March 12, 2019

US Department of Justice Sharpens Its Focus on Foreign Lobbying and Influence

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Two recent steps by the Department of Justice (“DOJ”) demonstrate a new commitment to enforcing the Foreign Agents Registration Act (“FARA”). FARA is a World War II-era law that governs US lobbying efforts by or on behalf of foreign interests. Foreign persons, companies, governments and political parties—as well as the lobbyists and agents who represent them—should pay close heed, as these DOJ efforts could portend a much more aggressive enforcement culture—and bring with it more substantial compliance obligations for those who work to influence policy in the United States.

First, on March 6, Assistant Attorney General for National Security John C. Demers announced the appointment of Brandon Van Grack to head DOJ’s Foreign Agents Registration Unit. Van Grack is a longtime prosecutor and most recently worked for special counsel Robert Mueller. The announcement indicates a marked shift for the agency “from treating FARA as an administrative or regulatory obligation to one that is increasingly an enforcement priority,”1 according to Demers. While FARA enforcement actions were historically unusual, special counsel Robert Mueller’s investigation has brought new attention to the act. Demers’ appointment suggests that DOJ may be refocusing its attention on enforcing FARA—heightening the need for fulsome compliance efforts.

Second, DOJ has already stepped up enforcement of FARA, as seen in its recent civil settlement with Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden”). According to the settlement, Skadden acted as an agent of the government of Ukraine within the meaning of FARA but did not properly register under the act.

FARA defines an “agent of a foreign principal” to mean, in part:

any person who acts as an agent, representative, employee, or servant, or any person who acts in any other capacity at the order, request, or under the direction or control, of a foreign principal or of a person any of whose activities are directly or indirectly supervised, directed, controlled, financed, or subsidized in whole or in major part by a foreign principal, and who directly or through any other person—

(i) engages within the United States in political activities for or in the interests of such foreign principal;

(ii) acts within the United States as a public relations counsel, publicity agent, information-service employee or political consultant for or in the interests of such foreign principal;

(iii) within the United States solicits, collects, disburses, or dispenses contributions, loans, money, or other things of value for or in the interest of such foreign principal; or

(iv) within the United States represents the interests of such foreign principal before any agency or official of the Government of the United States.2

In 2012, Ukraine’s Ministry of Justice hired Skadden to draft a report on the trial of former Ukraine Prime Minister Yulia Tymoshenko, which had occurred the previous year, and for advice regarding another, future trial. Subsequently, Skadden learned that the Ukraine government would use the report as part of a public relations campaign. Indeed, the lead Skadden partner directly played a part in this campaign, arranging a call between a journalist and one of Ukraine’s lobbyists and hand-delivering a copy of the report to a journalist. Despite this, neither Skadden nor the partner registered under FARA.

Moreover, according to the settlement, the partner provided false and misleading information about his role in the report’s release in response to subsequent inquiries from the DOJ FARA Unit. In response to the FARA Unit’s inquiries about the activities Skadden engaged in for the government of Ukraine, for example, the partner omitted his interactions with lobbying and public relations firms and his provision of a copy of the report to the journalist. Skadden also did not provide complete information regarding its compensation for the project, telling the FARA Unit it did not believe that the FARA Unit was “entitled to such information.”3 Had Skadden properly registered under FARA, it would have been required to provide this information.

As a result of the settlement agreement, Skadden has registered as a foreign agent under FARA and has agreed to pay DOJ more than $4.6 million, which is roughly equivalent to the fees and expenses it incurred for its work on behalf of the government of Ukraine.

The settlement agreement is the most significant and high-profile FARA enforcement action in some time—perhaps ever. If follows on the heels of Paul Manafort’s criminal plea to violating FARA in connection with his work on behalf of the Ukraine government and Ukrainian political parties. These actions are the latest in what many observers view as an increased focus on enforcement of this law by DOJ.

FARA, which was originally intended to counteract German propaganda prior to World War II, is an extremely far-reaching law. Many do not realize, for example, that FARA applies not just to those acting on behalf of foreign governments and foreign political parties but also to those acting on behalf of any foreign partnership, corporation or other business (though there are significant exceptions to the law’s registration and reporting requirements). In addition, many of the law’s terms are vague, providing additional potential for pitfalls. As DOJ’s enforcement of FARA increases, and as the broader focus continues, foreign persons would be well served to ensure that they are in compliance with FARA’s intricacies.

1 https://www.law360.com/articles/1136195/doj-retools-foreign-agent-unit-to-focus-on-enforcement

2 22 U.S.C. § 611(c)(1).

3 U.S. Department of Justice, National Security Division, Settlement Agreement with Skadden, Arps, Slate, Meagher & Flom LLP, ¶ 60, Jan. 15, 2019.

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