The Treasury Department needs to look into the use of the litigation finance in the US by foreign actors, Deputy Secretary Wally Adeyemo said.
“This is an issue we have to look, we have to both work on and try and address,” said Adeyemo in testimony at a Senate hearing.
His comments came after Sen. Bob Menendez (D-N.J.) asked whether he believed the lack of transparency in the litigation finance industry could create a gap in sanctions enforcement. Menendez referenced a Bloomberg Law investigation that found a firm established by Russian billionaires tied to Russian President Vladimir Putin has backed lawsuits in New York and London both before and after three of its founders were sanctioned following the 2022 invasion of Ukraine.
“One of the challenges we have, of course, is that these Russian oligarchs have become quite expert at trying to avoid our sanctions,” Adeyemo said Tuesday. “And from what I’ve seen, this is one of the several ways they’re trying to do that.”
Menendez also referenced a Government Accountability Office report from 2022, which found sovereign wealth funds may be investing in litigation finance, and he raised the issue of patent litigation being financed by foreign companies.
When asked if he thought that legislation was needed for increased transparency in the industry, Adeyemo said he would like to work with Menendez’s office and would come to him if his team thinks such legislation is necessary.
The Senate Committee on Banking, Housing, and Urban Affairs held the hearing to get an update on efforts to counter illicit finance, terrorism, and sanctions evasion from the Treasury Department. Menendez was indicted last year by federal prosecutors in Manhattan for allegedly providing sensitive US government information and taking steps that secretly aided Egypt. He is a senior member of the banking committee.
Last year, House Speaker Mike Johnson (R-La.), Sen. John Kennedy (R-La.), and Sen. Joe Manchin (D-W.V.) introduced legislation that would regulate foreign entities’ ability to fund litigation. The proposed Protecting our Courts from Foreign Manipulation Act, which has not been heard in committee, would require disclosure of any foreign agents or investors financing a suit. It also would ban sovereign wealth funds and foreign governments from funding US litigation.