Tracking Foreign Influence: The Coming Wave
The increasing impact of foreign ‘soft power’ has led Australia to introduce a world-first Foreign Influence Transparency Scheme. Other western governments will be watching with interest to gauge its effectiveness and applicability to their own countries.
This new Foreign Influence Transparency (FIT) Scheme has been partially informed by the longstanding U.S. Foreign Agents Registration Act, but will be broader in application. It is part of a far-reaching legislative package that was enacted by Australia’s parliament in mid-2018 that aims to protect the country’s political institutions and processes. The Australian Government was strongly encouraged to act in this way by its security agencies.
A number of circumstances have come together over recent years to prompt these changes. This includes significant political donations by foreign entities, co-opting of ethnic communities in support of geopolitical objectives, establishment of foreign government-supported institutes within Australian universities, and allegations of foreign entities supporting current and former politicians.
Of course, there has been significant speculation as to which countries these measures are aimed at, most particularly China, but they apply universally regardless of country of origin.
With effect from December 2018, the FIT Scheme essentially requires any person who undertakes activities on behalf of a ‘foreign principal’ that are aimed at influencing political or government processes to register and then disclose relevant details on an ongoing basis. So, what are the key elements of the FIT Scheme?
Firstly, the activities that are captured are all about influencing government processes and political debate – including parliamentary lobbying, general political lobbying, communications activity and ‘disbursement’ activity (e.g. campaign donations and funding). Communications activity is broadly defined and includes the use of any conventional or social media channel that aims to influence parliamentary processes or government decisions.
To be registrable, an activity must be on behalf of a foreign principal, which means a foreign government, foreign political party or foreign government-related entity (FGRE). A FGRE includes any entity that has over 15% foreign government ownership or voting power in an organisation, so includes wholly and partially state-owned entities, sovereign wealth funds, some pension funds, and others. Many organisations of this type are active players in the Australian economy.
The Scheme places registration and disclosure obligations on those who are acting on behalf of the foreign principal – third party advisers and local directors/employees. There are some exceptions to the Scheme – for instance, lawyers where they are providing legal advice and directors/employees of the foreign principal where the activity relates to supplying goods or services for sale.
Parties to whom the Scheme applies are required to disclose significant information at the time of registration – most of which will be made publicly available via an online portal – and then to continuously update their activities.
Stricter rules have been put in place for former Cabinet Ministers and those who have previously served in a senior government position. More frequent disclosures are required by registered parties during election periods when the sensitivity to foreign influence is at its highest.
The Scheme also sets out broad-ranging information and documentation requirements, as well as extensive record-keeping obligation on registered parties. And, to make sure there is a strong incentive to comply with the Scheme, substantial penalties have been put in place for breaches including criminal sanctions where non-compliance is intentional or wilful.
Australia is far from alone in its concern about foreign interference and influence. It will be interesting to see how effectively the FIT Scheme performs and whether other nations choose to implement similar arrangements.