Business & Lobbying

Mueller fuels foreign lobbying crackdown

Special counsel Robert Mueller’s Russia investigation has given federal prosecutors momentum to litigate alleged violations of what until last year was an obscure law governing foreign lobbying.

In the course of his now 19-month probe, Mueller has uncovered a web of alleged criminality linked to violations of a World War II-era law enacted amid concerns over foreign propaganda.

Mueller has obtained guilty pleas under the law, the Foreign Agents Registration Act (FARA), from two of President Trump’s 2016 campaign aides, Paul Manafort and Richard Gates. Both pleaded guilty to charges linked to their lobbying work on behalf of pro-Russian forces in Ukraine.

Mueller has also referred cases falling outside his mandate to other U.S. prosecutors.

{mosads}One of those referrals resulted in the guilty plea last summer of GOP consultant Sam Patten, an associate of Manafort’s. Patten pleaded guilty to illegally lobbying on behalf of a political party in Ukraine called the Opposition Bloc, the successor to Russia-backed oligarch Viktor Yanukovych’s Party of Regions. Patten has been cooperating with Mueller and other federal officials and prosecutors are expected to give an update on his case by Monday.  

Meanwhile, federal prosecutors in Manhattan are said to be accelerating an investigation into Washington, D.C., firms that helped Manafort lobby on behalf of Yanukovych, raising the possibility new charges could be filed in the future.

And government prosecutors in Virginia are poised to lay out their case against a former business partner of Michael Flynn, Trump’s onetime national security adviser. Flynn is expected to be a witness against his old partner, who is charged with illegally lobbying on behalf of the Turkish government.

The developments have had a chilling effect in Washington among lobbyists and consultants.

“When you become ground zero for what America is angry about … anything can happen,” said one lobbyist who spoke on the condition of anonymity. “All it takes is a couple of scandals.”

FARA dates back to 1938, when it was passed to ensure transparency of foreign influence in the American political process as a result of fears over Nazi and communist propaganda. It has been amended twice since then but is essentially the same law.

It requires that “agents of foreign principals,” typically lobbyists or consultants who work for foreign governments or political parties, register and file regular reports with the Justice Department on their activities. They also must file copies of materials they distribute for any foreign entities and keep a record of their activities.

Criminal prosecutions under the law have been few and far between. Indeed, a Justice Department inspector general report released two months before the 2016 presidential election concluded that Justice lacked a “comprehensive” strategy to enforce FARA.

{mossecondads}Mueller’s investigation has turned the tides, at least for the time being.

Mueller charged Manafort and Gates with acting as unregistered foreign agents in October 2017, in addition to a slew of other federal offenses stemming from their lobbying on behalf of politicians in Ukraine. Both have since pleaded guilty and agreed to cooperate, though Manafort’s plea deal broke down dramatically last month as the special counsel accused him of lying.

Their cases spell potential trouble for two D.C. firms that Manafort recruited to lobby on behalf of Yanukovych in the United States. Manafort has admitted to arranging for the firms, the now-defunct Podesta Group and Mercury Public Affairs, to work for a nonprofit that claimed to be independent but was in fact under Yanukovych’s direction in order to obscure that their efforts were done at the behest of the Ukrainian government.

Mueller’s prosecutors said in September that some employees of both firms, identified only as “Company A” and “Company B” in court filings, knew that they were receiving direction from Yanukovych and not the nonprofit.

Neither firm registered under FARA for the lobbying work. Instead, they registered under the Lobbying Disclosure Act. The two firms said they did so on advice from counsel, and both have subsequently registered under FARA.

FARA allows for some exemptions in which lobbyists could register under the Lobbying Disclosure Act rather than FARA. To do so, individuals or firms must represent foreign principals who are not foreign governments or political parties.

The Associated Press reported earlier this month that prosecutors in Manhattan, on Mueller’s referral, had in recent weeks interviewed witnesses to probe the lobbying done by the Podesta Group and Mercury, a sign of the investigation accelerating. Neither firm has been charged with wrongdoing.

Mueller’s referral also reportedly included Greg Craig, who worked as White House counsel under former President Obama and whose law firm Manafort hired to produce a report that defended the Ukrainian government’s imprisonment of former Prime Minister Yulia Tymoshenko, Yanukovych’s political rival.

Separately, Mueller’s investigation has contributed to prosecutors bringing charges against Bijan Kian, a co-founder of Flynn’s lobbying group who was indicted alongside another associate in mid-December on charges of conspiracy and acting as an unregistered agent of the Turkish government.

The charges came roughly a year after Flynn pleaded guilty in connection with Mueller’s investigation and admitted to making false statements in filings to the Justice Department about the Flynn Intel Group’s lobbying work related to Turkey.

Kian has pleaded not guilty and his trial is slated to begin in February in Alexandria, Va., where Flynn is expected to testify.

Lobbyists who do work with foreign governments insist they comply with FARA, and some have suggested that the recent charges give the false impression that the industry is characterized by shady dealings.

“One bad lobbyist can tarnish the whole industry,” said one lobbyist, who likened the latest controversy to the Jack Abramoff scandal, which resulted in the former D.C. power player spending four years in prison and spurred congressional action to regulate lobbying.

Regardless, Mueller has thrown a spotlight on foreign lobbying activities that is unlikely to wane even after his investigation has concluded. Some lawmakers have pushed for legislation they argue would strengthen FARA and prevent individuals from exploiting loopholes in the law.

Lobbying shops may also start to turn away foreign clients if they haven’t already, given that Russian interference and other recent developments have cast a shadow over the work. A handful of firms, for instance, have recently dropped Saudi Arabia as a client in light of journalist Jamal Khashoggi’s murder.

“I think that even those who have been following the rules are going to think twice about this because I think there are probably ample numbers who have not been following the rules,” one lobbyist told the Hill.

“Even those that register appropriately, the question is going to be why are you working for an oppressive regime? Why are you trying to bolster a foreign government over the U.S. government?” the person continued.

New bills are expected to be introduced in the coming year and House Democrats will likely push to get a bill that tackles foreign lobbying regulations out of the lower chamber.

“I think there is definitely more focus. People are more engaged,” said Steven Cash, a D.C.-based lawyer at Day Pitney and former chief counsel to Sen. Dianne Feinstein (D-Calif.).

“I think there is more to come that is going to spin out of Mueller, and I suspect there is more to come generally, because we’re going to be more attentive to this,” Cash added.  

Tags Dianne Feinstein Donald Trump FARA Lobbying Disclosure Act Paul Manafort Robert Mueller Russia Ukraine

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