justice Department’s inspector general concluded what many already knew: FARA procedures are not producing their intended results.

FARA registrants are frequently late in submitting required documentation and are often unresponsive to FARA Unit requests to update their information. Because timely and complete disclosure of foreign agent political and quasi-political activities are central to the act, we believe the FARA Unit should be more proactive and assess whether additional tools may be available to assist it in its efforts to identify and monitor these foreign agents.

The high profile of the special counsel investigation makes the charges against Manafort and Gates an especially resonant shot across the bow, but that doesn’t mean that the Justice Department didn’t already have plans in the works to ramp up FARA enforcement. We’ll have to wait and see whether the trend continues, but it appears to have caught the attention of Sen. Chuck Grassley (R-Iowa), who introduced legislation to amend FARA to improve compliance and give the attorney general more authority to bring civil and criminal actions against those who violate the law.

Lobbyists, be vigilant.