Mucking Through Data
Scrutiny of foreign lobbying related to former Trump national security adviser Michael Flynn spurred a flurry of lobbying and foreign agent registrations in 2017.
Flynn’s case, as well as that of former Trump campaign manager Paul Manafort and lobbying firm Podesta Group, drove a spike in filings because it hit at a gray area in the Foreign Agent Registration Act (FARA), according to Lydia Dennett foreign lobbying investigator for the Project on Government Oversight (POGO).
Lobbying firms that weren’t sure if their work falls under FARA’s purview are exerting an overabundance of caution and registering just in case, Dennett said.
Enforcement around FARA is rare, but lobbying groups aren't taking any chances. The result is a 'mini-boomlet' in demand for lawyers versed in foreign lobbying registration according to Rob Kelner, chair of political law practice and FARA expert with Covington & Burlington.
Now, international law and lobbying firms that regularly file under FARA, like Squire Patton Boggs, Podesta Group, Akin Gump Strauss Hauer & Feld, and Hogan Lovells, are being joined by firms new to foreign lobbying, like Ballard Partners, as well as travel marketing agency MMGY Global and smaller firms like Ashcroft Law—former attorney general John Ashcroft's firm—and Jack Abramoff, the former super-lobbyist and Republican fundraiser.
Registrations under FARA—a 1938 statute that requires agents of foreign principals acting in a political capacity to disclose their activities to the DOJ—are up 60 percent from 2016, the highest they’ve been in over 20 years.
And registrations for foreign entities under the Lobbying Disclosure Act (LDA)—the 1995 rule that requires registration and disclosure for all lobbyists with the House of Representatives—are up 88 percent.
Registrations under both FARA and LDA hit historic lows in 2014 following changes from the 1995 Lobbying Disclosure Act, the 2007 Honest Leadership and Open Government Act (HLOGA), as well as a lack of clarity and enforcement around the rules for filing.
Kelner added that registration through FARA has been inconsistent because there wasn’t much pressure from the DOJ, clients didn’t understand the rules, and the process could be complicated.
According to James Thurber, professor and founder of American University's Center for Congressional and Presidential Studies, the HLOGA scared off groups from registering. The risk of potential fines and prison, plus the prohibition on gifts and the general desire for less transparency, drove lobbying underground.
“Companies now hire lobbyists to walk right up to the line requiring them to register, or they use shadow lobbying tactics like strategic advisers who provide lobbying advice but don’t actually meet with representatives,” Thurber added.
Flynn’s consulting firm, Flynn Intel Group, originally filed under the LDA as having worked for a private company, Inovo BV, based in the Netherlands.
But Flynn eventually filed as a foreign agent under FARA because the work he produced ultimately benefited the Turkish government.
While Inovo BV was a non-government foreign entity, Inovo was owned by a Turkish businessman who arranged meetings between Flynn and representatives of the Turkish government, according to FARA filings. Following the meetings, Flynn's group published an op-ed in The Hill newspaper supporting the Turkish government and hired a film crew to produce a documentary.
Dennett said that Flynn’s work benefiting a foreign government despite not working for a foreign government, “falls in a gray zone between FARA and the LDA.”
“The definition of what constitutes the principal beneficiary—the entity who ultimately benefits from the work being done—is not well understood and the DOJ has yet to give guidance on it,” Dennett added.
Currently, lobbying by a foreign principal—foreign governments, political parties, entities, or individuals—must be filed with FARA. But numerous exemptions exist for commercial, academic, and nonprofit groups, and many foreign organizations only file under the less strict LDA.
Under FARA, registrants are required to file a wide range of documents with the DOJ including contracts, and any distributed informational materials have to be filed within 48 hours.
Under LDA, lobbyists only file quarterly and they only include brief descriptions of their lobbying activity are included.
Because of a suspected lack of compliance, numerous bills have tried removing the exemption in FARA for non-government foreign entities that file with the LDA, otherwise known as the LDA exemption.
But Kelner said that if the LDA exemption was removed, some groups might not register at all.
“Commercial entities that were registering under LDA could simply avoid registration altogether under FARA’s commercial exemption,” Kelner said. FARA guidelines stipulate that, to qualify for the commercial exemption, company activities must be private and nonpolitical.
According to Dennett, even with the increased attention FARA has received, there's plenty of confusion on filing requirements.
“There’s little guidance and plenty of room for misinterpretation on exemptions for attorneys and nonprofits, and there’s little enforcement outside of the Flynn and Manafort cases,” Dennett said.
According to Dennett, the rules don't say that lawyers don't have to register, but it could be interpreted that way. And the guidance for nonprofits exempts those that "work to ease human suffering" from registering, which could also be broadly interpreted.
DOJ currently has two methods of enforcing FARA compliance—criminal charges or a civil injunction requiring a cease to all work until FARA compliance—and both are rare. Criminal charges require a grand jury to indict and civil injunctions haven't been used since 1991.
Since both of those are often unlikely, Dennett believes civil fines would be a good middle of the road option for those that fail to register or register late.
Additionally, thousands of foreign groups file under the LDA but do not acknowledge being foreign entities.
This includes groups that would appear to be foreign entities: The Embassy of Azerbaijan, Japan Bank for International Cooperation, and the University of Oxford in England.
Thurber said that the Government Accountability Office (GAO) has the ability to audit LDA filings, but the GAO already struggles to deal with those that don't register.