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June 16, 2022

Stroock Client Alert

By: Gregory Jaeger, Chris Griner, Shannon Reaves, Tom Firestone, Christopher R. Brewster, Kerry T. Cooperman, Andrew J. Astuno, Erin Bruce Iacobucci

A retired four-star Marine General resigned as president of the influential think tank, Brookings Institution. This happened following the public disclosure of an FBI search warrant application  alleging criminal violations of the Foreign Agents Registration Act (“FARA” or “the Act”) when he participated in a lobbying campaign on behalf of Qatar during the 2017 Gulf diplomatic crisis. The resignation is the latest development in the heightening FARA enforcement environment in both the criminal and civil arenas.

Companies, including non-profit organizations, dealing with foreign governments and/or principals (which includes foreign individuals and businesses), should take note of this increasing enforcement trend, and take steps to determine the extent to which FARA compliance should be a part of their overall regulatory compliance efforts. 

I.     FARA Background

FARA requires individuals acting as “agents of foreign principals” to make periodic public disclosures of their relationship with, and activities for, such foreign principals. The purpose of such disclosures is not to prevent such relationships, but to allow the American public and government officials to evaluate the agents' statements and activities with knowledge of the foreign interests they serve. FARA regulates efforts to influence public opinion that may not involve “lobbying” as that term is generally understood — public relations campaigns, for example. Moreover, FARA reaches lobbying at all levels of government, not just Congress, and can apply to activities undertaken on a pro bono basis. In addition to lobbying, FARA also reaches conduct that has nothing to do with lobbying, nothing to do with the U.S. government, and nothing to do with influencing U.S. public opinion (e.g., acting as a political consultant to a foreign government regarding foreign politics and fundraising for a foreign principal in the U.S.).

A party must register under FARA if it acts in any capacity at the order, request, or under the direction or control, of a foreign principal or of a person any of whose activities are directly or indirectly supervised, directed, controlled, financed, or subsidized in whole or in major part by a foreign principal and who directly or through any other person, and within the United States: (i) engages in political activities for or in the interests of such foreign principal; (ii) acts as public relations counsel, publicity agent, information-service employee or political consultant for or in the interests of such foreign principal; (iii) solicits, collects, disburses, or dispenses contributions, loans, money, or other things of value for or in the interest of such foreign principal; or (iv) represents the interests of such foreign principal before any agency or official of the government of the United States. 

“Political activities” are defined to include “any activity that the person engaging in will, or that the person intends to, in any way influence any agency or official of the government of the United States with reference to formulating, adopting, or changing the domestic or foreign policies of the United States or with reference to the political or public interests, policies, or relation of a government of a foreign country or a foreign political party.” 22 U.S.C. § 611(o). FARA defines the term “foreign principal” to include foreign governments, foreign political parties, individuals located outside the United States who are not U.S. citizens or who are not domiciled in the United States, and businesses organized under a foreign country’s laws or that have their principal place of business in a foreign country. 

Willful violations of FARA and its implementing regulations are subject to criminal penalties under the Act, including a fine of up to $250,000, or imprisonment of up to five years. Civil violations may be subjected to a request from the Department of Justice (DOJ) to register under the Act, or an injunctive action compelling such registration.   

II.     Brookings Institute President Retired Marine General John Allen

The particular facts of the Allen investigation provide insight into how the government intends to enforce the Act. 

During the 2017 Gulf crisis, the UAE and other Gulf states cut off diplomatic ties with Qatar, and closed all air and sea lanes to the country, based on public accusations that Qatar supported Iran and various terrorist groups. For similar reasons, several U.S. House of Representatives members had introduced proposed sanctions against Qatar. Allen, along with Imaad Zuberi and Richard Olson, was recruited to lobby in the U.S. on behalf of Qatar to help resolve the crisis. According to the warrant application, at the request of Qatari officials, “Allen corresponded with, met with, and successfully lobbied U.S. Executive Branch officials in the United States to release public statements sought by Qatar,” and solicited Executive Branch officials to meet personally with Qatari officials. 

The warrant application alleges that Allen sought compensation for these efforts, including a $20,000 speaking engagement fee and travel expenses for a trip to Doha, and a longer-term compensation arrangement through Zuberi. The application further alleged that Allen pursued at least one multi-million-dollar business deal with the Qatari government on behalf of an unidentified company on whose board of directors he served. It should be noted here that, although DOJ has characterized the speaking fee and travel expenses as compensation for Allen’s advocacy work, such compensation is not necessary to establish an obligation to register under FARA. Finally, the warrant application contends that Allen participated in the lobbying effort despite being aware of the FARA registration requirements and their applicability to his situation, thus justifying the criminal allegations. 

Allen has vigorously denied these allegations, and time will tell how far the investigation will go. It is worth noting, however, that Zuberi earlier pleaded to a criminal FARA violation for an unrelated matter, which led to his cooperation in the Allen matter. From an aggregate view, the Allen matter reveals that the DOJ intends to aggressively pursue FARA violations, even those that have occurred several years ago.  

III.     Stephen A. Wynn and Christina Pushaw

The Allen criminal FARA matter comes less than a month after the Justice Department’s filing of a civil enforcement action in the U.S. District Court for the District of Columbia against Stephen A. Wynn (former CEO of Wynn Resorts). In that case, the government has sought to compel Wynn to register under FARA for his work with the Chinese government in connection with lobbying efforts to convey to the Trump Administration the PRC’s request to cancel the visa of (or otherwise remove from the United States) a PRC businessperson who left China in 2014. The Chinese national was later charged with corruption by the PRC, and sought political asylum in the United States. 

Wynn had been advised by the DOJ that he was required to submit a FARA registration, but after much back and forth between Wynn’s counsel and the government, Wynn failed to register. In response to this, the DOJ filed its complaint for injunctive relief to compel Wynn to register. According to the DOJ announcement for this lawsuit, this was the first affirmative civil lawsuit under FARA in more than three decades.

The Wynn case stands in contrast to the recent report that Christina Pushaw, press secretary to Gov. Ron DeSantis (FL), filed a FARA registration for work she had performed for former Georgian President Mikheil Saakashvili between 2018 and 2020. According to her attorney, Pushaw’s efforts included writing op-eds, reaching out to supporters and officials, and engaging in advocating on Saakashvili’s behalf in Georgia and in the United States. For these efforts, she received approximately $25,000. Like Wynn, Pushaw apparently received a request from the DOJ to register with FARA for her activities; however, unlike Wynn, she did so immediately.

IV.     Impending Regulatory Changes

The foregoing enforcement actions have occurred in the midst of the DOJ’s efforts to revise the existing FARA regulations. At the end of last year, the DOJ issued an Advanced Notice of Public Rulemaking (ANPRM) soliciting the public’s suggestions for potential amendments to/clarifications of the current FARA implementing regulations. Responses to the ANPRM were due last February, and the next step will be the issuance of a Notice of Proposed Rulemaking (NPRM) which will set forth specific regulatory text for public comment. The ANPRM sought public input regarding basic FARA provisions, such as the scope of agency applicable to FARA’s definition of an “agent of a foreign principal,” the definition of a “political consultant,” and applicable exemptions under the statute, including commercial exemptions, the exemption for religious/scholastic/scientific pursuits, and the exemption for persons qualified to practice law. It is unclear at this stage to what extent the regulations will be revised, and how specifically they will affect the FARA enforcement environment. 

However, it is abundantly clear that the DOJ is committed to broadening its FARA enforcement efforts. Past comments by DOJ officials have made clear that, although a major goal of the Act is to achieve transparency in relationships with foreign persons and entities, the Department will not hesitate to pursue criminal charges where it deems it appropriate. In conjunction with counsel, companies doing business with foreign companies and entities should undertake appropriate compliance measures, i.e., conducting a FARA risk assessment, designating someone in the organization as responsible for FARA compliance, developing a procedure to review all engagements that involve foreign funding, conducting FARA training for employees, having foreign clients and funders sign FARA certifications when appropriate, and inserting intellectual independence clauses in contracts when appropriate. 

For more information, please contact any of the authors.

June 16, 2022

Stroock Client Alert

By: Gregory Jaeger, Chris Griner, Shannon Reaves, Tom Firestone, Christopher R. Brewster, Kerry T. Cooperman, Andrew J. Astuno, Erin Bruce Iacobucci

A retired four-star Marine General resigned as president of the influential think tank, Brookings Institution. This happened following the public disclosure of an FBI search warrant application  alleging criminal violations of the Foreign Agents Registration Act (“FARA” or “the Act”) when he participated in a lobbying campaign on behalf of Qatar during the 2017 Gulf diplomatic crisis. The resignation is the latest development in the heightening FARA enforcement environment in both the criminal and civil arenas.

Companies, including non-profit organizations, dealing with foreign governments and/or principals (which includes foreign individuals and businesses), should take note of this increasing enforcement trend, and take steps to determine the extent to which FARA compliance should be a part of their overall regulatory compliance efforts. 

I.     FARA Background

FARA requires individuals acting as “agents of foreign principals” to make periodic public disclosures of their relationship with, and activities for, such foreign principals. The purpose of such disclosures is not to prevent such relationships, but to allow the American public and government officials to evaluate the agents' statements and activities with knowledge of the foreign interests they serve. FARA regulates efforts to influence public opinion that may not involve “lobbying” as that term is generally understood — public relations campaigns, for example. Moreover, FARA reaches lobbying at all levels of government, not just Congress, and can apply to activities undertaken on a pro bono basis. In addition to lobbying, FARA also reaches conduct that has nothing to do with lobbying, nothing to do with the U.S. government, and nothing to do with influencing U.S. public opinion (e.g., acting as a political consultant to a foreign government regarding foreign politics and fundraising for a foreign principal in the U.S.).

A party must register under FARA if it acts in any capacity at the order, request, or under the direction or control, of a foreign principal or of a person any of whose activities are directly or indirectly supervised, directed, controlled, financed, or subsidized in whole or in major part by a foreign principal and who directly or through any other person, and within the United States: (i) engages in political activities for or in the interests of such foreign principal; (ii) acts as public relations counsel, publicity agent, information-service employee or political consultant for or in the interests of such foreign principal; (iii) solicits, collects, disburses, or dispenses contributions, loans, money, or other things of value for or in the interest of such foreign principal; or (iv) represents the interests of such foreign principal before any agency or official of the government of the United States. 

“Political activities” are defined to include “any activity that the person engaging in will, or that the person intends to, in any way influence any agency or official of the government of the United States with reference to formulating, adopting, or changing the domestic or foreign policies of the United States or with reference to the political or public interests, policies, or relation of a government of a foreign country or a foreign political party.” 22 U.S.C. § 611(o). FARA defines the term “foreign principal” to include foreign governments, foreign political parties, individuals located outside the United States who are not U.S. citizens or who are not domiciled in the United States, and businesses organized under a foreign country’s laws or that have their principal place of business in a foreign country. 

Willful violations of FARA and its implementing regulations are subject to criminal penalties under the Act, including a fine of up to $250,000, or imprisonment of up to five years. Civil violations may be subjected to a request from the Department of Justice (DOJ) to register under the Act, or an injunctive action compelling such registration.   

II.     Brookings Institute President Retired Marine General John Allen

The particular facts of the Allen investigation provide insight into how the government intends to enforce the Act. 

During the 2017 Gulf crisis, the UAE and other Gulf states cut off diplomatic ties with Qatar, and closed all air and sea lanes to the country, based on public accusations that Qatar supported Iran and various terrorist groups. For similar reasons, several U.S. House of Representatives members had introduced proposed sanctions against Qatar. Allen, along with Imaad Zuberi and Richard Olson, was recruited to lobby in the U.S. on behalf of Qatar to help resolve the crisis. According to the warrant application, at the request of Qatari officials, “Allen corresponded with, met with, and successfully lobbied U.S. Executive Branch officials in the United States to release public statements sought by Qatar,” and solicited Executive Branch officials to meet personally with Qatari officials. 

The warrant application alleges that Allen sought compensation for these efforts, including a $20,000 speaking engagement fee and travel expenses for a trip to Doha, and a longer-term compensation arrangement through Zuberi. The application further alleged that Allen pursued at least one multi-million-dollar business deal with the Qatari government on behalf of an unidentified company on whose board of directors he served. It should be noted here that, although DOJ has characterized the speaking fee and travel expenses as compensation for Allen’s advocacy work, such compensation is not necessary to establish an obligation to register under FARA. Finally, the warrant application contends that Allen participated in the lobbying effort despite being aware of the FARA registration requirements and their applicability to his situation, thus justifying the criminal allegations. 

Allen has vigorously denied these allegations, and time will tell how far the investigation will go. It is worth noting, however, that Zuberi earlier pleaded to a criminal FARA violation for an unrelated matter, which led to his cooperation in the Allen matter. From an aggregate view, the Allen matter reveals that the DOJ intends to aggressively pursue FARA violations, even those that have occurred several years ago.  

III.     Stephen A. Wynn and Christina Pushaw

The Allen criminal FARA matter comes less than a month after the Justice Department’s filing of a civil enforcement action in the U.S. District Court for the District of Columbia against Stephen A. Wynn (former CEO of Wynn Resorts). In that case, the government has sought to compel Wynn to register under FARA for his work with the Chinese government in connection with lobbying efforts to convey to the Trump Administration the PRC’s request to cancel the visa of (or otherwise remove from the United States) a PRC businessperson who left China in 2014. The Chinese national was later charged with corruption by the PRC, and sought political asylum in the United States. 

Wynn had been advised by the DOJ that he was required to submit a FARA registration, but after much back and forth between Wynn’s counsel and the government, Wynn failed to register. In response to this, the DOJ filed its complaint for injunctive relief to compel Wynn to register. According to the DOJ announcement for this lawsuit, this was the first affirmative civil lawsuit under FARA in more than three decades.

The Wynn case stands in contrast to the recent report that Christina Pushaw, press secretary to Gov. Ron DeSantis (FL), filed a FARA registration for work she had performed for former Georgian President Mikheil Saakashvili between 2018 and 2020. According to her attorney, Pushaw’s efforts included writing op-eds, reaching out to supporters and officials, and engaging in advocating on Saakashvili’s behalf in Georgia and in the United States. For these efforts, she received approximately $25,000. Like Wynn, Pushaw apparently received a request from the DOJ to register with FARA for her activities; however, unlike Wynn, she did so immediately.

IV.     Impending Regulatory Changes

The foregoing enforcement actions have occurred in the midst of the DOJ’s efforts to revise the existing FARA regulations. At the end of last year, the DOJ issued an Advanced Notice of Public Rulemaking (ANPRM) soliciting the public’s suggestions for potential amendments to/clarifications of the current FARA implementing regulations. Responses to the ANPRM were due last February, and the next step will be the issuance of a Notice of Proposed Rulemaking (NPRM) which will set forth specific regulatory text for public comment. The ANPRM sought public input regarding basic FARA provisions, such as the scope of agency applicable to FARA’s definition of an “agent of a foreign principal,” the definition of a “political consultant,” and applicable exemptions under the statute, including commercial exemptions, the exemption for religious/scholastic/scientific pursuits, and the exemption for persons qualified to practice law. It is unclear at this stage to what extent the regulations will be revised, and how specifically they will affect the FARA enforcement environment. 

However, it is abundantly clear that the DOJ is committed to broadening its FARA enforcement efforts. Past comments by DOJ officials have made clear that, although a major goal of the Act is to achieve transparency in relationships with foreign persons and entities, the Department will not hesitate to pursue criminal charges where it deems it appropriate. In conjunction with counsel, companies doing business with foreign companies and entities should undertake appropriate compliance measures, i.e., conducting a FARA risk assessment, designating someone in the organization as responsible for FARA compliance, developing a procedure to review all engagements that involve foreign funding, conducting FARA training for employees, having foreign clients and funders sign FARA certifications when appropriate, and inserting intellectual independence clauses in contracts when appropriate. 

For more information, please contact any of the authors.