Kim Schmett didn't disclose political donations while acting for Saudi Arabia

Kim Schmett, one half of an Iowa Republican power couple who were foreign agents for the Kingdom of Saudi Arabia while serving on influential state boards, made at least three donations to GOP campaigns or entities while registered as a foreign agent in late 2016. There is no record of Schmett disclosing those political contributions, as required under the Foreign Agents Registration Act.

THE WORK FOR SAUDI ARABIA

Brian McGlinchey’s website 28Pages.org has done groundbreaking reporting on lobbying to undermine the Justice Against Sponsors of Terrorism Act (JASTA), which allowed “9/11 families and survivors to sue Saudi Arabia for its alleged support of al Qaeda and its hijackers.” Starting weeks after the law’s passage in September 2016, the firm Qorvis MSLGROUP hired 70 Americans to work on the kingdom’s behalf.

Kim Schmett and his wife Connie Schmett were among the eight Iowans Qorvis MSLGROUP retained. Their consulting firm, Schmett & Associates, eventually received $101,500 for unspecified “communications services” (see the second to last page of this document).

The “deceptive premise” of the Saudi public relations campaign was the idea that “if other countries reciprocate and pass similar laws, individual military service members and veterans will be exposed to lawsuits in foreign courts.” Some of the consultants, including Connie Schmett, helped recruit veterans to lobby members of Congress, without telling them Saudi money was ultimately covering their all-expenses-paid trips to Washington.

Kim Schmett chairs the Employment Appeal Board, a three-member body that is “the final administrative law forum for state and federal unemployment benefit appeals,” along with appeals of rulings by the Occupational Safety and Health Administration or the Iowa Public Employees Retirement System. Connie Schmett serves on the Cultural Trust Board of Trustees and the Health Facilities Council, which reviews and issues “certificates of need” for proposed hospitals or nursing homes.

Some state officials are required to file annual personal financial disclosure forms. Kim Schmett’s latest such statement mentioned Schmett & Associates as outside work during the 2016 calendar year. However, Connie Schmett’s disclosure form from this spring says she had “no other business, occupation, or profession” in 2016 and no sources of income greater than $1,000.

The Qorvis supplemental FARA statement lists Connie and Kim Schmett as having started work as consultants on October 7 and October 8, 2016, respectively. (On those dates, each spouse signed short forms registering as a foreign agent for the Kingdom of Saudi Arabia.) The same Qorvis filing listed most of its American consultants, including Kim Schmett but for some reason not Connie Schmett, as having “terminated” their work as foreign agents on March 30, 2017. (page 19)

Ryan Foley reported for the Associated Press on November 2 that the Schmetts were “facing scrutiny” over their side work. Connie Schmett told Foley the omission on her disclosure form was “an oversight on my part.”

Kim Schmett informed Gov. Kim Reynolds’ staff recently that he “believed he and his wife complied with all applicable rules and regulations regarding registration and disclosure,” press secretary Brenna Smith said.

He said judicial rules restricting lobbying and political involvement don’t apply to work as a foreign agent. “It’s not even discussed” in Iowa code, he said. […]

Iowa Ethics and Campaign Disclosure board director Megan Tooker said Thursday [November 2] she is looking into the couple’s work as foreign agents, which is the first time such an issue has come up in recent memory but appears to be allowed. She said Connie Schmett’s disclosure will likely have to be amended to list her consulting and that she may be asked to retroactively file a disclosure for 2014, which never occurred after she joined the Health Facilities Council due to an apparent oversight.

After reading some of McGlinchey’s writing, I sought insight from Tooker on whether Schmett’s position on the Employment Appeal Board precludes lobbying or consulting work for a foreign entity. She declined to comment on the record.

In a telephone interview on October 24, I asked Schmett whether his consulting related to JASTA was primarily about lobbying members of Congress. “Actually not,” he said. “I was doing public relations work on behalf of a bill that was a federal bill, or on behalf of a client on that, but I did not do any direct lobbying.” Work like placing letters to the editor or op-ed columns in newspapers? “Similar stuff to that. Most of it on this one was finding people who were highly interested in what the legislation was and connecting them with the client.”

Was he involved in soliciting former U.S. Representative and decorated Vietnam veteran Leonard Boswell to write a February 2017 guest editorial for the Des Moines Register? That piece, titled “Congress must correct mistake on terrorist act,” echoed JASTA talking points from other newspaper columns, which appeared to be part of an “astroturf” campaign by lobbyists representing Saudi Arabia.

Schmett told me he was “not aware of the piece” from the Des Moines Register. “We have worked with Leonard before on things, but I’m not familiar with the one you’re talking about.” (Side note: Schmett was Boswell’s GOP challenger in Iowa’s third Congressional district in 2008.)

28Pages.org had reported that the bipartisan Des Moines-based LS2 Group also consulted for Qorvis on JASTA. Did the Schmetts collaborate with that firm on this project?

I’m not going to go into huge detail on, you know, my personal business activities that I’m not required to report and disclose, simply like law firms don’t list all clients, and so forth, that they have. But on this one, no, LS2–I was not working with–there’s no business relationship between LS2 and our work on this one.

Did Schmett inform anyone in the governor’s office that he was doing this work? “The governor’s office was aware that I had the consulting business,” but he doesn’t call them about individual cases or clients. Schmett emphasized that he would recuse himself from any Employment Appeal Board case involving a conflict of interest due to his outside work. “In this case, the client is as far removed from what I do in Iowa as you could possibly be. I don’t think that Saudi Arabia has any employees in the state of Iowa that would be seeking unemployment compensation.”

Could Schmett give me a ballpark idea of how many hours he put in on the JASTA project between October 2016 and March 2017? He earns about $80,000 a year working for the state. “I’m not going to go into that, no, I really couldn’t, fairly.” The Qorvis supplemental FARA filing didn’t indicate how much Kim and Connie Schmett each contributed to the work that netted their business $101,500. McGlinchey’s reporting for 28Pages suggests Connie Schmett was much more actively involved in arranging Washington travel for veterans.

POLITICAL DONATIONS WHILE ACTING AS A FOREIGN AGENT

Currently available records do not show any political donations by Connie Schmett since she registered as a foreign agent.

Federal Election Commission filings show Kim Schmett gave $100 to U.S. Representative David Young’s campaign on October 14, 2016.

The Iowa Ethics and Campaign Disclosure Board’s database shows Schmett made two other political donations during the relevant time frame: $50 to the Polk County Republican Central Committee on October 28, 2016, and $150 to the Governor Branstad Committee on November 28, 2016. According to the Open Secrets website, Schmett also gave the Republican Party of Iowa $250 on April 21, 2017, but by that time he was no longer a foreign agent.

I sought comment from Larry Noble, senior director and general counsel at the Campaign Legal Center, about the legality of Schmett’s campaign contributions late last year. He explained in an October 19 e-mail, “As long as he is a US citizen and the money he used to make the contributions was not given to him by a foreign national or government for the purpose of making the contribution, it is legal. FARA does not prohibit a US citizen who registers from making a contribution.”

Noble later clarified, “FARA does require reporting of political contributions by an agent of a foreign principal. Failure to report would be a violation.” (Public Citizen described those rules in more detail here.)

Schmett did not need to file a supplemental FARA statement, since he worked as a foreign agent for less than six months. The Qorvis supplemental statement does not list Schmett’s political contributions.

In our October 24 interview, Schmett told me, “I don’t pretend to be an expert on foreign federal agent registration.” He retained legal counsel in Washington to handle the registration and maintain the FARA reports. He refused to provide the name of that attorney but assured me, “Everything was filed. If there is anything that is not included in the report or whatever, we’ll file an amended report on that.”

Schmett added that he was not sure whether the donations to the Polk County GOP and then Governor Terry Branstad’s campaign “were political contributions, even. I have not had a chance to look at the checks. […] It’s possible that they could be fees for a voter list or a vendor’s table or something like that also, as opposed to a contribution.”

In any event, “the JASTA bill was never discussed with Governor Branstad or anyone on his staff.” As for the Polk County Republicans,

there’s nothing they could do for it anyway, but it wouldn’t have been discussed with the county party either. So they are unrelated to the JASTA bill. However, if they were contributions that need to be reported, we will amend and correct that report, and I appreciate your bringing it to my attention, if that’s what it turns out to be.

In a follow-up conversation on November 6, Schmett told me his counsel was out of the office recently, “but I have sent them all the contributions that I would have made during the entire time that I was registered.” The DC attorneys said they would get back to him this week, “and we’ll file an amended return if they feel that that’s legally required.” They thought they had filed what FARA requires, “but they wanted to look into it to be sure.”

One caveat: the National Security Division of the U.S. Department of Justice stamped Schmett’s short FARA form as “received” on October 31, 2016. If that is considered the starting point for his work as a foreign agent, then disclosure might not be required for the donations to Young’s Congressional campaign and the Polk County GOP. On the other hand, the supplemental statement filed by Qorvis in March lists Schmett’s work as beginning on October 8, the day he signed the short form. Either way, the November contribution to Branstad’s campaign would need to be disclosed.

Staff for Governor Kim Reynolds have not responded to my related questions, such as: does the governor consider it appropriate for people serving on state boards or commissions to do side work for the Kingdom of Saudi Arabia or any other foreign entity? I assume the answer is yes, since the Schmetts co-hosted a Reynolds campaign fundraiser in September of this year.

On November 6, I asked Schmett whether he had spoken with the governor’s office about this matter since our last conversation. “We’ve had some communications. They’re aware of the articles when they come out.” Is he planning to do similar work for foreign clients in the future? He laughed before answering,

I’m almost 65 years old, I have never worked for a foreign client before this project. When you’re based out of Iowa, we don’t have a whole lot of foreign clients that have an interest in what we do, in the area we do it in. So no, I mean, I would not rule it out. There’s always qualifications.

Saudi Arabia has been an ally of the United States for years, and I’m not representing somebody who’s un-American. You’ve always got to look at the issue to make sure that it’s something you’re comfortable with too. But quite frankly, you know, I don’t think that there’s going to be a long list of foreign countries calling me.

Veterans whom Connie Schmett encouraged to come to Washington should have had the same opportunity to understand who was educating them about “The Real Impact of JASTA,” so they could decide whether they were comfortable acting in Saudi Arabia’s interests.

UPDATE: Reynolds told reporters on November 7 that she wants to change Iowa law to block state officials from working for foreign governments. In addition, her staff have asked the state ethics board to review the Schmetts’ consulting work and public disclosures for possible violations. O. Kay Henderson posted the audio from the governor’s press conference at Radio Iowa.

The AP’s Foley reported on November 7 that Kim Schmett “listed his occupation as a ‘consultant’ when he registered as a foreign agent —omitting his role as an $80,000 per-year administrative law judge whose board receives 96 percent of its budget from the federal government.” His counsel may want to amend that portion of Schmett’s FARA filing as well as adding the political donations.

The State of Iowa Employee Handbook states, “An employee working in connection with a program financed in whole or in part by federal funds may be covered by the provisions of the federal Hatch Act.” The Hatch Act prohibits some forms of political activity, but it’s not clear whether Schmett’s activities would constitute a Hatch Act violation.

P.S.- I wondered whether Schmett’s other partisan political activity was compatible with his state work. He has made more than 20 donations to Republican candidates or committees since Branstad named him to the Employment Appeal Board in 2014 (see here and here). He was a county co-chair for Senator Chuck Grassley’s 2016 re-election bid and is among the legions of county co-chairs for the Reynolds gubernatorial campaign.

A 2002 advisory opinion from the Iowa Ethics and Campaign Disclosure Board noted, “In addition to being subject to the executive branch ethics laws, members of the [Employment] Appeal Board are governed by the judicial code of conduct due to the quasi-judicial nature of the work done by the Board.” That code says a judge shall not “act as a leader in […] a political organization” or “make a contribution to a political organization, a candidate for judicial retention, or a candidate for public office […].”

Communications staff for the Department of Inspections and Appeals told me that agency does not have a policy addressing this issue, because the Employment Appeal Board is a “semi-autonomous” body appointed by the governor.

Schmett explained during our October 24 interview, “The code of judicial conduct that applies to us is the code of administrative judicial conduct. We hold administrative hearings. We aren’t a part of the judicial branch of government, as you noted, we’re part of the executive branch.” Administrative law judges are not restricted from making political donations, serving on a party central committee, or helping a campaign.

LATER UPDATE: The Iowa Democratic Party highlighted the controversy in a November 9 press release challenging Reynolds’ leadership.

Governor Reynolds Ignores Opportunity for Leadership in Schmett-Saudi Case

Reynolds is waiting on ‘third parties’ to tell her what to do about two of her fundraisers.

Des Moines, IA – In her weekly press conference earlier this week, Governor Reynolds tried to minimize her ties to GOP power couple Connie and Kim Schmett and passed off any responsibility for responding to the allegations that the couple took money from Saudi Arabia to exploit veterans and lobby against 9/11 victims.

Despite the fact that the Schmetts hosted a fundraiser for her as recently as September, Governor Reynolds claims that they have only given $100 to her campaign. She did not say whether or not she would be returning those funds.

Governor Reynolds placed all responsibility for holding the Schmetts accountable on the State Legislature and Iowa Ethics & Campaign Disclosure Board. It should be noted that the Ethics Board is housed under the Executive Branch.

“Reynolds fundraisers Kim and Connie Schmett took money from Saudi Arabia to lobby against victims of 9/11 and Governor Kim Reynolds is waiting on ‘third parties’ to tell her what to do about it,” said Iowa Democratic Party Spokesperson Tess Seger. “Even if she has no legal recourse, Governor Reynolds could use her considerable influence to condemn their actions and call for their resignations. The people of Iowa need a governor who’s willing to stand up for what’s right, not one who puts party over leadership.”

NOVEMBER 13 UPDATE: Reynolds’ campaign manager Phil Valenziano told the Associated Press that the Schmetts were no longer Polk County co-chairs and that “the campaign has donated the couple’s $100 contribution to Tunnel to Towers, a charity that supports victims of the September 11, 2001 terrorist attacks.” The Schmetts made that contribution as hosts of a fundraiser that happened in September, after 28Pages had reported on the couple’s side work for Saudi Arabia.

NOVEMBER 14 UPDATE: Not so fast. The AP’s Foley caught up with Tunnel to Towers Foundation officer John Hodge, who “called the campaign’s gesture well-intentioned but not thought out. He says his group is ‘probably the last foundation on the face of this earth that would take money from a foreign agent for Saudi Arabia.’”

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