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Sweeping changes proposed for foreign lobbying law

Kate Ackley, CQ-Roll Call on

Published in Political News

WASHINGTON -- A bill by Senate Judiciary Chairman Charles E. Grassley, in response to indictments in the special counsel's Russia probe, would have far-reaching consequences for U.S. representatives of foreign governments, foreign companies and other international interests.

The Iowa Republican introduced the measure last week after indictments in special counsel Robert S. Mueller III's investigation of Russian interference in the 2016 elections and possible coordination by the Trump campaign. Rep. Mike Johnson, R-La., introduced an identical bill in his chamber after former lobbyists and Trump campaign officials Paul Manafort and Rick Gates were indicted on a number of charges including violations of a 1938 law known as the Foreign Agents Registration Act.

Though K Street has been absorbed with the unfolding drama of the Mueller investigation, which has roped in the Podesta Group and Mercury LLC, lobbyists have paid less attention to the potentially major changes contained in the Grassley and Johnson measures.

The bill would require anyone representing foreign corporations -- not just foreign governments and political parties -- in the United States to register under FARA. This change would affect lobbyists as well as lawyers and public relations advisers.

"This is a big deal," said Joshua Rosenstein, an expert on lobbying laws with the law firm Sandler Reiff Lamb Rosenstein & Birkenstock.

U.S. lobbyists for foreign-based companies such as Honda have filed under a simpler system as part of a 1995 law on lobbying disclosures but the Grassley and Johnson bill would require filing under FARA, which makes public much more information including the contacts that lobbyists, lawyers and public relations advisers make with congressional officials.

The Grassley and Johnson measures also would require more frequent disclosures to the Justice Department, putting it on the same quarterly schedule as the system for lobbying disclosure reports filed with Congress.

The bill also would give the FARA unit at the Justice Department more subpoena-like investigative authority, something the unit has asked of Congress for decades.

"Unfortunately, we've seen time and again how lobbyists of foreign principals skirt existing disclosure laws to conceal their clients' identities and agendas," Grassley said in a statement. "This bill seeks to correct those flaws by improving enforcement, compliance and oversight of FARA."

Legal experts on the foreign lobbying law, such as Rosenstein and William Minor of DLA Piper, said some parts of the Grassley bill may be an overreaction to the Manafort and Gates indictments.

"There are good reasons to consider amending FARA. We are dealing with a 1930s statute that has really never been updated for modern times," said Minor, who advises clients that file lobbying disclosures.

But he believes the measures are "potentially an overreaction" to recent events. "There would seem to be other ways to address the current concerns about foreign governments and political parties without requiring the registration of everyone who represents foreign companies or associations," he said.

Grassley does not yet have any Senate co-sponsors for his bill, but the chairman has been in talks with Republicans and Democrats and believes that "it's a bill that can earn broad support from both sides of the aisle," said Grassley spokesman Taylor Foy.

The House measure has a handful of GOP co-sponsors including Reps. Ken Buck of Colorado and Brian Babin of Texas.

Some Democrats, including Rep. John Sarbanes of Maryland, say they are looking at the proposal and agree in principle with their Republican colleagues that the 1938 law should be revised.

"If we're going to protect our democracy from this foreign influence, FARA definitely needs to be strengthened," Sarbanes said.

Some of the provisions in the 34-page legislation stem from a 2016 Justice Department's inspector general report, which found lax enforcement of the foreign lobbying law.

Adam S. Hickey, deputy assistant attorney general, told Grassley's committee this summer that DOJ had fully implemented most of the 14 recommendations in the IG report and was working toward adopting the remaining ones.

FARA, for example, has made its advisory opinions publicly available, Hickey said.

Though Congress has shown no interest in pursuing an overhaul of lobbying or ethics laws, the widening Mueller probe may spur on such legislation.

K Street already is on alert.

One of its most storied firms, the Podesta Group, is reportedly disbanding amid reports that its founder, Democratic lobbyist and campaign donor Tony Podesta, was closing shop.

Podesta disclosed to the Justice Department in a previous filing under FARA that he was the sole owner of the firm, and two sources with the firm said some of its lobbyists and public relations professionals were forming a new shop with the expectation that some clients would follow.

Some won't.

"As a part of the development of Wells Fargo's new Government Relations and Public Policy organization, the company is conducting an ongoing review of all external vendor relationships in Washington, DC," said Jennifer Dunn, a spokeswoman for Wells Fargo, in an email. "The company has terminated its relationship with the Podesta Group as a result of that review."

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