Two public relations firms have filed documents with the Department of Justice revealing that they provided public relations and media services in the United States for the government of Ecuador without being registered under the Foreign Agents Registration Act (FARA), as that law requires.  These firms are the latest in a long string of law firms, business consultants, and individuals who have inadvertently triggered FARA and sought to register with the Department of Justice for work already underway or even completed.  Despite some increased attention to FARA in recent years, the statute remains relatively unknown.

FARA requires that an agent register with the Department within ten days of meeting the statute’s triggers, and it further prohibits anyone from acting as an agent until the registration is complete.  The PR firms’ filings show that both engaged for months in activities that required registration, but they did not register until just weeks ago.  One firm, McSquared PR, revealed that it had been receiving money from the government of Ecuador since May 2013.  The other firm, FitzGibbon Media, disclosed that it contracted to assist McSquared in December 2013.

FARA is an old statute that, despite its age, remains relatively obscure.  It was enacted in 1938 in an effort to force public disclosure of Nazi propagandists in the United States.  The statute uses sweeping language that can apply to anyone working in the United States on behalf of anyone outside the United States – both foreign governments and foreign corporations.  To make matters worse, the law contains complex and interrelated triggers that require assessing the relationship between the U.S. company and the foreign entity, the type and location of activities undertaken for the foreign entity, and whether one of the statue’s several exceptions might apply.  In short, it is very easy to trigger the statute inadvertently.

The recent PR firms’ filings also demonstrate the typical enforcement pattern of the FARA statute.  The Department of Justice relies primarily on press reports and other public information to uncover agents who have failed to register.  In this case, the Washington Free Beacon reported in June that McSquared “touted the government of Ecuador as a client” but was not registered under FARA.  It is possible that McSquared then received an inquiry letter from the Department, asking whether the company should have registered.  FARA inquiry letters are common, and they are the Department’s primary method to prompt compliance with the statute.  The Department has an explicit policy of “encouraging voluntary compliance” with FARA, even after the fact, rather than pursuing criminal or civil enforcement proceedings.  Although the statute carries stiff criminal penalties, the Department’s policy reserves criminal enforcement for “significant FARA offense[s],” such as willful violations involving millions of dollars.

The PR firms’ filings indicate that they were paid $6,408,000 for the public relations campaign.  Despite an “eye-popping” budget for such a cash-strapped nation, the disclosures filed by the PR firms have likely brought this matter to a close.

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Photo of Robert Kelner Robert Kelner

Robert Kelner is the chair of Covington’s Election and Political Law Practice Group. Mr. Kelner provides political law compliance advice to a wide range of corporate and political clients.  His compliance practice focuses on federal and state campaign finance, lobbying disclosure, pay to…

Robert Kelner is the chair of Covington’s Election and Political Law Practice Group. Mr. Kelner provides political law compliance advice to a wide range of corporate and political clients.  His compliance practice focuses on federal and state campaign finance, lobbying disclosure, pay to play, and government ethics laws, as well as legal ethics rules.  His expertise includes the Federal Election Campaign Act, Lobbying Disclosure Act, Ethics in Government Act, Foreign Agents Registration Act, and Foreign Corrupt Practices Act.  He is also a leading authority on the arcane rules governing political contributions by municipal securities dealers, investment advisers, hedge funds, and private equity funds.  Mr. Kelner advises Presidential political appointees on the complex process of being vetted and confirmed for such appointments.

In addition, he regularly advises corporations and corporate executives on instituting political law compliance programs.  He conducts compliance training for senior corporate executives and lobbyists.  He has extensive experience conducting corporate internal investigations concerning campaign finance and lobbying law compliance, as well as other corporate compliance matters.  Mr. Kelner regularly defends clients in investigations by the Federal Election Commission, the U.S. Department of Justice, the U.S. House & Senate Ethics Committees, the House Oversight & Government Reform Committee, the House & Senate Judiciary Committees, the House Energy & Commerce Committee and its Subcommittee on Oversight & Investigations, the Senate Finance Committee, the Senate Special Committee on Aging, the Senate Permanent Subcommittee on Investigations, the Senate Health, Education, Labor, and Pensions Committee, and other congressional committees.  He has prepared numerous CEOs and corporate executives for testimony before congressional investigation panels, and he regularly leads the Practicing Law Institute’s training program on congressional investigations for in-house lawyers.  He also defends clients in Lobbying Disclosure Act audits by the GAO and enforcement actions and audits by state election and lobbying enforcement agencies.

Mr. Kelner has appeared as a commentator on political law matters on The PBS News Hour, CNBC, Fox News, and NPR, and he has been quoted in the New York Times, Washington Post, Wall Street Journal, Legal Times, Washington Times, Roll Call, The Hill, Politico, USA Today, Financial Times, and other publications.

Photo of Brian D. Smith Brian D. Smith

Brian Smith provides strategic and legal advice on matters that require substantial political, reputational, or government relations considerations.  He represents companies and individuals in high-profile or high-risk investigations, particularly congressional investigations, criminal investigations with political implications, and investigations related to political law compliance. …

Brian Smith provides strategic and legal advice on matters that require substantial political, reputational, or government relations considerations.  He represents companies and individuals in high-profile or high-risk investigations, particularly congressional investigations, criminal investigations with political implications, and investigations related to political law compliance.  He has significant experience in crisis management, where he advises clients facing combined legal, political, and media relations risks.  His practice also includes the development and execution of government relations initiatives, including securing the U.S. government’s political support on behalf of U.S. companies facing international legal issues.