Paul Manafort could be the Jack Abramoff of foreign agents, say lawyers who represent foreign governments and political parties in Washington.
In the wake of the indictment of President Donald Trump’s former campaign chairman in late October, the Department of Justice has begun stepping up enforcement of laws governing lobbyists and public relations executives promoting foreign governments’ interests on U.S. soil. And those lobbying and PR shops, mindful of renewed efforts to enforce a law that had all but lost its teeth, have started scrambling to ensure they’re complying with it.
“FARA is on the minds of lawyers and clients a lot more now than it was even just a year ago, and that’s very similar to how lobbying disclosure was on the minds of people more in the aftermath of the Abramoff cases,” according to Craig Engle, a partner in the Washington law firm Arent Fox, a FARA-registered firm. “A scandal or a prosecution creates awareness, awareness creates conversations where lawyers double check their compliance.”
The indictments against Manafort and his Trump campaign deputy Rick Gates were incredibly unique. Passed in the 1930s to counter Nazi propaganda, Special Counsel Robert Mueller’s use of the statute was just the seventh instance of criminal FARA prosecution in the last 50 years. Only three people since 1966 have been convicted of violating the law.
But in the aftermath of those indictments, DOJ has stepped up efforts to ensure compliance and even expanded the scope of FARA enforcement to foreign-owned news organizations that, it says, act more as U.S. propagandists for their state sponsors. In particular, DOJ wants to make sure that foreign agents are providing all information required under FARA, which calls for a full accounting of government and media officials contacted on behalf of an agent’s “foreign principal,” among other information.
“They’re under pressure from the Hill and probably Main Justice to up their game,” said one FARA attorney.
The extent to which DOJ has stepped up efforts to collect information from such firms was illustrated by a letter The Daily Beast obtained from the department’s FARA registration division to a Washington law firm that works with foreign government clients. The letter claims that the firm’s “supplemental” disclosure statement—which lists government officials and journalists contacted, payments received, and political contributions made—“does not provide a full disclosure of all activities engaged in, and services rendered to, [some of the firm's] foreign principals.”
An attorney at the firm that received the letter said similar notes have been sent to a number of Washington-area law firms in the last couple months. The letters, the attorney said, have been interpreted as an escalation of DOJ’s efforts to enforce FARA disclosure requirements.
“It asked that we disclose more info than we’ve been disclosing,” said the attorney, who requested anonymity in order to candidly discuss communications with DOJ officials. “We’ve been filing the same way for years. It wasn’t that we suddenly started putting less information in our FARA filings. There’s a move to ask more people for more information, and I’m fine with that as long it’s the right information.”
With Congress considering legislation to revamp FARA, and DOJ more strictly enforcing the statute on the books, the country could see the most dramatic shift in the Washington influence industry since notorious lobbyist Jack Abramoff was busted for fraud and tax evasion in 2005.
The Abramoff scandal, which involved illegal kickbacks from Indian tribes seeking to develop casinos on their reservations, focused national attention on the inadequacies of domestic lobbying disclosure laws. The indictments of Manafort and Gates, and ongoing questions surrounding Russian influence in Washington, are placing pressure on officials to redouble enforcement efforts on foreign influence peddling in particular.
Lobbyists and law firms representing foreign governments, state-sponsored enterprises, and political parties have taken notice. Some have filed amended FARA disclosures with DOJ as attorneys revisit their work under what is effectively a new standard for reportable activity—one that is perhaps more in line with the letter of the law, but stricter than DOJ’s effective enforcement approach just a year ago.
Muzin Capitol Partners, a lobbying firm run by former Trump campaign aide Nick Muzin, signed the Democratic Party of Albania as a client on March 22, 2017. Two days earlier, Muzin had signed a contract to lobby on behalf of a private company, Biniatta Trade LP, under the terms of the Lobbying Disclosure Act, which governs advocacy domestic and privately owned foreign entities.
It wasn’t until November 14, nearly eight months later, that Muzin informed DOJ that Biniatta had paid Muzin for its work on behalf of the Democratic Party of Albania. The company had written Muzin a $150,000 check four days after they signed a contract, and two days after Muzin inked his deal with the political party.
Muzin admitted to DOJ last month that it had signed Biniatta “in connection with its representation of foreign principal the Democratic Party of Albania.” The firm insisted it was proactively addressing a lack of disclosure it had found of its own accord. “A review conducted in the course of preparing the registrant's supplemental statement determined, that the representation principally benefited the Democratic Party of Albania,” Muzin wrote. That note to DOJ just happened to come two weeks after Manafort was indicted.
Days later, another firm filed FARA disclosures noting work for government-sponsored enterprises going back nearly two years. Travel and hospitality marketing firm MMGY belatedly informed DOJ of public relations activity on behalf of state-run travel and tourism agencies for the European Union, Taiwan, Bermuda, and cities in Mexico, Argentina, and Switzerland. Such tourism agencies are generally bound by FARA disclosure requirements but MMGY didn’t disclose its work, undertaken since January 2016, until less than a month after the Manafort indictment.
Neither MMGY nor Muzin responded to questions about their work and disclosure of it.
Efforts by firms to come into compliance are occurring amid heightened public and congressional scrutiny of their practices. Russian attempts to influence the outcome of the 2016 presidential election heightened attention on laws governing foreign agents in the U.S. A September 2016 report from DOJ’s inspector general criticized a lackluster enforcement culture that generally failed to aggressively enforce FARA registration and disclosure requirements. And members of the Senate Judiciary Committee grilled DOJ officials charged with overseeing FARA in a July hearing.
Manafort and Gates were indicted in late October for charges that included FARA violations involving their advocacy work for a Ukrainian nonprofit linked with the country’s former pro-Russian president and his political party. They both pled not guilty on those charges.
Former National Security Adviser Mike Flynn has also come under scrutiny for lobbying work that he belatedly disclosed which may have principally benefitted the government of Turkey. Though Flynn’s recent guilty plea in the ongoing investigation into Russian election meddling did not include copping to any FARA charges, special counsel Robert Mueller noted in his plea agreement that the former National Security Adviser had knowingly worked on behalf of the Turkish government and willfully failed to disclose that information to DOJ.
Some in the influence industry say the FARA charges against Manafort and scrutiny of Flynn’s foreign government advocacy demonstrated to their clients the need for experts who can navigate the bureaucracy. “No one wants to be the first one to come home in a box, so our clients are saying thank you,” said the FARA attorney who reported receiving DOJ’s letter.
Indeed, these attorneys say the cases demonstrate to current and potential clients the value of staying on the the right side of a law subject to increasingly strict enforcement. With DOJ cracking down, those services could get more expensive for the clients and more lucrative for their representatives in Washington.
“The Justice Department may hire some people [to work on FARA issues], but it’s not the Justice Department that needs to hire people, it’s international lobbyists that need to hire people because that’s where the compliance comes from,” said Engle. “Just like every law in the United States, 99% of it relies on voluntary compliance. The government will never be big enough to enforce everything itself.”
Congress is looking to beef up FARA in the wake of scandals surrounding Manafort, Gates, Flynn, and Russian efforts to exert some measure of surreptitious influence over U.S. policy and politics.
“Congress passed the Foreign Agents Registration Act to prevent inappropriate influence in domestic policy, but my oversight work has uncovered rampant disregard by foreign agents and lackluster enforcement by federal authorities,” said Sen. Chuck Grassley (R-IA), chairman of the Judiciary Committee, in an October statement.
Grassley has introduced legislation that would dramatically increase FARA disclosure requirements. It would require representatives of all foreign-owned entities, not just state-owned or state-sponsored ones, to disclose their work under FARA. That measure would eliminate the “LDA exemption” that allowed, for instance, Muzin to initially minimize his disclosure for Biniatta Trade. But it would also subject the representatives of any company with its principal place of business outside of the United States to FARA disclosure requirements.
With firms already adapting to DOJ’s new stepped up enforcement philosophy, changes to the law present the prospect of a compliance nightmare. At the very least, Engle says, Congress should wait for the Manafort saga to end.
“When the cases are over is when congress should step in,” he said. “If Congress attempts to change the law during the investigation it will only complicate the case.”