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Former U.S. official’s work for Chinese client stirs concern over disclosure loopholes

Former U.S. official’s work for Chinese client stirs concern over disclosure loopholes

Former U.S. Attorney General Loretta Lynch wrote a letter to a senior Defense Department official last July on behalf of SZ DJI Technology Co Ltd, asking that her client be removed from a list of Chinese military companies.

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When a Chinese drone company came under U.S. government scrutiny over its alleged ties to China’s military, the company turned to one of America’s pre-eminent lawyers: Loretta Lynch, a former attorney general in the Obama administration.

Lynch, who ran the U.S. Department of Justice from 2015 to 2017 and is now a partner at the Paul, Weiss law firm, wrote a letter to a senior Defense Department official last July on behalf of SZ DJI Technology Co Ltd, asking that her client be removed from a list of Chinese military companies.

Advocating for foreign clients is legal and U.S. law includes a public disclosure exemption for lawyers.

But the letter, seen by Reuters, is an example of what transparency advocates and some members of Congress — dozens of whom have supported bills to change rules — say are gaps in the law that allow lawyers and lobbyists, including former officials, to avoid disclosing their advocacy for companies possibly subject to U.S. sanctions.

The Paul, Weiss law firm declined to comment on the letter, and Lynch did not respond to Reuters emails. DJI also declined to comment, but it has said previously that it is not a military company and that it was prepared to formally challenge its inclusion on the list.

The Foreign Agents Registration Act, or FARA, a decades-old law requiring public disclosure of work done on behalf of non-U.S. entities, includes a list of exemptions, including for commercial activities and legal representation.

The work by the onetime top U.S. law enforcement officer on behalf of a company the Department of Defense says poses “threats to national security” comes as U.S. agencies warn about companies with links to China’s Communist Party and as lawmakers push to tighten FARA’s disclosure requirements.

The U.S. Treasury and Commerce departments say DJI supported biometric surveillance and tracking of Muslim Uyghur minorities in China.

The Defense Department did not respond to a request for comment on Lynch’s letter. DJI remained on the Pentagon list when it was updated in late January.

The Justice Department also declined comment on the letter and broader FARA enforcement.

Almost a dozen critics of FARA told Reuters the law’s loopholes have allowed less transparency for other companies with alleged ties to China’s military, including surveillance technology firm Hikvision and biotech firm WuXi AppTec.

Jim Risch, the top Republican on the Senate Foreign Relations Committee, says reforms to the law are needed, given the blurry lines between many Chinese companies and the Chinese government, and to keep former members of the U.S. government from effectively lobbying on their behalf.

“It is appalling that former senior U.S. officials use their connections to serve the interests of U.S. adversaries,” Risch said.

However, the American Civil Liberties Union, or ACLU, and others assert that broadening disclosure requirements could act as a barrier to legally protected free speech.

In 2022 the ACLU and 13 other groups wrote to the Justice Department about their concerns, cautioning that problems with the law could “enable selective enforcement for bad faith or malicious reasons.”

Others argue that stricter FARA rules on disclosure could give authoritarian countries like Russia and China cover for their own stifling of free speech.

Jonathan Turley, a George Washington University law school professor, said some countries, such as Russia, label citizens and reporters as foreign agents to limit their activities.

“I do have concerns over some past investigations and prosecutions that targeted individuals who appeared to be engaging in First Amendment activities,” Turley told Reuters.

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The Pentagon in 2022 placed DJI on its Chinese Military Companies list, a designation that serves as a warning about the risks of conducting business with those entities.

In her letter to Assistant Secretary of Defense Laura Taylor-Kale on behalf of DJI, Lynch urged the department to promptly remove the drone maker.

“The wide use and dependence on DJI products by a variety of U.S. stakeholders reinforces the importance and urgency of deleting DJI from the list,” Lynch wrote.

She added that DJI requested “a meeting to discuss this matter.” Reuters could not establish whether that meeting occurred.

Also signing the letter, labeled “confidential treatment requested,” were former Assistant United States Attorney Michael Gertzman and Associate White House Counsel in the Obama administration Roberto Gonzalez – now both partners at Paul, Weiss.

Gertzman and Gonzalez did not respond to requests for comment.

FARA enforcement has intensified in recent years, with the Justice Department prosecuting individuals for their work on behalf of Chinese interests and pushing some law firms to register.

Paul, Weiss attorneys have acknowledged growing enforcement tied to China.

In a 2022 memo to clients about a U.S. court’s dismissal of a FARA case against casino magnate Steve Wynn, Lynch, Gonzalez and other Paul, Weiss attorneys wrote: “The targeting of lobbying on behalf of China by the DOJ is further evidence of the Biden Administration’s intention to use all of the legal tools at its disposal in a multi-faceted strategy to counter the perceived threat posed by China.”

Paul, Weiss did not respond to questions about the memo and a White House spokesperson did not immediately respond to a request for comment.

At the Justice Department’s request, the Sidley Austin law firm in 2022 retroactively registered its lobbying on behalf of Hikvision, a company the U.S. says has been implicated in human rights violations toward Uyghurs.

Sidley Austin declined to comment on its registration. While the firm had not originally filed under FARA it had disclosed under the Lobbying Disclosure Act, which has less rigorous disclosure requirements, according to the Justice Department.

The Justice Department has called for the repeal of an LDA exemption from FARA filing.

Hikvision did not respond to a request for comment but has previously denied reports that the company is complicit in human rights abuses.

Congressional pressure again has begun to tick up.

On March 5, the House of Representatives select committee on China asked the Justice Department to review trade association Biotechnology Innovation Organization’s lobbying on behalf of Chinese biotech firm WuXi AppTec for possible FARA requirements.

BIO told Reuters that its advocacy was fulfilling its duty to let Congress and patients know the impact of potential policies and “nothing more.”

WuXi AppTec, when asked by Reuters about the House committee’s request, said it objected to “inaccurate assertions and preemptive actions against our company without due process,” adding it was confident lawmakers would see it as a trusted partner.

Some experts, including those who have concerns about extending FARA’s reach, agree the law is vague and presents particular challenges for attorneys.

David Laufman, a partner at law firm Wiggin and Dana who previously oversaw the Justice Department’s FARA enforcement, said while lawyers may not need to register under FARA if they avoid policy discussions with government officials, the only way to know for certain is to seek an opinion from the Justice Department.

“In the meantime, life goes on for attorneys. We have to represent our clients,” he said.

Reforms to the law would be up to Congress. Several bipartisan bills to close FARA loopholes have been proposed.

One, proposed last year in the House and Senate could require retroactive FARA registration by anyone who acts as an “agent for a foreign principal.”

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