A number of Russian entities sanctioned by the Biden administration after the invasion of Ukraine have been able to keep the full extent of their lobbying footprint in Washington, D.C., hidden due to a wrinkle in disclosure laws.
For years, Russian entities registered to lobby under the Lobbying Disclosure Act, rather than registering under the Foreign Agents Registration Act, or FARA, according to public filings. They were able to do so so long as a foreign government or political party was not the “principal beneficiary” of the lobbying effort. As a result, those Russian entities were able to influence U.S. policy without disclosing details with the Department of Justice about the scope of their outreach.
Top lobbying shops like Squire Patton Boggs registered under the LDA to represent Gazprombank, which the Treasury Department called Russia’s third-largest financial institution. BGR Group and Roberti Global registered under the LDA to represent Nord Stream 2 AG, the company behind the now-defunct energy pipeline project. And the firm Venable registered under the LDA to represent Sberbank, which Treasury described as “uniquely important to the Russian economy” and majority-owned by the Russian Federation.
All of the lobbying was done for these since-sanctioned companies without the lobbying entity having to disclose specific information about the dates of their activities on behalf of the client, names of contacts, speeches or internet postings in furtherance of a client’s interests, and specific expenses on behalf of the client, among other activities.
Government ethicists say these companies are able to evade more stringent reporting requirements simply by claiming a degree of separation from a state government that has heavy control over their operations.
“When it comes to Russian enterprises, Russian banks, Russian oil companies, we see that Putin has direct and overwhelming control over their actions and their interests,” said Craig Holman, an ethics, lobbying and campaign finance lobbyist for the good government group Public Citizen. “Russian banks, Russian oil companies, they’re acting at the behest of Putin, and if we can’t show it — if we can’t document it — then these foreign agents, you know, claim that they can just register under LDA and avoid the extensive disclosure of FARA.”
The ability of state-controlled companies to file under the LDA is an element of the law that members of Congress are now trying to change. But, so far, there has not been much legislative momentum behind the push.
Republican senators recently introduced a measure of their own to address the absence of more thorough reporting requirements as part of sanctions legislation, known as the Never Yielding Europe’s Territory, or NYET, Act. The bill would task the U.S. attorney general and secretary of State with submitting to Congress a report on Russian entities registered under LDA and an assessment of whether changes to the exemption under FARA are necessary.
“There has been concern both [among] private bar [FARA attorneys] and on Capitol Hill that the LDA exemption has been abused,” said Daniel Pickard, a lawyer at Buchanan Ingersoll & Rooney who advises clients around FARA. “There have been concerns that there have been middlemen acting on behalf of ultimately for foreign governmental entity.”
FARA disclosures have been a topic of renewed political focus after a number of political operatives found themselves facing charges related to violations of the act. In 2017, Donald Trump campaign chair Paul Manafort was indicted for failing to register with the Department of Justice as a foreign agent on behalf of the Ukrainian government, including former President Viktor Yanukovych. But efforts by lawmakers to reform FARA quickly dissipated amid pushback from foreign-owned companies.
Last September, a task force with the American Bar Association released a report outlining recommendations to fix FARA. Among them, the task force suggested that the Justice Department should replace “’the principal beneficiary’ standard” that allows some entities to register through LDA instead of FARA with a new “standard that focuses on the purpose of the potentially registrable work.”
“The exemption is just too broad, and it allows people who should be registered under FARA, and they should have to deal with the enhanced scrutiny that comes with being registered under FARA, you know, it allows people to avoid and circumvent the kind of like, the kind of thing we’re trying to do with FARA,” said Dylan Hedtler-Gaudette, a lobbyist for the watchdog group Project on Government Oversight. “There are a lot of places where you may technically be a private individual, you know, but the line between the private and the public sphere — particularly in like authoritarian regimes — is pretty ambiguous.”
Hedtler-Gaudette pointed to China, Russia and Saudi Arabia as examples of those “authoritarian regimes” where differences between private and public entities are obscure.
Although Russian companies are able to register under LDA so long as the foreign government is not the “principal beneficiary,” the Russian Federation stands to benefit from their work. Several years ago, Squire Patton Boggs reported lobbying the State Department on “Banking laws and regulations including applicable sanctions” for Gazprombank.
As recently as the fourth quarter of 2021, Venable had lobbied Congress and the State Department on sanctions and the “Defending Ukraine Sovereignty Act of 2022,” among other legislation, for Sberbank. Gazprom, a Russian state-owned gas company, was the majority shareholder for Nord Stream 2 AG. Neither Squire Patton Boggs nor Venable returned a request for comment.
Other firms maintained that they complied with the appropriate regulations. A spokesperson for Roberti Global, which represented Nord Stream 2 AG, said in a statement that the firm’s reporting was extensively vetted.
“We conducted extensive due diligence and sought specialized outside legal advice to evaluate our reporting requirements before commencing any work in connection with the Nord Stream 2 pipeline project,” the spokesperson said. “Our representation was properly disclosed from the outset on Lobbying Disclosure Act forms, and we are confident that we complied with all applicable registration and disclosure requirements.”
The exemption provisions have not only been utilized by Russian entities. BGR, for one example, has reported payments of $520,000 from Edward B. MacMahon, Jr., PLC, a lawyer, to “Provide strategic counsel and advocate on issues pertaining to possible sanctions.” MacMahon represented Lev Parnas, a business associate of Rudy Giuliani, who was convicted for illegal campaign finance charges (he has not yet been sentenced).
The documents provide no additional details about why MacMahon would care much about sanctions. However, at the bottom of its initial registration form, BGR disclosed that the client had an affiliation with a foreign entity: the Chinese electronics company Xiaomi. The Trump administration had added the company to a list of businesses alleged to have ties with the Chinese military. Last year, the Biden administration walked back a Trump-era ban on American investment in Xiaomi, after the company sued. MacMahon declined to comment.
“BGR is extremely confident that it has registered correctly for its clients,” a principal at BGR, Jeff Birnbaum, said in a statement.
Daniel Lippman contributed to this report.