The first of a pair of Paul Manafort trials began this week in a courthouse in Virginia. The international lobbyist and onetime head of the Trump presidential campaign is charged with parking millions in cash offshore to evade taxes and otherwise launder his earnings. These are common enough charges in the shadier back-alleys of global high-finance and political fixing. The second trial, slated for later in the District of Columbia, deals extensively with a rather less common sort of allegation—that Manafort failed properly to register his activities under the federal Foreign Agents Registration Act (FARA).
To say that FARA was, at least until recently, an obscurity would be a wild understatement. In 2016, the Justice Department’s inspector general audited the enforcement of FARA and “found that historically there have been hardly any FARA prosecutions.” And by hardly any, the IG meant hardly any. In half a century—from 1966 to 2015—there were “only seven criminal FARA cases.” One produced an actual conviction at trial, two resulted in guilty pleas, two of the accused pleaded out to other charges, and “two cases were dismissed.” So in 50 years, all of three people have been found guilty of FARA violations.
One other measure of what a backwater FARA enforcement has been: The Senate Select Committee on Intelligence website offers a helpful list of some two dozen “Major Intelligence Related Statutes.” The 1993 Central Intelligence Agency Voluntary Separation Pay Act makes the list; FARA does not.
But now, thanks to the various investigations of the special counsel, FARA seems to be everywhere. There are the Manafort charges, of course, but don’t forget the 13 Russian social media trolls and their alleged corporate sponsors. They are accused of defrauding the United States by “impairing, obstructing, and defeating the lawful functions of the government.” One of the “lawful functions” specified by the Mueller team is FARA. And then there is Russian grad student and gun-rights advocate Maria Butina, who was recently charged with violating an even more obscure parallel to the FARA statute, 18 U.S.C. 951, which regulates “agents of foreign governments.”
All of these prosecutions have focused the minds of Washington’s lobbyist class and others who are wondering whether they might find themselves defined as “foreign agents.” They’ve been lining up at lawyers’ offices to register their activities.
“We have seen a significant uptick in FARA-related business, both from new clients wanting to ensure they are in compliance and from existing clients who are asking us to ensure that their prior filings are fully buttoned-up,” says Josh Rosenstein of Sandler Reiff Lamb Rosenstein & Birkenstock. “Many of them have told us that the new regulatory environment is prompting them to take a hard look at FARA compliance.” Sensible stuff, that.
Law firm Wiley Rein is at “a record pace in fielding inquiries from clients in regard to compliance with the Foreign Agents Registration Act,” says attorney Daniel Pickard. “We’re receiving lots of requests for guidance as to whether clients need to file.”
According to a Justice Department spokesman, there were 50 percent more FARA filings in 2017 than in 2016. And if anything, the pace has quickened since then. Asked if there’s been a boom in FARA work and whether the current prosecutions explain it, Thomas J. Spulak of King & Spalding is blunt: “Yes and yes.”
Savvy law firms are putting the word out to clients with international business that they need to get right with Uncle Sam. Jenner & Block produced a white paper in February titled “The Revival of the Foreign Agents Registration Act: What You Should Know and What to Do Next.” Covington & Burling warned, “The breadth of the statute, its criminal penalties, the absence of interpretive guidance, and the growing attention paid to the 1930s era law by federal prosecutors combine to create dangerous and difficult-to-manage risks for multinational companies, lobbying firms, and public relations firms.”
Which is an elaborate way of saying if you have to ask whether you need to file, chances are you might want to.
There’s no shortage of persons covered by the law, in no small part because of the circumstances of its passage. In the years before the United States entered World War II, Nazi propagandists and provocateurs actively infiltrated American social and political organizations. Their goal: to skew public opinion about the war in Europe. The Foreign Agents Registration Act was drafted to empower the federal government to respond to that threat, and as with many wartime security laws, FARA was written as broadly as possible.
Consider the law’s quite expansive definition of “person.” The statute explains: “The term ‘person’ includes an individual, partnership, association, corporation, organization, or any other combination of individuals.”
Then there is the “foreign principal” who makes a “person” into a foreign agent by giving him, her, or it direction. Several subclauses note who is included in the definition of foreign principals. The first is straightforward enough: “A government of a foreign country and a foreign political party.” But what of the second subclause, which defines as a “foreign principal” any non-American “person outside of the United States.” Just a bit broad, don’t you think?
Given the expansiveness of the statute the better question than who is covered might be who isn’t. Craig Engle heads the political law group at Arent Fox. He says most people even remotely covered by the act don’t want to run afoul of FARA any more than they want to get themselves into any other sort of trouble. Of those who are conceivably covered by FARA but unregistered, Engle says the vast majority want to be in conformity with the law. “Now that FARA is in the papers, clients are calling.” They’re all asking, “Oh, does that apply to me?”
It’s a good question. Let’s say you are the CEO—or even just the press spokesman—for a U.S. business owned by a German firm, and you express to a reporter an opinion about tariff policies. Are you required to declare yourself and your company foreign agents and keep up twice-yearly filings with the FARA office? It can’t hurt.
In our age of globalized business, this has all sorts of companies worried that a prosecutor in need of a handy statute with which to leverage them may learn from Team Mueller just how useful FARA can be. Business lobbyists have been looking to Capitol Hill to make FARA less encompassing and less elastic. A spokesman for Senate Judiciary chairman Chuck Grassley says, “We’ve been working with stakeholders to find a way to thoughtfully address legitimate concerns raised by U.S. subsidiaries of foreign companies.” Grassley has FARA reform legislation now before the Foreign Relations Committee.
Arent Fox’s Engle says two things have come from all the publicity about FARA and its broad application: (1) more compliance with FARA; and (2) a new impetus for long-overdue reform of the statute. “Controversy,” Engle says, “sometimes creates progress.”
Not that this will turn off the lawyers’ FARA faucet: “We have certainly seen an uptick in the number of clients seeking FARA advice recently,” says Christopher E. Babbitt of Wilmer Cutler Pickering Hale and Dorr. “We would expect that to continue—particularly if any of the proposed FARA reforms are enacted.” It’s a win-win of a sort.
