Michael Cohen’s testimony on February 27, 2018 before the U.S. House Committee on Oversight and Reform featured several heated exchanges, including one particular line of questioning about the Foreign Agents Registration Act (“FARA”) from Mark Meadows (R-NC). Congressman Meadows suggested during the hearing that Mr. Cohen’s work for several foreign companies obligated him to register under FARA, which he then followed-up with a criminal referral to the Department of Justice that reportedly asserted Mr. Cohen should have registered his representations under FARA for pharmaceutical company Novartis of Switzerland, BTA Bank of Kazakhstan, and Korea Aerospace Industries of South Korea.
Is there any merit to Congressman Meadows’ claim? Did Mr. Cohen violate FARA?
Here’s the bottom line: many assume that FARA registration is necessary whenever a person represents a foreign interest, but that is not the case because the statute exempts several types of foreign-entity representations. And based on the relevant facts and law in Mr. Cohen’s case, it appears that at least one FARA registration exemption applies to the representations that Congressman Meadows thinks are illegal.
To determine whether Mr. Cohen violated FARA, we first need to start with the facts for each of these three representations, as we currently know them:
· Mr. Cohen reportedly received $1.2 million from Novartis, which is a publicly traded Swiss pharmaceutical company, through his Essential Consultants LLC. Both Mr. Cohen and Novartis both maintain that he provided advice on issues but ultimately never made any contacts with U.S. government officials on the company’s behalf. The exact nature of the services rendered is unclear, particularly because a draft version of the contract between the two parties included in its scope of work that Cohen was to “[p]rovide access to key policymakers in the US Government to facilitate constructive discussions about policy matters impacting Novartis.”
· Mr. Cohen reportedly received $300,000 from BTA Bank, a privately held bank located in Kazakstan, through his Essential Consultants LLC for services apparently related to locating the Bank’s assets in the U.S. that were embezzled by its former Chairman.
· Mr. Cohen reportedly received $150,000 from Korea Aerospace Industries, a South Korean publicly traded company in which the South Korea government holds a one-third stake, through his Essential Consultants LLC for “legal consulting.”
Because it is difficult to determine at this point what work Mr. Cohen actually performed for these entities, we will assume (despite the parties’ denials) for the sake of our analysis that he communicated with U.S. government officials on their behalf.
FARA would require Mr. Cohen (via his Essential Consultants LLC) to register with the Department of Justice within 10 days of becoming an “agent of a foreign principal” unless he falls within an exemption. The initial portion of the legal analysis here is straightforward: all three companies are “foreign principals” because they are corporations headquartered outside the United States and Mr. Cohen is an “agent” because we are assuming for purposes of this analysis that he communicated with U.S. government officials on the foreign companies’ behalf. Mr. Cohen was therefore required to register under FARA within 10 days unless an exemption applies to these representations.
Do any FARA exemptions apply to these representations? Some of them manifestly do not cover Mr. Cohen’s work, but at least one of the FARA exemptions probably does. Let’s run through the exemptions that could potentially apply here:
· The “LDA” Exemption—FARA exempts from registration an “agent” who has registered a representation under the Lobbying Disclosure Act (“LDA”). There are some additional caveats within this exemption, but we need not examine them because Mr. Cohen did not register any of these three representations under the LDA and is therefore not eligible for this exemption.
· The “Legal Representation” Exemption—FARA exempts from registration lawyers who represent a “disclosed foreign principal before any court of law or any agency of the Government of the United States.” Past FARA Advisory Opinions suggest this could also exempt lawyer services outside a court or agency, which might mean that Mr. Cohen’s work for Korea Aerospace Industries is not FARA-registrable, but the exemption also cannot cover efforts to otherwise influence the U.S. government or “any section of the public” in the U.S. Mr. Cohen would therefore be unwise to rely too heavily on this exemption to avoid FARA registration.
· The “Commercial Activities” Exemption—FARA exempts from registration an “agent” who engages only in “private and nonpolitical activities in furtherance of the bona fide trade or commerce” of a foreign company. This exemption could therefore cover Mr. Cohen’s work on behalf of private companies, but only to the extent that he did not engage in any “political activities,” which are any activities to “influence any agency or official of the Government of the United States or any section of the public within the United States” with regard to U.S. policy or with regard to the political or public interest of a foreign government/political party. If Mr. Cohen engaged in any contacts with U.S. government officials on behalf of these three companies, it could be difficult for him to rely on this exemption to avoid FARA registration.
· The “Activities Not Serving Predominantly a Foreign Interest” Exemption—In what is perhaps the law’s broadest exemption, FARA and its implementing Department of Justice rules exempt “agents”—even those acting for a foreign corporation “owned in whole or in part by a foreign government”—if the representation: (1) furthers the foreign corporation’s bona fide commercial operations; (2) is “not directed by a foreign government or foreign political party; and (3) does “not directly promote the public or political interests of a foreign government or of a foreign political party.” Unlike the “commercial activities” exemption, this exemption would allow Mr. Cohen to engage in “political activities” (e.g. interacting with U.S. government officials) without triggering registration. And Mr. Cohen’s representations of Novartis, BTA Bank, and Korean Aerospace Industries appear at first blush to be in furtherance of those companies’ legitimate commercial interests. He can therefore avail himself of this exemption and avoid FARA registration unless his work was “directed by a foreign government or foreign political party,” which seems unlikely given that these foreign companies are either publicly traded or appear to be owned exclusively by private-sector persons.
Mr. Cohen may have been required to register separately under the Lobbying Disclosure Act for these three corporate representations and he might have incurred FARA registration obligations on behalf of other entities, but it appears for now at least that Congressman Meadows’ criminal referral as to Mr. Cohen’s Novartis, BTA Bank, and Korea Aerospace Industries engagements could be without merit due to the “activities not serving predominantly a foreign interest” exemption under FARA.