Hunter Biden and China: Grassley Urges DOJ to Investigate Potential Violations of the Foreign Agents Registration Act (FARA), But What Do We Know So Far?

In the run-up to the recent presidential election, Joe Biden’s son, Hunter Biden, was back in the news. This time it was about his relationship with the Chinese company CEFC China Energy. Now that the election is behind us (I think), some folks do not appear to be giving up on the story. Recently, Republican Senator Chuck Grassley, Chair of the Senate Finance Committee, wrote a letter to Attorney General William Barr, urging the Justice Department to probe potential violations of the Foreign Agents Registrations Act (FARA) by Hunter Biden and others.

As Senator Grassley summarizes, FARA is “designed not to prohibit activity but rather to require individuals to register with the DOJ if they are acting as an agent of a foreign government or enterprise to influence U.S. policy or public opinion.” Until the last few years, FARA prosecutions were few and far between, but the law has received renewed attention with the recent prosecutions of Paul Manafort, Michael Flynn, and Manafort associate Richard Gates. And while it is true that FARA generally requires individuals to register with DOJ if they are acting as an agent of a foreign principal in undertaking certain political or financial activities, the scope of such registration requirements are notoriously vague.

Senator Grassley’s letter alleges that recently disclosed emails and texts show that Hunter Biden and Joe Biden’s brother, James Biden, “had significant connections to CEFC China Energy” and that “CEFC was an extension of the Chinese government.” Grassley also makes the general allegation that “CEFC intended to alter U.S. policy and public opinion to its benefit and that the Chinese government would be the principal beneficiary of those actions.” The letter cites a comment by Tony Bobulinski, a former business associate of Hunter Biden, saying that the Chinese viewed Hunter Biden “as a political or influence investment.” Grassley asks that the Attorney General review the evidence for potential FARA violations and report back any actions DOJ has taken in the matter.

Noticeably absent from Senator Grassley’s letter is any mention of the several exemptions to the FARA registration requirements, including the so-called “commercial exemption” under 22 U.S.C. § 613(d). Under this provision, persons “agreeing to engage only in private nonpolitical activities in furtherance of bona fide trade or commerce of such foreign principal” are exempt from registration. Importantly, the FARA regulations under 28 CFR § 5.304 provide that such commercial activities “shall be considered ‘private,’ even though the foreign principal is owned or controlled by a foreign government, so long as the activities do not directly promote the public or political interests of the foreign government.” Further, even a person engaging in political activities on behalf of a foreign government-owned corporation are exempt “where the political activities are directly in furtherance of the bona fide commercial, industrial, or financial operations of the foreign government or foreign political party and the political activities do not directly promote the public interest or political interests of a foreign government or of a foreign political party.”

With this exemption in mind, a close read of Senator Grassley’s seven-page letter reveals little smoke and no fire. Grassley focuses on Hunter Biden’s relationship with Ye Jiamming, chairman of CEFC, alleging that Ye had “connections” to the Chinese communist party and that CEFC was “an extension of the communist Chinese government.” The letter then delves into an alleged “lucrative financial relationship” between Ye and Hunter Biden through which Biden allegedly “receiv[ed] millions of dollars while Ye and CEFC gained inroads to lucrative U.S. investment opportunities.” This included failed efforts by Hunter Biden to close a deal involving a $40 million investment in a natural gas project in Louisiana. The letter then attempts to connect the Bidens’ work for Ye to lists of contacts James Biden apparently emailed that included senior U.S. democratic politicians and foreign leaders, although the letter makes no connection between the contact lists and Ye or CEFC.

Rightly or wrongly, some may look askance at these interactions, given who Hunter Biden’s father is and the amount of money involved, but what does all this really mean in terms of FARA? Aside from bandying about talk of communists, there is not much in the letter to suggest (at least not yet) that these interactions were anything more than commercial business dealings. Whether or not Ye may have connections to the Chinese government or CEFC received funding from a government-owned bank, a foreign business “gain[ing] inroads to lucrative U.S. investment opportunities,” without more, would appear to fall squarely within FARA’s commercial exemption. Even if Hunter Biden was engaged in political activities (although there does not appear to be evidence in the letter that he has done so), those activities very well could have been “in furtherance of the bona fide commercial, industrial, or financial operations of the foreign government or foreign political party” and not “directly promot[ing] the public interest or political interests of a foreign government or a foreign political party,” as provided in the FARA regulations. Indeed, even Senator Grassley appears to recognize the commercial nature of the relationship, concluding that “it is clear that CEFC intended to make inroads in the United States for the purpose of expanding its business and used Hunter Biden and his business associates to help effectuate that intent.”

Of course, the devil is in the details. This could be the proverbial tip of the iceberg. And advisory opinions by DOJ on the commercial exemption show that the contours of it are anything but clear. We do not yet know whether and to what extent prosecutors and the FBI may be following up on these issues. Time will tell whether evidence will back up Grassley’s allegation that the purpose of the relationship between Hunter Biden and CEFC was to promote the interests of China. For example, it may be relevant (although not necessarily dispositive) if Biden was interacting with U.S. government officials on behalf of CEFC to gain regulatory approval of a commercial project. Or if he was interacting with U.S. officials to improve U.S.-Chinese relations in the energy sector. Based on what has been revealed so far, however, that doesn’t appear to be the case.

November 20, 2020

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