The recent twelve-count indictment of Paul J. Manafort Jr. and his business partner Richard W. Gates III, brought by special prosecutor Robert Mueller in connection with his investigation into Russian interference in the 2016 election, utilized a seldom-enforced and often-flouted law called the Foreign Agents Registration Act (FARA). Lobbyists are suddenly paying attention.
Count Ten of the indictment charged Manafort and Gates with failing to register as foreign agents with the Attorney General for their work between 2006 and 2015 on behalf of the Government of Ukraine, the Pro-Russia Party of Regions, former Ukrainian President Viktor Yanukovych, and the Opposition Bloc, a successor group to the Party of Regions. The indictment alleges that Manafort and Gates engaged in a multi-million dollar lobbying campaign in the United States at the direction of these groups. As part of this scheme, Manafort and Gates hired two unnamed D.C. lobbying firms and acted as a go-between for the two firms and Yanukovych. The lobbying firms then engaged in extensive lobbying of members of Congress and their staffs about Ukraine sanctions, the validity of the Ukraine elections, and the propriety of Yanukovych’s imprisoning his presidential rival, Yulia Tymoshenko. The indictment further alleges that Manafort and Gates hid their connection to Ukraine by creating an organization, The European Centre for a Modern Ukraine, to be the nominal client of the lobbying firms. In reality, the Centre was under the control of Yanukovych, and Manafort used off-shore accounts to pay the lobbying firms. When Manafort and Gates retroactively filed FARA disclosures in November 2016 and February 2017, they allegedly made false statements and material omissions in an attempt to minimize their lobbying efforts in the United States. For this they were charged with knowingly and willfully making false and misleading FARA statements.
Enacted in 1938 in response to the rise of propaganda activity directed toward the American public by Nazi Germany, FARA requires lobbyists and other groups working on behalf of foreign governments to make certain disclosures of their activities to the U.S. government and the public. FARA requires an agent to register within 10 days of agreeing to become an agent and before performing activities on behalf of the foreign principal. In addition, the agent must file any informational material distributed on behalf of the foreign agent with the Department of Justice, as well as copies of their contracts, receipts, disbursements, political contributions, and semiannual reports containing a description of their activities. Any person who willfully violates provisions of FARA by failing to register or provide the required disclosures or by making false statements or omissions is subject to fines not exceeding $10,000 or by imprisonment of no more than five years. FARA’s object is thus to ensure transparency when foreign governments attempt to exert influence on U.S. policy. The problem? The DOJ rarely brings enforcement action and compliance is low.
A 2016 audit by the Office of the Inspector General found steadily decreasing FARA registrations since the 1980s, widespread non-compliance, and deficient filings. The audit found that 62 percent of initial registrations were untimely and that 50 percent of registrants filed at least one supplemental statement late. But prosecution for violations of FARA is also almost non-existent with only seven criminal cases brought between 1966 and 2015. Of these cases, one resulted in conviction at trial, two pleaded guilty, two others pleaded guilty to non-FARA charges and the others were dismissed. The lack of FARA prosecutions demonstrates how the FARA enforcement unit inside the National Security Division (NSD) of the DOJ has prioritized pursuing registration for alleged FARA violators rather than prosecution. They see their central role as promoting voluntary disclosure. The audit notes that FBI agents and prosecutors were frustrated by the NSD’s reluctance to approve FARA charges, believing this leaves a substantial counterintelligence tool underutilized.
The indictment of Manafort and Gates thus came as a surprise to lobbyists familiar with FARA, some of whom thought the law was “toothless” and a “complete joke.” The indictment is certainly the most significant prosecution under FARA to-date, but the question remains whether this signals a renewed effort by the DOJ to prosecute FARA violations or is simply a useful tool of the Mueller investigation. Soon after the Manafort indictment, Tony Podesta, a powerful Democratic lobbyist and founder of the Podesta Group, stepped down from his firm after coming under investigation by Mueller. Politico reported that the Podesta Group filed paperwork with the DOJ in April disclosing that it had done work for the European Centre for a Modern Ukraine, claiming that it had at the time believed it was a European think tank untethered to a political party. Since the Podesta Group was reportedly subpoenaed earlier this year by the Special Counsel, Mueller may have information related to the accuracy of these statements on Podesta’s FARA filings.
Although the recent use of FARA as a prosecutorial tool seems to be confined to parties connected to the Russia investigation, this may serve as a needed wake-up call to D.C. lobbying outfits engaging in international lobbying work, who have previously not taken FARA seriously. Given the issue of Russian interference in the previous presidential election, it is clear that FARA needs increased emphasis and reform. Just as FARA was necessary to combat the threat of a foreign power in 1932, we are discovering the same may be true today.
Prior to enrolling at Columbia law School, Jacob attended Cornell University (‘14), where he studied government. Jacob interned at the Securities & Exchange Commission in the enforcement division.