Gainful Solutions Inc., and the U.S. Foreign Agents Registration Act

As reported on April 29 by Sam Mednick of the Associated Press, a U.S. $3.7 million lobbying contract was signed on April 2 by the Office of the President of the Government of the Republic of South Sudan (GRSS), and retired U.S. ambassador and former principal deputy assistant secretary of state for African affairs Michael Ranneberger and his business partner Soheil Nazari-Kangarlou, together acting as the Delaware-registered corporation Gainful Solutions Inc., (GSI).  The contract was reported to the U.S. Department of Justice (DoJ) and entered as registrant #6667 in the Foreign Agents Registration Act (FARA) online registry.

As this excerpt of the contract suggests, the deal may eventually be much more lucrative than the headline dollar figure.  As yet unquantified terms provide that GSI and another individual, Reverend Paul Cheboi, the so-called coordinator of the contract:

shall equally and proportionally share any residuals, compensation, commissions, or shareholding resulting from such facilitation and negotiation with American and Western businesses.  The [Government of South Sudan] agrees that all American and Western business companies venturing into South Sudan after the execution of this Contract will be assumed to have originated from the parties of this Contract…

Screenshot 2019-05-01 at 07.36.51

Two other retired U.S. diplomats, Constance Newman, former assistant secretary of state for African affairs under George W. Bush, and Timothy Towell, former ambassador to Paraguay under Ronald Reagan, who as the Washington Post reported in 1999 himself once courted controversy as a foreign lobbyist, are contractors for GSI on the deal.  Towell’s participation remains conditional: article C of the contract states “[Towell] has agreed to serve as a sub-contractor for [GSI] as needed and appropriate.”  (Towell has yet to register as a foreign lobbyist with the DoJ, which suggests he has not yet provided any services as a sub-contractor.)

The contract engages GSI to provide at least six services, including:

  1. Open[ing] a channel of communication between President Kiir and President Trump with the objective of persuading President Trump and his administration to expand economic and political relations with South Sudan, and supporting American private sector investment in South Sudan in oil, natural resources, energy, gas, mining, and other areas.
  2. Improv[ing] bilateral relations between the United States and South Sudan.
  3. Persuad[ing] the Trump administration to reverse current sanctions and further block potential sanctions.
  4. Delay[ing] and ultimately block[ing] establishment of the hybrid court envisaged in the R-ARCISS [2018].
  5. Mobiliz[ing] American companies to invest in the oil, natural resources, and other sectors [in South Sudan].
  6. Persuad[ing] the Trump administration to open a military relationship with South Sudan in order to enhance the fight against terrorism and promote regional stability.

Beyond the outrage that has focused on the moral wrongs of any effort to block the hybrid court, the contract may expose its parties to legal peril in two distinct areas.

First, the contract’s clear intent to obstruct the formation of a key institution required by the peace agreement, the hybrid court, raises the prospect of sanctions pursuant to presidential Executive Order 13664, which permits sanctions against:

any person determined by the Secretary of the Treasury, in consultation with the Secretary of State…to be responsible for…(B) actions or policies that threaten transitional agreements or undermine democratic processes or institutions in South Sudan; (C) actions or policies that have the purpose or effect of expanding or extending the conflict in South Sudan or obstructing reconciliation or peace talks or processes.

Executive Order 13664 allows for the freezing of the property of any person so designated under the order.  It may be applied to both U.S. and non-U.S. persons, whether within the United States or abroad.

The second area of legal jeopardy concerns three potential areas of non-compliance with the FARA:

1. Potential omissions in GSI’s FARA registration statement: The FARA statute requires in § 612.(a) “a true and complete registration statement…” and in § 612.(4) “a comprehensive statement of the nature and method of performance of each such contract, and of the existing and proposed activity or activities engaged in or to be engaged in by the registrant as agent of a foreign principal.”  The information is required to be filed in the FARA registration statement, specifically in response to Question 8 of Exhibit B of the registration statement which asks registrants to: “describe fully the activities the registrant engages in or proposes to engage in on behalf of the above foreign principal.”

However, GSI’s answer to Question 8 of Exhibit B makes no reference to the hybrid court or to the peace agreement.  In other words, the registration statement appears to be inconsistent with the underlying contract.  This suggests that GSI has failed to comply with FARA requirements, by inexhaustively listing the services to be provided, or in the language of the statute, offering an apparently “deficient” registration statement.  Omitting a reference to the hybrid court in the disclosure statement of Exhibit B is not necessarily mitigated by the enclosure of the contract.

And there is further uncertainty about the activities GSI might be potentially asked to undertake.  The contract states that “[GSI’s] services will include, but not necessarily be limited to” the six services noted above.  This overly broad contractual language leaves ambiguity as to the activities GSI may be asked to engage in, which defeats the disclosure requirements of the statute.  The contract also makes reference to a letter from President Kiir to Ranneberger which described the government’s initial request for services to be performed by GSI.  The letter has so far not been disclosed, but clearly the correspondence may contain further information pertinent to FARA’s requirements.  Only the letter’s disclosure would confirm whether the FARA statement is as thorough in content as the statute requires.

2. Late filing of FARA statements: § 612.(a) of the FARA statute requires that “…every person who becomes an agent of a foreign principal shall, within ten days thereafter, file with the Attorney General, in duplicate, a registration statement, under oath on a form prescribed by the Attorney General.”

GSI signed the contract on April 2, 2019.  Its FARA statements, and those of its principals and contractor Newman, were filed late: not until April 18, 2019.   Title 28 C.F.R. Part 5, which concerns the administration and enforcement of the FARA, provides clear guidance in the computation of the ten day period, noting in § 5.4, “Computation of time. Sundays and holidays shall be counted in computing any period of time prescribed in the [FARA] or in the rules and regulations in this part.”

Screenshot 2019-05-01 at 09.06.26Excluding April 2, the day of the event that triggered the start of the ten day period, a full fifteen days elapsed before the FARA registration statement was filed on April 18th, the sixteenth day after GSI became a foreign agent of the GRSS.

3. As per its corporate websiteGSI claims to be a registered lobbyist for foreign governments (plural), but has not filed any other FARA registration statements. Screenshot 2019-04-30 at 10.49.24

Though this claim may be chalked up as an ill-advised corporate boast, the FARA statute is explicit: all U.S. lobbyists for foreign governments must register.  If GSI actually does represent more than one foreign government, as its website implies, then it is likely in breach of FARA requirements.

The DoJ noted as recently as March of this year that FARA compliance was an enforcement priority.  Consistent with its civil enforcement prerogative, there would appear to be sufficient grounds for the DoJ to further investigate GSI’s filing.

Beyond the FARA’s requirements, the Departments of Treasury and State would be well-advised to consider what action is open to them pursuant to the law and presidential executive orders concerning South Sudan.  If the U.S. wants to get serious about peace spoilers, there would be no better place than to start with those who have placed profit over principle, regardless of their former standing or current position.

Review the original GSI documents here: https://efile.fara.gov/pls/apex/f?p=181:200:7190410560585::NO:RP,200:P200_REG_NUMBER:6667

 

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