WASHINGTON: The indictments of Paul Manafort and Richard Gates sent a jolt through Washington’s public affairs firms last week after two of the 12 charges against the former Trump campaign officials were related to Foreign Agents Registration Act violations.
Among other charges, Manafort and Gates were accused of not registering as lobbyists for a foreign entity under FARA and lying about lobbying activities for a foreign government, according to the indictment. Two lobbying and public affairs firms were also mentioned in the indictment, which NBC News reported to be Mercury and the Podesta Group.
"One of the areas we’ve been focusing on is getting PR and media consulting firms to understand that FARA may apply to their work, as well," says Joshua Rosenstein, attorney at Sandler Reiff Lamb Rosenstein & Birkenstock. "Conventional wisdom was that it only applied to lobbying and government relations. The implications are far broader."
The law requires companies working on behalf of foreign governments or political parties to register the work with the Justice Department within 10 days. Many of the firms registered under FARA are lobbying, public affairs, and communications shops.
Public affairs firms that work with foreign agents say they are diligent about reporting the work correctly. Michael Petruzzello, MD at Qorvis MSLGroup, says his firm "[works] closely with in-house and outside counsel to ensure proper and full disclosure."
APCO president, operations MD, and Washington MD Evan Kraus adds that his agency "[respects] the sensitivities that surround foreign representation and the critical importance of embracing transparency, which is why we believe so strongly in the principle of disclosure and adhere so strictly to FARA."
However, other public affairs pros describe a heightened awareness around the offices of D.C. shops after the indictments.
"It’s always unsettling when a company within your industry gets caught in the storm like this," says one staffer who works in public affairs. "I’d characterize it the same way I assume the airline industry is after an accident. They come to work the next day, but are doubly committed to safety and have that heightened sense of vigilance."
Rosenstein shares that sentiment, saying the charges against Manafort and Gates "sent shockwaves through the K Street community," serving as a "wake-up call that the Department of Justice is no longer going to ignore similar violations."
The combination of increased media scrutiny and heightened awareness among government policymakers and regulators may result in a crackdown, Rosenstein adds.
Violating FARA is punishable by up to five years in prison. However, the FARA office bases its enforcement on voluntary compliance, which is essentially a "carrot with no stick" as it lacks subpoena power, Rosenstein explains. Sen. Chuck Grassley (R-IA) recently proposed an amendment that would close a loophole in the law and boost compliance.
When firms are caught violating FARA, the punishment is "not a public admonishment, so businesses will never know," says one former Trump campaign aide and current lobbyist.
"The point is not to discipline [them]; it’s about transparency," he adds.
"The much bigger issue for companies is we’re entering an extremely transparent age and the question it asks is if everyone in comms deserves representation," said Richard Levick, CEO of Levick. "That is the question that is causing comms firms angina, [as] strategy and tactics [become] transparent and visible."
Rosenstein says he’s seen an uptick in the number of clients asking FARA-related questions at his law firm, and his firm’s FARA practice has grown about 30% over the past four years.
"Washington is often a town moved by scandal," Rosenstein says. "An indictment of this nature against a D.C. insider who’s been around for so long involving FARA charges is the type of scandal that would move policymakers and regulators."