Russian Firms Spent Millions on U.S. Lobbying. Now They're Getting Dumped

(Bloomberg) -- Russia’s business giants have paid lobbyists millions to influence U.S. lawmakers in recent years. Now, those relationships are fraying after the invasion of Ukraine, as firms drop sanctioned or controversial clients.

Lobbying contracts for at least six Russian companies have been canceled in the past week, according to federal disclosures. The moves are further isolating some of the country’s largest banks and energy companies, including those associated with the contentious Nord Stream 2 AG pipeline, which is owned by Russian giant PJSC Gazprom and was designed to transport natural gas from Russia to Western Europe.

Russian companies, especially those with links to President Vladimir Putin, will likely continue to lose access to U.S. decision makers even if they haven’t been formally sanctioned, said Ben Freeman, a research fellow at the Quincy Institute for Responsible Statecraft. “The closer that the lobbying client is to Putin, the more likely it is that they will be dropped.”

Since 2014, Russian firms spent at least $186 million on U.S. lobbying and influence, according to an analysis by OpenSecrets, a nonprofit that tracks lobbying data. The spending is dominated by Russian state-owned media, energy companies and banks. One oligarch, Rusal President Oleg Deripaska, made the list of top-10 spenders.

Nord Stream 2 spent nearly $12 million since 2017 promoting the now-doomed pipeline to members of Congress. As a full invasion of Ukraine loomed last week, lobbying firms Roberti Global and BGR Group cut their once-lucrative contracts with the company. Another lobbying firm, Mclarty Inbound, also severed ties with European companies that had invested in the pipeline, including a subsidiary of Shell Plc.

Read More: Contentious Nord Stream 2 Gas Pipeline Is Dead for Now

Sanctioned companies being dumped by their lobbyists isn’t necessarily a “statement of solidarity with Ukraine,” Freeman said. “They had a legal obligation. If they didn’t stop working with them, they could be prosecuted.”

Russia’s largest bank by assets, Sberbank, was dropped by Venable LLP, a firm that had billed the bank $240,000 last year for monitoring sanctions and lobbying on bills including the Defending Ukraine Sovereignty Act, according to federal disclosure filings. Another now-sanctioned Russian bank, VTB Group, was cut by Sidley Austin LLP, which had provided legal services and a weekly policy memo on U.S.-Russia relations for the financial institution. Lobbying firm Geopolitical Solutions also cut Vnesheconombank, one of the largest Russian investment companies, after U.S. sanctions were imposed.

While not sanctioned, power and aluminum company En+ Group International PJSC was dropped by Mercury Public Affairs, as well as Sovcombank, which was sanctioned. 

For lobbying firms, considerations around ending accounts include potential reputation risk, said Michael Dawson of WilmerHale, which advises clients on sanctions compliance. “We’re seeing a greater reluctance to do business with Russian companies.”

Freeman compared the scenario to the exodus of lobbying firms from Saudi interests after the killing of journalist Jamal Khashoggi. “But it’s much, much worse, I think. Russia did not have much goodwill to begin with, even before this invasion.”

©2022 Bloomberg L.P.