We Americans do not like foreign governments or their agents meddling in our domestic affairs, whether it is China, Russia, Iran, Syria, or some less reprehensible regime. We do not even like friendly foreign governments meddling in our affairs. I am not talking about traditional CIA/007 spies or agents who operate in the shadows, mainly toward political ends (sometimes by way of economic means). And I am not talking about official representatives of foreign governments operating in the United States as counterparts to our State Department officials. But I am talking about non-governmental (not to be confused with NGO) economic and political agents who operate and exert influence on U.S. soil on behalf of foreign governments and quasi-governmental groups. These agents are considered “foreign agents” under the U.S. Foreign Agents Registration Act (“FARA”), and as foreign agents, they are required to register and update their registrations regarding each foreign client. This is the first of a three-part series on FARA registration requirements to help you ensure you do not end up on the wrong side of the U.S. Department of Justice.
Foreign lobbying and FARA rose again to prominence in the past few years, with prosecutions accelerating starting in 2017, thanks to Russia and Ukraine. You may remember some of these newsworthy prosecutions brought by the U.S. Department of Justice in the past five years:
- 2014 – Prince Asiel Ben Israel pleaded guilty for failing to register under FARA for his lobbying efforts on behalf of Zimbabwe to try to lift sanctions on Robert Mugabe and other top Zimbabwean government officials. Ben Israel was sentenced to seven months in prison.
- 2017 – Michael T. Flynn pleaded guilty to making false statements to the FBI regarding his interactions with the Russian Ambassador to the United States and for making materially false statements on his FARA registration documents regarding work performed by him and his company to principally benefit the Republic of Turkey.
- 2018 – Three Russian Companies and 13 Russian nationals were indicted by a grand jury for violating FARA for their political interference surrounding the Clinton vs. Trump election.
- 2018 – Richard Gates (compadre of Paul Manafort) pleaded guilty to conspiring to violate FARA by failing to register and providing false statements in a FARA registration document in connection with his lobbying work on behalf of the Government of Ukraine, the Ukrainian Party of Regions, and former Ukrainian President Victor Yanukovych. Gates has been cooperating with the government and is awaiting sentencing.
- 2018 – Nisar Ahmed Chaudhry pleaded guilty for failing to register under FARA as an agent for the Government of Pakistan, its military, intelligence, and diplomatic officials.
- 2018 – W. Samuel Patten pleaded guilty to violating FARA on behalf of the Opposition Bloc, a Ukrainian political party, for failing to register under FARA, even though he contacted members of Congress, the executive branch, and news media. He also drafted talking points for a Ukraine oligarch for meetings with members of Congress and congressional staff and news articles targeted at the U.S. press. He cooperated with the government and was sentenced to 36 months of probation.
- 2018 – Paul Manafort pleaded guilty to violating FARA by failing to register and providing false statements in a FARA registration document for his work on behalf of the Government of Ukraine, the Ukrainian Party of Regions, and former Ukrainian President Victor Yanukovych. He was sentenced to the maximum 60 months for his conspiracy to violate FARA.
- 2018 – Elena Alekseevna Khusyaynova, a Russian national, was charged by a criminal complaint for her alleged role in a Russian conspiracy to impair, obstruct, and defeat the U.S. Department of Justice’s administration and enforcement of FARA.
- 2019 – The U.S. law firm Skadden, Arps, Slate, Meagher & Flom LLP entered into a settlement agreement resolving its liability for FARA violations surrounding its work for the Government of Ukraine, including a Skadden partner’s false and misleading statements to the FARA Unit to avoid registration under FARA. Skadden disgorged over $4.6 million in fees.
If at this point you are wondering whether there appears to be an accelerated trend of pushing against foreign influence in the U.S., you are absolutely correct. In addition to increasing FARA scrutiny, CFIUS reviews under FIRRMA, which seek to limit foreign ownership of U.S. businesses, have also been on the rise in recent years (see here and here). You may not consider yourself a traditional lobbyist. Perhaps you only consider yourself an advisor, a consultant, or “just” a lawyer working on behalf of a client. Whatever your role, if you are involved with a foreign government or “any faction or body of insurgents within a country assuming to exercise governmental authority,” then you need to carefully look at the FARA criteria.
You may also be wondering why those working on behalf of China as foreign agents have not been involved in FARA prosecutions at this point, though there have been plenty of criminal economic espionage cases brought against those stealing trade secrets for China (see here) by the DOJ. Based on the current state of affairs, you can believe that foreign agents operating on behalf of China will be in the crosshairs next. It is time to make sure you and your company are complying with FARA.
Criteria for registering as a foreign agent under FARA
Registration under FARA is not limited to U.S. individuals and entities. Non-U.S. individuals and entities operating in the U.S. as foreign agents also need to register, regardless of whether the foreign government being represented is a friend, frenemy, or enemy. Here are some key legal terms and questions with which to become familiar to assess whether you or your company must register under FARA:
Are you working on behalf of a “foreign principal”?
This broad term generally refers to a government of a foreign country or a foreign political party, but it also includes any faction or body of insurgents within a country exercising governmental authority, whether or not that group is recognized by the United States as a legitimate government over legitimately-controlled territory. A foreign principal also includes a partnership, association, organization, or other combination of persons having its principal place of business in a foreign country. Nation-states, government entities, government officials, political parties, ousted dictators in exile, guerilla groups, and for-profit and nonprofit entities owned by any of the foregoing all fit into the definition of a foreign principal.
Are you engaging in “political activities” or will you act as “public relations counsel” or a “political consultant”?
Political activities means any activity the U.S. Department of Justice (DOJ) believes will influence or is intended to influence any U.S. agency or official or any section of the public within the United States. Public relations counsel refers to consulting with the foreign principal on how to sway public relations. Political consultants generally provide guidance on how to navigate interactions with state or federal legislative or executive branch members. The key of this analysis point is whether you are trying to sway U.S. government officials or U.S. voters. If you are only helping your client to engage with non-U.S. political actors and voters, then you may not be engaging in political activities or acting as public relations counsel or a political consultant for FARA registration purposes.
Who or what needs to register under FARA?
The business entity engaged on behalf of the foreign principal needs to register a primary registration statement, and each individual involved in performing political activities or acting as public relations counsel or a political consultant on behalf of the foreign principal needs to register under the primary registration statement on a short form registration statement. This includes employees and contractors of the FARA registrant entity. If the work on behalf of the foreign principal is being performed solely by an individual as an agent, representative, employee, servant, or in any other capacity at the request or under the direction of a foreign principal, then that individual needs to register a primary registration. Keep in mind that FARA registration only applies to actors engaging in the United States in conducting political activities or acting as public relations counsel or a political consultant.
The various relevant registration documents can be found here, all of which are filed electronically here and become public records (including your engagement letter and your fees actually received). In the third post we will walk through these forms in detail.
What are the penalties for non-compliance with FARA registration?
Penalties for non-compliance with FARA registration can be significant, especially if those activities involve hot-button topics and unpopular U.S. adversaries. The punishments and settlements made public by the DOJ range from probation, to months or years of prison time, to disgorgement of fees received from the foreign principal, with the worst punishments being assessed against individuals and businesses that made false statements in the registration process or to investigators trying to ascertain whether FARA violations occurred.
Whether you are working on behalf of official or quasi-official clients from China, Russia, Iran, India, Spain, or somewhere else, you need to assess whether your activities necessitate registration under FARA. Registration applies to those representing friends and foes, but foes particularly draw popular ire and DOJ scrutiny.
How to remain in compliance with the ongoing registration requirements
Here is a brief overview of the various FARA registration documents, all of which are filed electronically here.
This is the primary registration form that must be filed by each foreign agent. The form centers on the registrant (the foreign agent) and not the foreign principals the foreign agent represents, though the foreign agent is responsible to report information on its foreign principal clients. The information required is not overwhelming, but this form and the following forms have some nuance to them, and you need to know exactly what actions you will be taking on behalf of your foreign principals so that you can describe them accurately and consistently across all of the forms.
This contains information on the foreign principal you represent. If you represent multiple foreign principals, you must file one Exhibit A for each of them.
You will attach your written engagement letter with the foreign principal to this form, and if you do not have a written engagement letter, you will need to describe the arrangement. You also need to describe your activities on behalf of the foreign principal, which includes determining whether your activities constitute “political activities,” meaning any activity that you believe will or is intended to influence any U.S. “agency or official” or “any section of the public within the United States.” If you are only helping the foreign principal engage with non-U.S. political actors, then you may not be engaging in political activities. You still need to register if you are acting as public relations counsel or political consultant to the foreign principal, both of which are broad categories.
No printed form is provided, but you are required to provide a copy of your charter documents and bylaws. To a corporate lawyer like me, the request of “bylaws” seems unnecessarily narrow and should include shareholder agreements and operating agreements to provide a full view into how decisions are made within your company and who are the key players. But for now you only need to provide articles and bylaws if you are a corporation and only the certificate or articles of formation if you are an LLC (and nothing if you are a partnership that has not filed a certificate or articles of formation).
Amendment to Registration Statement.
If the attorney general’s office requires you to make changes after submitting the Registration Statement, you will use this form. You are also responsible to use this form to update any information that becomes inaccurate after you file the Registration Statement, including minutiae like the list of employees, contractors, etc. working on each project and whether your activities on behalf of the foreign principal differ from those initially reported on the Registration Statement.
Short Form Registration Statement.
This will be filled out and signed by every individual and entity that is a partner, director, or officer in your business, along with each employee, agent, consultant, or subcontractor involved in the work on behalf of the foreign principal.
This is a detailed form like the initial Registration Statement, and you must file this every six months for the duration of your registration under FARA. It is used to report any changes to the Registration Statement. You are also required to file this statement within 30 days after your representation of the foreign principal has been terminated, including to indicate that you are no longer required to register under FARA.
FARA registration is required for representation of any foreign principal, not just those representing the Chinese government or quasi-governmental groups, but because China is in the crosshairs you need to ensure you are fully compliant with this registration process and the ongoing reporting requirements.