On January 17, 2019, U.S. Assistant Attorney General for National Security John Demerks announced Skadden, Arps, Slate, Meagher & Flom LLP entered into a settlement agreement with the U.S. Department of Justice, resolving its liability for violations of the Foreign Agents Registration Act (FARA).
The agreement evidences that Skadden acted as an agent of the Government of Ukraine within the meaning of FARA, 22 U.S.C. § 611 et seq., by participating in a public relations campaign direct at select members of the U.S. news media in 2012. In 2012 and 2013, in response to multiple inquiries from the Justice Department’s FARA Registration Unit about its role in that campaign, a partner then at Skadden made false and misleading statements to the FARA Unit. Thereafter, the FARA Unit concluded in 2013 that the firm did not have to register. When more facts were known, Skadden was required to register in 2012. Skadden has agreed to register retroactively.
Skadden has agreed under the settlement to pay the U.S. treasury more than $4.6 million, which it received in fees and expenses for its work with Ukraine, and will ensure that it has formal, robust procedures for responding to inquiries concerning its conduct from any federal government entity and ensuring FARA compliance as to its engagements on behalf of foreign clients.
In the spring of 2012, the Ministry of Justice (MOJ) for Ukraine, with the help of Paul Manafort, hired Skadden to write a report on the evidence and procedures used during the 2011 prosecution and trial of former Prime Minister Yulia Tymoshenko and discuss questions concerning its fairness. Skadden also agreed to advise Ukraine concerning a second, potential future prosecution of Tymoshenko. According to the engagement letter between Skadden and the MOJ, the latter would pay Skadden only 95,000 Ukrainian hryvynas (approximately $12,000). Skadden understood that a Ukrainian business person would pay its fees. Eventually, the money came from a Cypriot bank account of an entity named Black Sea View Ltd., which Manafort controlled. Eventually Skadden received $4,657.578.91 for this work. The arrangements with the Ukrainian business person, the amounts paid, and advice on a second criminal prosecution of Tymoshenko were not disclosed in connection with the issuance of the report.
After it started work for the MOB and realized that Ukraine intended to use the report as part of a public relations campaign to influence U.S. policy and public opinion toward Ukraine, Skadden’s lead partner for the Ukraine engagement, advanced the public relations campaign.
Skadden is the first large organization to be ensnared with FARA enforcement problems. The media has reported that the Skadden partner on the project who made false and misleading statements to the DOJ FARA unit is Gregory Craig, a former White House counsel under President Barack Obama. He may yet have legal exposure. (see e.g., Kenneth P. Vogel and Matthew Goldstein, Law Firm Settles Inquiry Into Work It Did for Manafort, N.Y. Times, Jan. 18, 2019, at A13, col. 1; Greg Farrell and Christian Berthelsen, Skadden Settlement for Manafort Work Suggests Ex-Partner’s Peril, Bloomberg BNA, Jan. 17, 2019).
The case illustrates that the DOJ is continuing to increase enforcement of FARA. The February 2019 issue of the IELR will carry a more comprehensive discussion of the settlement and its implications