Foreign Money in U.S. Elections

From OpenCongress Wiki

Jump to: navigation, search

Contents

Laws and Regulations Regarding Foreign Money in U.S. Elections

The abundance of political cash in the 2012 presidential election due to the rise of the super PACs in the wake of the Citizens United decision is causing concern about campaign donation disclosure. Whether super PACs are an obstacle to democracy or a manifestation of First Amendment rights, it is clear that donor disclosure is blatantly absent.

Since 1966, foreign nationals have been prohibited from donating money to American campaigns; recent legislation and Supreme Court decisions have only reinforced this principle. However, the lack of disclosure in the new super PACs means that foreign donations will be harder to detect, and American elections may be vulnerable to foreign influence. The following is a history of regulations regarding foreign campaign contributions, and current analysis regarding the potential role of foreign influence in the 2012 election.

FARA

Efforts to curb foreign financial involvement in US elections began with the 1966 amendment of the Foreign Agents Registration Act. FARA was originally intended ensure regulation and disclosure of Nazi propaganda in the 1930s.

“In 1966, FARA was significantly amended to focus on the integrity of the United States Government decision-making process, and to emphasize agents seeking economic or political advantage for their clients. The amendments were prompted by the excesses of lobbyists struggling over their share of the "sugar quotas" legislatively determined after trade with Cuba, the principal sugar producer, was prohibited. It required any person engaged in "political activities", as defined, as an agent on behalf of a foreign principal, to register. This is substantially narrower than the original act, which did not require that the activities be "for or on behalf of" the foreign principal.”

FECA

In 1974, the FARA prohibition was incorporated into the Federal Election Campaign Act.

Federal Election Campaign Law: § 441e. Contributions and donations by foreign nationals (a) Prohibition. It shall be unlawful for— (1) a foreign national, directly or indirectly, to make— (A) a contribution or donation of money or other thing of value, or to make an express or implied promise to make a contribution or donation, in connection with a Federal, State, or local election; (B) a contribution or donation to a committee of a political party; or (C) an expenditure, independent expenditure, or disbursement for an electioneering communication (within the meaning of section 304(f)(3)) (2 U.S.C. § 434(f)(3)); or (2) a person to solicit, accept, or receive a contribution or donation described in subparagraph (A) or (B) of paragraph (1) from a foreign national. (b) As used in this section, the term “foreign national” means— (1) a foreign principal, as such term is defined by section 611(b) of title 22 except that the term “foreign national” shall not include any individual who is a citizen of the United States; or (2) an individual who is not a citizen of the United States or a national of the United States (as defined in section 101(a)(22) of the Immigration and Nationality Act) and who is not lawfully admitted for permanent residence, as defined by section 1101(a)(20) of title 8 22 U.S.C. § 611(b) provides: (b) The term “foreign principal” includes— (1) a government of a foreign country and a foreign political party; (2) a person outside of the United States, unless it is established that such person is an individual and a citizen of and domiciled within the United States, or that such person is not an individual and is organized under or created by the laws of the United States or of any State or other place subject to the jurisdiction of the United States and has its principal place of business within the United States; and (3) a partnership, association, corporation, organization, or other combination of persons organized under the laws of or having its principal place of business in a foreign country.

Foreign Nationals Brochure

The “Foreign Nationals” Brochure, published by the Federal Election Commission, explains the prohibitions on foreign involvement in US elections.

The following groups and individuals are considered "foreign nationals" and are, therefore, subject to the prohibition: Foreign governments; Foreign political parties; Foreign corporations; Foreign associations; Foreign partnerships; Individuals with foreign citizenship; and Immigrants who do not have a "green card." An immigrant may make a contribution if he or she has a "green card" indicating his or her lawful admittance for permanent residence in the United States. A domestic subsidiary of a foreign corporation may not establish a federal political action committee (PAC) to make federal contributions if: The foreign parent corporation finances the PAC's establishment, administration, or solicitation costs; or Individual foreign nationals: Participate in the operation of the PAC; Serve as officers of the PAC; Participated in the selection of persons who operate the PAC; or Make decisions regarding PAC contributions or expenditure. 11 CFR 110.20(i). (See also AOs 2000-17, 1995-15, 1990-8, 1989-29, and 1989-20.) Additionally, a domestic subsidiary of a foreign corporation (or a domestic corporation owned by foreign nationals) may not donate funds or anything of value in connection with state or local elections if: 1. These activities are financed by the foreign parent or owner; or 2. Individual foreign nationals are involved in any way in the making of donations to nonfederal candidates and committees.[1] In AO 1989-32, the Commission concluded that although foreign nationals could make disbursements solely to influence ballot issues, a foreign national could not contribute to a ballot committee that had coordinated its efforts with a nonfederal candidate's re-election campaign. In AO 1984-41, the Commission allowed a foreign national to underwrite the broadcast of apolitical ads that attempted to expose the alleged political bias of the media. The Commission found that these ads were not election influencing because they did not mention candidates, political offices, political parties, incumbent federal officeholders or any past or future election.[3] Under Commission regulations it is unlawful to knowingly provide substantial assistance to foreign nationals making contributions or donations in connection with any U.S. election. 11 CFR 110.20(h). "Substantial assistance" refers to active involvement in the solicitation, making, receipt or acceptance of a foreign national contribution or donation with the intent of facilitating the successful completion of the transaction. This prohibition includes, but is not limited to individuals who act as conduits or intermediaries. 67 FR 69945-6 (November 19, 2002) [PDF]. The Act prohibits knowingly soliciting, accepting or receiving contributions or donations from foreign nationals. In this context, "knowingly" means that a person: · Has actual knowledge that the funds solicited, accepted, or received are from a foreign national; · Is aware of facts that would lead a reasonable person to believe that the funds solicited, accepted, or received are likely to be from a foreign national; · Is aware of facts that would lead a reasonable person to inquire whether the source of the funds solicited, accepted or received is a foreign national. Pertinent facts that may lead to inquiry by the recipient include, but are not limited to the following: A donor or contributor uses a foreign passport, provides a foreign address, makes a contribution from a foreign bank, or resides abroad. Obtaining a copy of a current and valid U.S. passport would satisfy the duty to inquire whether the funds solicited, accepted, or received are from a foreign national. 11 CFR 110.20(a)(7).

Chinagate

In the years following the presidential election of 1996, the Justice Department investigated allegations that Chinese individuals made financial contributions to the Bill Clinton campaign. The Republican majority of the Senate Governmental Affairs Committee investigated and produced a report. Twenty-two people were eventually convicted of fraud.

Washington Post on the Draft Committee Report:

“The draft report also criticizes the DNC's dismantling of its "vetting" systems to check the appropriateness and legality of large donations during the 1996 campaign. While staffers had checked all donations of more than $10,000 during 1992 and all contributions of more than $25,000 in 1994, that program was abandoned during the last campaign, the report says.” "In fact, it appears that the DNC made a decision to operate under a 'system' that would turn a blind eye towards questionable contributions, allowing the DNC to receive large, illegal contributions without any accountability for their receipt in the event they were detected," the report states”

At this time, there was heightened rhetoric in Washington about the danger of foreign money in U.S. elections, particularly from then-Speaker of the House, Republican Newt Gingrich

"I believe that this is a growing scandal which should trouble every American at the spectacle of the most powerful nation on earth having its president pander to a foreign billionaire and raise money from people who are legally not allowed to participate in the American system," said Gingrich.

"It's a very serious problem," he said. ""If we ever lose control of this country to foreign influence peddling then we are in for some very real difficulties.

"The negative advertising that you're seeing (about Dole) which is factually false is actually being paid for by foreigners who are funneling money to the Clinton administration," Gingrich said.

BCRA

In 2002, Congress passed the Bipartisan Campaign Reform Act, which also incorporated a ban on foreign donations.

Section 303 of the BCRA makes it unlawful for a foreign national to make (A) a contribution or donation of money or other thing of value, or to make an express or implied promise to make a contribution or donation, in connection with a Federal, State, or local election; (B) a contribution or donation to a committee of a political party; or (C) an expenditure, independent expenditure, or disbursement for an electioneering communication[.] 2 U.S.C. Sec. 441e(a)(1). The provision replaces the former, similar ban in the Federal Election Campaign Act (FECA).
The existing prohibition on contributions in federal, state, or local elections by foreign nationals was clarified and expanded in BCRA. The ban now clearly applies to: · contributions and donations of money, or anything of value, in connection with US elections, · contributions and donations to committees of political parties, · donations to Presidential inaugural committees, · donations to party committee building funds, · disbursements for electioneering communications, · expenditures, including independent expenditures.

Citizens United v. Federal Election Commission

In 2010, the Supreme Court decision in Citizens United v. Federal Election Commission stated that the First Amendment does not allow the government to restrict independent political expenditures by corporations. The Supreme Court opinion mentions foreign political donations here:

“We need not reach the question whether the Government has a compelling interest in preventing foreign individuals or associations from influencing our Nation’s political process. Cf. 2 U. S. C. §441e (contribution and expenditure ban applied to “foreign national[s]”). Section 441b is not limited to corporations or associations that were created in foreign countries or funded predominately by foreign shareholders. Section 441b therefore would be overbroad even if we assumed, arguendo, that the Government has a compelling interest in limiting foreign influence over our political process. See Broadrick , 413 U. S., at 615.”

Bluman v. Federal Election Commission

In 2012, the Supreme Court’s decision in Bluman v. Federal Election Commission upheld the ban on donations by foreign nationals. The FEC explains the decision by the US District Court for the District of Columbia:

“The court granted the FEC’s Motion to Dismiss and denied the plaintiffs’ Motion for Summary Judgment. In its Memorandum Opinion, the court cited a long history of Supreme Court case law holding that foreign citizens may be excluded from certain activities that are an integral part of democratic self-government in the United States. The opinion listed several examples of activities that foreign citizens may be barred from: voting, serving as jurors, working as police or probation officers and teaching at public schools. See, e.g., Cabell v. Chavez-Salido, 454 U.S. 432 (1982); Ambach v. Norwick, 441 U.S. 68 (1979);Foley v. Connelie, 435 U.S. 291 (1978). “Under those precedents, the federal ban at issue here readily passes constitutional muster,” the court stated.”
“The court said these cases provide a straightforward precedent: “It is fundamental to the definition of our national political community that foreign citizens do not have a constitutional right to participate in, and thus may be excluded from, activities of democratic self-government.” For purposes of First Amendment analysis, the court stated the United States has a compelling interest in limiting the participation of foreign citizens in such activities, and “thereby preventing foreign influence over the U.S. political process.” The court found that political contributions and expenditures are a vital aspect of the process of American democratic self-government. The court said the ban on foreign election spending was also in line with the 2010 Supreme Court decision in Citizens United v. FEC, 130 S. Ct. 876 (2010).”

The Supreme Court did not strike down the ban on political contributions by foreign nationals. However, in the aftermath of the Citizens United decision, organizations designed to support campaigns have been reorganized. Many super PACs have parallel 501(c)(4) nonprofits, which do not have to disclose donors.

A 501(c)(4) is a social welfare organization (e.g., NRA, Sierra Club). Contributions to a (c)(4) are not tax deductible, and may be subject to a gift tax. Donors also need not be publicly disclosed under the tax law. Unlike (c)(3)s, these groups can participate in political campaign activity for candidates for public office, provided that this is not their primary activity. The IRS uses a “facts and circumstances” test to determine when a group sponsoring ads is participating in campaign activity. 501(c)(4) groups were particularly active in the 2010 election cycle, as they represented a handy way to ensure donor confidentiality while engaging in a considerable amount of independent campaign advocacy. Examples of such (c)(4)s are Crossroads GPS and American Action Network. It can also have a (c)(4) to head up its lobbying and to run election ads, provided that the latter activity is not the “primary activity.” The (c)(4) can provide cover for those donors that do not want to be publicly associated with the group’s election advocacy. - Campaign Legal Center

The Brennan Legal Center provides an analysis of this phenomenon:

Despite reporting requirements, the most recently filed disclosures still leave many questions unanswered. Restore Our Future raised $5.8 million from corporations in the last six months of 2011. Some of these corporations have easily identifiable roots, such as Jonathan W. Bullen, the national finance chairman for Romney’s 2008 campaign, who donated $100,000 through the company he owns, Slocum and Associates. Other corporations appear to be shell companies set up to shield the original donors. Glenbrook LLC, for example, donated $250,000, but its records lead to a public accounting firm by another name and a wealth management firm that denies any connection to the money.
This lack of transparency crosses party lines, despite President Obama’s denouncement ofCitizens United and the huge amount of money in politics. According to NPR, “the president does not support today's rules but realized belatedly he must play by them to give himself a competitive chance at a second term.” Priorities USA Action, the Super PAC supporting him, received its biggest donation, $1 million, from the Service Employees International Union whose members are anonymous. Its second biggest contributor ($190,000) is an affiliated nonprofit, Priorities USA, that doesn’t disclose its donors.
Priorities USA is a 501(c)(4) nonprofit, which takes advantage of provisions in the tax code that let it not disclose its donors. In this way, 501(c)(4)s can function similarly to shell corporations – passing money to Super PACs and disguising the true source of the money. For example, ProPublica reports that the nonprofit Citizens for Strength and Security donated almost $72,000 to a Democratic Super PAC by the same name, and is identified only as a PO box at a UPS store.

Thus, the lack of transparency causes heightened concerns about hidden donations by foreign nationals.

"The new reality presented by the decision in Citizens United and the rise of super PACs raises concerns about the challenge of discovering such illegal activity," said Cynthia L. Bauerly, an FEC commissioner who ran the agency last year.

An Associated Press review of donations made to major super PACs last year found no evidence so far of foreign donations. But there were repeated instances in which contributions could not be clearly traced because donors masked themselves behind vague corporate entities or because the super PACs failed to provide clear information.

A new study by U.S. PIRG and another research organization, Demos, found that 6.4 percent of super PAC donations since 2010 were "untraceable" because of vague or masked information about the sources of the money. It also found that six of the 10 largest super PACs accepted such untraceable donations – including the pro-Romney group Restore Our Future; Priorities USA Action, a committee backing Obama; American Crossroads, a major Republican super PAC; and its Democratic party rival, American Bridge 21st Century.
Many of the largest super PACs also operate nonprofit groups, which do not have to publicly disclose the identities of their own donors. Under tax rules governing charities, the nonprofits are regulated by the Internal Revenue Service, not the FEC. As long as they carefully limit their political activities, they have to disclose donors' identities only to the IRS, not the FEC or the public. - Huffington Post

Foreign Money in U.S. Elections

Dan Burton, Chair of House Investigation

House Hearing

Foreign money was funneled to straw donors. Straw donors gave money to the DNC and other campaigns. Campaign officials claimed to have no idea anything suspicious was going on. It happened time and time again with John Huang, James Riady, Charlie Trie, Pauline Kanchanalak, Ted Sioeng, Johnny Chung, and Mark Jimenez.
Some people say the American people don't care anymore, that they don't want to know the facts. Well, I don't think that is true, but the fact of the matter is we have a responsibility on this committee to get to the bottom of it, because illegal campaign contributions coming from foreign sources and foreign governments were given to influence the outcome of the elections in 1996 and 1992.
I think the American people really want to know if foreign governments and foreign individuals are trying to influence our elections. I think they want to know who their government is beholden to. I think we have an obligation to finish what we started. We have an obligation to the history books to get the facts on the record.

Washington Post

Burton deplored the fact that partisanship had come to overshadow "very serious allegations" about the 1996 presidential elections, including reports that the Chinese government "had developed and implemented a plan" to funnel money into the United States "to influence our elections."

Capitol Words

“The Attorney General ignored his compelling and sound advice. Then the investigation continued to limp along with the Attorney General failing to focus on any of the key White House and DNC officials or even John Huang, the individual who solicited millions in illegal foreign money after being personally placed at the DNC, the Democratic National Committee, by Bill Clinton.
In fact, the core of the investigation should be focused on all of the foreign money that flowed into the DNC conference from around the world. Illegal campaign contributions from Macao, China, Taiwan, Egypt, Indonesia, and South America.”

Fred Thompson, Chair of Committee on Government Affairs

PBS

I speak of allegations concerning a plan hatched during the last election cycle by the Chinese government and designed to pour illegal money into American political campaigns. The plan had a goal: to buy access and influence in furtherance of Chinese government interests.

Washington Post

On Capitol Hill, Sen. Fred D. Thompson (R-Tenn.), who denounced alleged Chinese involvement in the U.S. election but was unable to bring out direct evidence of it during hearings last year by his Senate Governmental Affairs Committee, claimed vindication in the news of Chung's charges. "The new information shows that the 'China Plan' the committee investigated last year was carried out in some form," said Thompson, who along with other senior legislators was briefed by the FBI on Chung's allegations this week.

Washington Post

"There apparently was a systematic influx of illegal money in our presidential race last year," Thompson said. "We will be wanting to know: Who knew about it? Who should have known about it? And was there an attempt to cover it up?"

Washington Post

"It is clear that there was an unprecedented and systematic effort to bring in illegal money into the Democratic National Committee, into the Clinton-Gore campaign, much of it foreign money, much of it by people who had free and ready access to the White House."

Newt Gingrich, Speaker of the House

Sun Sentinel

"What we're seeing here is the opening phase of what will turn into being the largest scandal in American history ... because it involves foreigners being directly involved in the American political system, the American government, the American criminal justice system," said House Speaker Newt Gingrich, R-Ga.

Baltimore Sun

Instead, he has focused his invective on the 1996 campaign finance scandal and what he called "the most systematic, deliberate obstruction of justice, cover-up and effort to avoid the truth we have ever seen in American history."
The attacks have been launched at partisan affairs, like Republican fund-raisers, where Gingrich can play to the party's conservative base in an election year. Yesterday, at a Republican women's conference, he spoke of "an enormous scandal" whose "ramifications are historic."

New York Times

It's unavoidable that there will be Congressional investigations; it is unavoidable that there will be a special counsel, Mr. Gingrich said. This makes Watergate look tiny. I mean, this is a potential abuse of the American system on behalf of an Indonesian billionaire in a way that we have never seen in American history. How many green-card holders have been solicited by the Clinton Administration and are funneling Asian money from China, from Korea, from Indonesia into the Democratic Party to try to buy an election? Mr. Gingrich said.

Philly.com

``This is a potential abuse of the American system on behalf of an Indonesian billionaire in a way that we have never seen in American history,said Gingrich, interviewed on Face the Nation on CBS. ``It's almost unthinkable.

The Toledo Blade

“One would prefer not not have non americans buying their way into american politics... we need to know to what extent the information we were being given by this administration was tainted with indonesian interests and tainted by the Riadys and the Lippo Group” - Gingrich

LA Times

House Republican leaders decided Wednesday to shift at least part of the troubled 16-month investigation of Democratic campaign fund-raising out of the hands of Rep. Dan Burton (R-Ind.), who has directed an inquiry beset by partisanship and personal rancor.
"We've tried to avoid having to shift this investigation," Gingrich said. "But we'll do whatever we have to to ensure that the American people have the right to know."

Houston Chronicle

"I believe that this is a growing scandal which should trouble every American at the spectacle of the most powerful nation on earth having its president pander to a foreign billionaire and raise money from people who are legally not allowed to participate in the American system," said Gingrich.
"It's a very serious problem," he said. ""If we ever lose control of this country to foreign influence peddling then we are in for some very real difficulties.
"The negative advertising that you're seeing (about Dole) which is factually false is actually being paid for by foreigners who are funneling money to the Clinton administration," Gingrich said.

New York Times

"The president has been soliciting money from foreign nationals?" Mr. Gingrich asked rhetorically on CBS-TV. "The greatest power in the world being rented to foreigners? This is a scandal that has historic implications." The Georgia Republican implied a link between donations from a wealthy Indonesian family and alleged efforts by the White House to keep a lid on the Whitewater affair. He also implied that America's China policy might have been influenced by questionable donations from abroad.
Mr. Gingrich said it was inevitable that there would be congressional investigations. He added that if it were learned that Mr. Hubbell had used the money from Mr. Lippo to pay off legal expenses linked to the Whitewater affair, "you have a scandal that truly would be unparalleled in American history."

Senator Susan Collins (R-ME)

Washington Post

"We are here today largely because of an ethical indifference which some in the Democratic National Committee and the White House displayed toward fund-raising in the 1996 presidential campaign," Sen. Susan Collins (R-Maine) urged Democrats on the panel to "go where the evidence leads."
"The White House and others under scrutiny must be more forthcoming," she added. "The president cannot credibly preach the gospel of campaign finance reform unless his aides and supporters are prepared to let the light of day shine on their activities."

Senator Olympia Snowe (R-ME)

Capitol Words

“If we do nothing, we will see a repeat--or likely an even worse scenario--of what we saw in 1996, which confirmed all the reasons why it is imperative to be strong proponents of campaign finance reform. We saw over $223.4 million in soft money raised by the two national parties--three times more than in the last Presidential election. We saw more than $150 million--we do not know the precise amount because it is not disclosed--spent on attack ads paid with unlimited funds by third-party groups that made candidates largely incidental to their own campaigns.
We saw an electorate that was, to put it bluntly, disgusted by the spectacle. And the 1996 elections were barely over when allegations were made of illegal and improper activities, centered around the issues of so-called ``soft moneyand foreign influence peddling through campaign contributions, all egregious abuses highlighted by the Senate Governmental Affairs hearings.
All of this has only served to further undermine public confidence and underscore the importance of enacting meaningful and achievable campaign finance reform this year.”

Senator James Inhofe (R-OK)

Capitol Words

“This is the same Justice Department that has botched up the investigation of the theft of information on the W-88 warhead, that has refused to appoint an independent counsel to investigate campaign fundraising illegalities, and that continues to cover up vital information in defiantly refusing to release the LaBella and Freeh memos suggesting that crimes may have been committed in the Chinagate scandal.”

Capitol Words

“FBI Director Freeh has testified that the public knows only about one percent of what the FBI knows about the Chinagate scandal. It is time for the truth to come out. It is time for the public to get some sense of the other 99 percent which is contained in the LaBella memo.”

Representative Jack Kingston (R-GA)

Capitol Words

“Actually, I am a Republican. I do not know that much about money laundering, particularly foreign money.”

Capitol Words

“Mr. Speaker, I think it is important to talk about Chinagate figure John Huang because he had a real tough job. As the president of his holding company, Hip Hing, a subsidiary of Lippo Group, he had to work many, many long hours. See, when one's only asset is a vacant parking lot, we would not believe the pressures they are under. Nevertheless he had the time to get deeply involved in Democrat politics, and when he donated $50,000, no one raised an eye about how a vacant parking lot attendant could afford such largess. Of course they did not know he was reimbursed by his parent company, the one-half Chinese Communist government owned Lippo Group, but now even Democrats admit this was an illegal donation and apparently only the tip of the egg roll.”

Representative Joe Pitts (R-PA)

Capitol Words

“Mr. Speaker, we have been hearing a lot lately about campaign finance reform. However, some of those pushing for new laws fail to mention the fact that our existing laws have been broken. It is against the law to use foreign money in election campaigns in America. It is against the law to launder money in election campaigns. It is against the law to sell access to your office or influence or even seats on a foreign trade mission to highest bidders”

Capitol Words

“We have heard some great excuses, from ``everybody does it,to ``we had to cheat. Otherwise, Republicans would have won. Maybe some of the best excuses are these two: ``Sure, I broke the law, but it is the system's fault, and we need to reform it.Then there is this one: ``I don't care if they broke the law. The Republicans are on a witch hunt. Right. I wonder if the reforms the other side has in mind will continue to consider taking foreign money as a crime.”

Senator Jon Kyl (R-AZ)

Capitol Words

“The bill attempts to tighten the restrictions on fundraising on federal property and strengthen the restriction on foreign money ban. Both of these provisions would address some of the Clinton-Gore campaign finance improprieties.”

Senator Mitch McConnell (R-KY)

Capitol Words

“First, Mr. President, I would like to submit a sampling of the opinion pieces I have authored in the past year. One is from January of this year, published by the Washington Times, in which I had a premonition that President Clinton, as his own campaign finance scandal deepened, would become campaign finance reform's No. 1 fan. Frankly, it's not that I am particularly clairvoyant, but rather that they are so predictable.
As the Clinton administration and the Democratic National Committee have sunk in a scandalous quicksand of their own making, the more they publicly thrashed around groping for a campaign finance bill as if it were a life preserver. Unfortunately for America, the President and Vice President Gore seek to save themselves from their own embarrassing malfeasance in raising money from foreigners and the other episodes which have been so much in the newspapers. They want to save themselves at the expense of core constitutional freedoms for all Americans.”

Meet the Press, 2000

SEN. McCONNELL: Well, the problem is this: Republicans are in favor of disclosure. There's a serious constitutional question, whether you can require people engaged in what's called issue advocacy to disclose. But if you're going to do that, and the Senate voted to do that, and I'm prepared to go down that road, then it needs to be meaningful disclosure, Tim. 527s are just a handful of groups. We need to have real disclosure. And so what we ought to do is broaden the disclosure to include at least labor unions and tax-exempt business associations and trial lawyers so that you include the major political players in America. Why would a little disclosure be better than a lot of disclosure?
MR. RUSSERT: Senator John McCain had this to say about your proposal. And I'll put it on the screen for you. "I'm all for expanding it, but not at the price of bipartisanship. It's a scam. They want to include labor unions and trial lawyers, but they don't want to go after the tax section that covers the National Right to Life committee." That's your good friend, John McCain.
SEN. McCONNELL: Well, my good friend John McCain's staff is also negotiating with us because he's apparently interested in this broadening proposal, but in order to catch Right to Life, you'd also have to catch the disabled American veterans, the NAACP, the AARP, and as the reformers often like to say, "Why let the perfect be the enemy of the good?" I mean, if you go into the C-3 and C-4 category, you step on an awful lot of people that I think probably are not entitled to be stepped on. Why not just include labor and business and trial lawyers and broaden it to the real players in American politics?

Orrin Hatch (R-UT)

Capitol Words

“Indeed, the legacy of the administration may prove to be that its most significant exploits--infamous or otherwise--were accomplished by warping the law for blatant political purposes. Here are just a few of the most notorious examples: Attorney General Reno both misapplied and ignored the Independent Counsel Act in order to prevent the appointment of an independent counsel in the campaign finance investigation; the 1996 election fundraising scandal where soft money prohibitions were ignored and foreign donations were illegally and eagerly accepted”

Washington Post

The Ickes investigation "should be followed by a broad-based request for an independent counsel to investigate the entirety of the Democratic campaign finance scandal."

Senator Larry Craig (ID)

Capitol Words

“Mr. President, Cable News Network announced this week that it would provide live television coverage of the Senate Governmental Affairs Committee hearings on campaign finance activities. But, Mr. President, their decision was based only on the fact that former Republican National Committee chairman, Haley Barbour, is scheduled to testify.
CNN has been suspiciously absent in its live coverage of the hearings, only allowing its viewers to see the opening statements of the chairman and the ranking member during the past 2 weeks of the hearings… And furthermore, the campaign finance hearings have uncovered much more serious charges and allegations. They include: Espionage, foreign influence peddling, campaign corruption and even money laundering. Just look at this summary by the staff of the Governmental Affairs Committee on what has been revealed so far during 2 weeks of hearings.”

Senator Roger Wicker (MS)

Capitol Words

“If you are not a United States citizen, or a United States national, you should not be able to influence the electoral process. It is wrong and dangerous to allow a potential to exist for undue foreign influence in electing Federal officials. That is what the debate on this amendment is about, undue foreign influence in our election process.
The American people have witnessed in the last two Clinton-Gore campaigns a breathtaking willingness to solicit money from non-citizens. We have all seen the video of Vice President Gore soliciting money from Buddhist monks who had taken a vow of poverty.
The Bereuter-Wicker amendment would address this problem by removing any ambiguity in the law, ambiguities which today allow foreign money to be funneled through U.S. addresses.”

Senator Rob Portman (OH)

Capitol Words

“However, while the Shays-Meehan bill makes some needed changes, it fails to go far enough in addressing what I believe are real problems with our current campaign finance system. Shays-Meehan fails to address the underlying problems of special interest influence, foreign influence and built-in incumbent advantages that plague our current system. Moreover, soft money provision, while well-intentioned, raise serious Constitutional concerns. Most seriously, the bill does nothing to address the problem posed by special interest PACs, which contribute overwhelmingly to incumbents and discourage individuals from getting involved in the political process.
During the last Congress, I introduced campaign finance legislation containing limitations and increased disclosure for soft money, and other key provisions that go further than the Shays-Meehan bill. Among other features, the Restoring Trust in Government Act would have: banned the activities of special interest Political Action Committees (PACs); required 60% of campaign funds to be raided within a House candidate's district or a Senate candidate's state; clearly prohibited contributions by non-citizens; limited the ``bundlingof campaign contributions; and completely banned taxpayer-financed unsolicited mass mailings by Members of Congress.
I believe these are all common sense changes that deserve consideration in the context of campaign finance reform.”

Bob Dole

Citation: Lewis, C & The Center for Public Integrity. (2000). The Buying of the President 2000. Washington, DC: The Center for Public Integrity.

"PACs give to incumbents, and that is me and the other incumbents in this chamber, because access to an officeholder is more important than a Member [of Congress]'s party, ideology, or even voting record on the issues." (p. 271)

FEC Cases Involving Foreign Money

Between the election years of 1992 and 2010, there were 41 Federal Election Commission enforcement cases that involved the issue of “foreign nationals” contributing to American elections. Many of these 41 cases include violations of multiple election laws by multiple respondents, and are only a fraction of total FEC enforcement cases. However, the cases listed below are unique in that the FEC investigated alleged foreign involvement in an American campaign.

For example, Mr. Jack Templeton was one of the respondents in case MUR 5831 against Softer Voices, a Section 527 organization involved in the 2006 Senate race between Rick Santorum and Bob Casey. Templeton, allegedly a citizen of the Bahamas, made a $630,000 political contribution to Softer Voices. However, the case was dismissed because the complainant mistook Jack Templeton, a rightful citizen of Pennsylvania, for his father, John Templeton, a citizen of the Bahamas. Thus, Jack Templeton’s donation did not in fact break any FEC laws.

In 2008, the FEC investigated allegations that “Hillary Clinton for President” had illegally accepted political contributions from a foreign national when Sir Elton John performed a concert on behalf of the organization. Although the complainant argued that the concert violated federal election law because the concert raised money for Clinton supporters, the FEC found that Elton John’s performance constitutes “volunteer action” and thus does not violate FEC laws against contributions by foreign nationals. Thus, the case was dismissed.

The following is a list of the FEC cases, the year that the violation occurred, and the outcome of the case.

Case/Committee Name Election Year Outcome of the Case
Cannon for Congress 2004 Settlement/Dismissed
Michael Kojima 1999 Dismissed
Schenectady County Democratic Committee 2008 $3,500 Fine
Republican National Committee 1994 Dismissed, Reason to Believe/No Further Action
DNC Services Corp./Democratic National Committee 1992, 1994, 1996 $704 Fine, $750 Fine, Conciliation Agreement
Invista 2006, 2008, 2010 $4,700 Fine, Conciliation
Democratic National Committee 1992, 1994, 1996 Conciliation Agreement
John Huang 1992, 1994, 1996 $2,000 Fine, Conciliation Agreement, Dismissed
Embassy of India and D. Singh 1994 Probably Cause/No Further Action
Friends for Fasi 1994, 1996 $75,000 Fine, Conciliation, Reason to Believe/No Further Action
DNC Services Corp./Democratic National Committee 1992, 1994, 1996 Conciliation
Sam Gejdenson for Congress 1996 No Reason to Believe, Reason to Believe/No Further Action
Cantu Construction Incorporated No Reason to Believe
Nick Smith for Congress Committee 1998 Dismissed
Howard Glicken 1998 $10,000 Fine, Conciliation
Wiebe, Jorg 1998 No Reason to Believe
Future Tech International 1994 $209,000 Fine, Conciliation, Reason to Believe/No Further Action
The India Network Foundation 2000 Dismissed
DNC Services Corp./Democratic National Committee 1992, 1994, 1996 $17,750 Fine, Conciliation, Reason to Believe/No Further Action
Mark Jimenez 1994 Dismissed
Ted Sioeng 1996 Probable Cause/No Further Action, Reason to Believe/No Further Action
Jose Casal 2000 $8,250 Fine, Conciliation
Hynes for Senate 2004 Dismissed, No Reason to Believe, Reason to Believe/No Further Action
Fan_the_Vote 2004 Dismissed
Hastert for Congress 2000 No Reason to Believe
Leopoldo Fernando Pujals 2004, 2006 No Reason to Believe
Softer Voices 2006 Dismissed, No Reason to Believe, Reason to Believe/No Further Action
Hillary Clinton for President 2008 No Reason to Believe
Hillary Clinton for President 2008 No Reason to Believe
Hillary Clinton for President 2008 No Reason to Believe
John McCain 2008, Inc. 2008 No Reason to Believe
Clarion Fund, Inc. 2008 No Reason to Believe
Transurban USA 2004, 2006, 2008 $33,000 Fine
Rep. Sam Page 2008 No Reason to Believe
American Resort Development Association Resort Owners Coalition PAC (ARDA-ROC PAC) 2002, 2004 $300,000 Fine, Conciliation
Skyway Concession Company, LLC 2008 $4,000 Fine, Conciliation
Itinere North America, LLC 2008 $10,000 Fine, Conciliation
Friends of Nancy Navarro 2008 Dismissed
Transcanada Keystone Pipeline GP, LLC 2010 No Reason to Believe
Transcanada Keystone Pipeline GP, LLC, Et al 2010 No Reason to Believe
Eddie Izzard, Et al 2008, 2010 No Reason to Believe


TERMS:

Probable Cause/NFA: In some cases the Commission may find probable cause that a violation has occurred or is about to occur and decide to take no further action.

RTB/NFA -- Reason-to-Believe/No Further Action: While the Commission may find reason to believe that a violation has occurred or is about to occur, it may nevertheless decide to exercise its prosecutorial discretion to take no further action.

Post Citizens United

Wait... Can Foreign Companies Now Spend On U.S. Political Elections - Paul Blumenthal 1/22/2010

Toolbox