Mr. FRANK. I notice Mr. Johnson is here. If you would like to come forward-and Mr. Guarini has joined us-we'll now hear from Mr. Johnson and Mr. Guarini. Mr. Johnson is the author of one of the major pieces of legislation before us, as Mr. Guarini is of one of the others. We are glad to have them also here in pursuit of their interests in this. STATEMENT OF HON. TIM JOHNSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF SOUTH DAKOTA Mr. JOHNSON. Well, thank you, Mr. Chairman. At a time when many experts feel that our economy is challenged by international economic pressures and foreign investments, it's vital to our national interest to possess accurate information, at the very least, about those who lobby or those who serve as agents. I want to commend Dan Glickman and Marcy Kaptur and Mr. Guarini, and others, who have made significant contributions in this area. I've also introduced a proposal to strengthen the Foreign Agents Registration Act, H.R. 1382. It has 19 cosponsors. This is the House counterpart to the late Senator Heinz' S. 346. The Heinz bill and my bill are somewhat similar to Congressman Glickman's bill. I'm not wedded to any particular approach here other than to believe that we ought to be making some progress in this area generally. I think a case in point is how the 1938 law required Toshiba to report $7.2 million in lobbying expenses during an 18-month period ending in August 1988. The disclosure was required by the law requiring U.S.-based companies to disclose expenses spent for direct congressional lobbying, and yet the cost of the Toshiba campaign to modify proposed sanctions on itself as a result of a subsidiary's selling classified submarine information to the Soviets which went unreported because the law does not require the reporting of costs incurred for nondirect congressional lobbying. The Foreign Agents Act of 1938 was basically designed to identify foreign sources of subversive propaganda. It is an old law and does not adequately address the contemporary needs for sunshine and disclosure. It does not address the problems associated with nondirect congressional lobbying. There were 825 foreign agents registered under the Foreign Agents Act in 1986, but the Justice Department officials estimated that these registrations represent only 30 to 60 percent of the total number of lobbyists and lawyers who might have otherwise registered. So, I'd like to submit my full statement for the record-- Mr. JOHNSON [continuing]. And, again, I commend you for holding these hearings. Thank you. Mr. FRANK. Thank you. [The prepared statement of Mr. Johnson follows:] STATEMENT OF CONGRESSMAN TIM JOHNSON HOUSE JUDICIARY COMMITTEE ON ADMINISTRATIVE LAW AND Mr. Chaiman, thank you for this opportunity to testify. At a time when many experts feel that our economy is severely challenged by international economic pressures and foreign investments, it is vital to our national interest to possess accurate information about those who lobby or serve as agents for foreign interests. I have introduced a proposal to strengthen the fifty-two year old Foreign Agents Registration Act, HR 1382. Senator Heinz introduced the companion, S. 346. The Heinz bill and my bill is similar to Congressman Glickman's bill. A case in point is how the 1938 law required Toshiba Corporation to report $7.2 million in lobbying expenses during an 18 month period ending in August of 1988. This disclosure was required by the law requiring U.S. based companies to disclose expenses spent for direct congressional lobbying. Yet, the costs of Toshiba's campaign to modify proposed sanctions on itself as a result of a subsidiary's selling classified submarine information to the Soviets went unreported because the law does not require the reporting of costs incurred for non-direct congressional lobbying. The Foreign Agents Act of 1938 sought to identify foreign sources of subversive propaganda. It does not address, however, the problems associated with non-direct congressional lobbying. There were 825 foreign agents registered under the Foreign Agents Act in 1986. Justice Department officials estimated that these registrations represented 30-60% of the total number of lobbyists and lawyers who should have registered. The main provisions of H.R. 1381 are: • Clarification of "foreign principal" to include American companies in which a foreign interest holds more than 50% ownership. Companies with a 20 to 50% foreign interest would have to prove that they are not foreign-controlled. • Removal of the lawyer's exemption. The line between lawyer and lobbyist has become increasingly hazy and the deletion of this exemption would promote enforcement. • Establishment of uniform reporting dates of December 31 and June 30 to supplement the agent's initial filing. Establishment of civil penalties to augment the existing criminal penalties. In conclusion let me commend Senator Levin for the hearings he has conducted into laws regulating all lobbyists. Mr. Chairman, I do not profess to be an expert on this matter and I do not claim that my bill is the only way to address this issue. Additionally, I know that none of us here is out to put lobbyists out of business or to trample on the first amendment. The full range of foreign and domestic lobbying should be disclosed to the American public in a more thorough manner than is done today. Mr. FRANK. Mr. Guarini, who is also the author of one of the important pieces of legislation is before us today. STATEMENT OF HON. FRANK J. GUARINI, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY Mr. GUARINI. Mr. Chairman, it's a pleasure to be before you this morning, and I think it's very important that these hearings examine into the Foreign Agents Registration Act, which has many loopholes and is very incomplete. I consider it a very important item to focus on because it does affect national policy issues and our national security. In 1938, as you know, FARA was established to counteract Nazi activities in our country. National security issues are just as equally important. The efforts of foreign interests to influence U.S. policy and politics have grown considerably in the last 20 years. Now there are 100 foreign corporations that have established PAC's through American subsidiaries. They contribute millions of dollars to campaigns. This is nothing in comparison, and it pales, with the hundreds of millions of dollars that are spent every year on lobbying and public relations efforts to shape American policies established by the U.S. Government. One main problem is that, despite public disclosure demanded by FARA and other statutes, foreign influence continues to be exercised, for the most part in secret. For all practical purposes, we have little knowledge as to what is going on and how extensive it is. It's my firm belief that the present situation is worse than having no disclosure requirements at all. The illusion of disclosure that presently exists results in a dangerous level of complacency. The public is led to believe that these lobbying activities are occurring in the open and are being regulated by public scrutiny when, in fact, they are not. In practice, the disclosure statutes are virtually meaningless. There is much that we do not know about lobbying campaigns and efforts to sway American public opinion. Marcy Kaptur and I had jointly introduced H.R. 806, which requires the creation of an information clearinghouse. Presently, we have fragmented information in many different depositories about foreign lobbying activities. We have it in the Federal regulations of the Lobbying Act; the Foreign Agents Registration Act; FEC, the Federal Election Campaign Act. We have information from the catalog of public hearings and witnesses and affiliations that are listed in the Congressional Record. We have depositories for information about foreign agents collected in accordance with the House and Senate rules. So, what we really have is a mosaic out there. There is no one place to go to collect all the information that we need on foreign lobbying. So, being fragmented, it almost prevents our ability to scrutinize what is actually happening with the people who are foreign agents and representatives. In order for the proposal to work, however, it will be necessary to improve the reporting and enforcement of FARA. Our proposal is aimed at ensuring that there is no misinformation or misrepresen tation, as was pointed out by hearings that were held by Senator Levin. A 1990 report done by the GAO that says that 775 people are registered as foreign agents, when in truth we know there are thousands of people out there who are foreign agents. One thing that we want to address is the exemption for lawyers who are able to take an exemption from registration without even having to file an exemption certificate or notification. But, many lawyers in town are really principally hired as lobbyists, and because they do not register under FARA we have no knowledge of who they represent. They can just always call upon the exemption that they have, which doesn't even have to be filed. What this bill does is to create a paper trail where these people do have to file their exemptions and request an exemption as foreign agents. Then, at least, we will know who they represent and where the players are. Now that's the least that can be done. If I ask what is the most that can be done, it is that they be treated like everyone else and that there be no exemption whatsoever. But, at least we can have an exemption registered and requested by the individual which notifies the Department of Justice that he or she is, indeed, representing a foreign entity. H.R. 806 would also create civil penalties from $2,000 to $5,000 depending upon the violation. We have criminal penalties in FARA now, but because of its severity the criminal penalties are rarely exercised. Therefore, in effect, they are useless. So, there's no sanction whatsoever. This calls upon civil penalties which would be more inclined to be used. The bill would also provide the right of subpoena by the administrative agency and judge, so that we could at least have law enforcement over the provisions of the statutes thus enabling the Department of Justice to collect the information and marshal the data that's necessary to determine whether or not there had been any violations of the act. It also calls for quarterly reports instead of semiannual reports. H.R. 806 doesn't require a lot of additional information, it just requires more timely reporting, full reporting, and reports that would take place quarterly, so people can immediately find information that they need, that they seek, to find out who's representing whom. So, what we're really calling for is more openness in our entire system and a clearinghouse that can really reform FARA by collecting all the information in one place. It's a like a one-stop, oneshop operation. Once people have information, they can then make better informed choices. Without accurate information, American policy and politics would be subject to more manipulation. It's my hope that you would include the provision for an affirmative request for an exemption from the Justice Department, civil penalties, a quarterly filing requirement, and the right of subpoena by the administrative judge in any revision of FARA. I think the clearinghouse is necessary and is essential if we're going to have information assembled in a meaningful manner. Sunshine is the best disinfectant, and I really commend those provisions of our bill to you. I have a longer statement which I'd like to include— |