Mueller’s Russia investigation: an unexpected revolution on foreign lobbying

When special counsel Robert Mueller indicted ex-Trump campaign manager Paul Manafort, the identity of his first target was less a surprise than the law at the core of his charges. Designed to catch Nazi spies, the 1938 Foreign Agents Registration Act (FARA) has justified only seven criminal prosecutions and one conviction in the past half century. Nor, until now, has the law’s civil regime been taken seriously. According to a 2016 Inspector General’s report, US lobbyists routinely scoff at their foreign agent reporting duties, with 62 percent of initial forms filed late.

The special counsel nonetheless charges Manafort and his deputy with violating FARA by willfully concealing their advocacy for the ‘European Centre for a Modern Ukraine’ – and then, when prompted to file a corrective form, misleading officials about the extent of their relationship ($75m over ten years), and the principal beneficiary of their work (the pro-Russian Ukrainian government of Viktor Yanukovych). The same allegations underpin a variety of financial charges, and the accused plead not guilty on all counts.

Whatever the ultimate outcome of Mueller’s investigation, he may already have revolutionized foreign lobbying.

Above: Audio: Mark Zaid, Washington-based specialist in national security law and government accountability

FARA specialist Joshua Rosenstein, of Sandler Reiff Lamb Rosenstein & Birkenstock, calls it an earthquake for the influence industry. ‘We are likely to see increased enforcement, and increased compliance,’ he says, ‘because the Justice Department is now under pressure from Capitol Hill to take the statute seriously, and the industry is scared to see the first prosecution of one of its kind in more than a decade. We’re dealing here with a well-known well-connected DC insider, as opposed to a front for foreign intelligence.’

Lobbyists may be divided into two categories, he says: ‘You have certain nefarious actors trying to conceal what they’re doing and willfully evade the law. That's classic swamp, and that’s what the indictments aim to get at. You also have players inside and outside Washington who are not so nefarious, who may just be oblivious.’ Rosenstein predicts that the not-so-nefarious will be more diligent in looking behind the mask of foreign clients, more regular in their regulatory filings, and quicker to consult other law firms on their compliance with the law.

“ If I were representing a foreign government, I'd be incredibly concerned about paying far more attention to the spirit rather than just the letter of the law

Mark Zaid
Washington-based specialist in national security law and government accountability

Washington attorney Mark Zaid, who specializes in national security law, also foresees a surge in compliance, but he’s not so sure about the surge in enforcement. ‘If I were representing a foreign government, I'd be incredibly concerned about paying far more attention to the spirit rather than just the letter of the law, because the spirit has not been enforced before and maybe there is a change of climate,’ he says. At the same time, ‘I don’t think it necessarily leads to a cascade of FARA prosecutions…. I think the special counsel is as the term acknowledges special…. For the Justice Department to initiate an increased number of FARA prosecutions would require a change in policy or a change in law.’

As it happens, Senator Charles Grassley proposed a reform of FARA on Halloween, a mere four days after Mueller unsealed the Manafort indictment. The Disclosing Foreign Influence bill, S. 2039, takes its inspiration from the critical Inspector General report of 2016. It would strengthen the Justice Department’s FARA unit by giving it civil subpoena power. It would authorise a rethink of the unit’s voluntary compliance strategy, perhaps taking into account the FBI’s desire for aggressive criminal enforcement of FARA when national security is implicated. Perhaps most importantly, it would close the loophole that allows a foreign entity like the European Centre for Modern Ukraine to evade an onerous FARA filing in favor of a perfunctory ‘Lobbying Disclosure Act’ form, simply by pretending to have no government ties.

When it comes to future FARA enforcement, the most intriguing question is Mueller’s next step. Might the special counsel also go after ex-National Security Adviser Michael Flynn for his representation of foreign nationals ow that he is co-operating with the investigation? What about the Democratic power broker Tony Podesta (brother of Hillary Clinton campaign chair and hacking victim John Podesta), who has resigned as head of the Podesta Group, reportedly under scrutiny by Mueller for his representation of the European Centre for Modern Ukraine?

Though an indictment of Tony Podesta would surely help Mueller to project an image of non-partisanship, Zaid predicts that the special counsel will be guided by professionalism. Based on preliminary reports, the other suspected FARA violations were far more limited in scope -- and unexacerbated by a cover-up. ‘Any of these people should be nervous, but I expect Mueller will be consistent in what pursues,’ says Zaid. It’s alleged that Manafort ‘not only failed to timely register but actively sought to hide assets and lied on the follow-up form. That’s often what sets prosecutors off.’

Manafort defense attorney Kevin Downing has argued that Mueller’s case is weak precisely because FARA has historically been prosecuted so sparsely. But observers are unimpressed by that defense. Rosenstein points out that the FARA offenses alleged here were uniquely extensive and aggravated. And as Zaid notes, an unenforced law is still on the books. ‘If I’m pulled over for driving 70 miles per hour, I can argue all I like. But it won’t get me very far.’