Foreigners Avoid Restrictions on U.S. Campaign Donations by Donating Through Trade Associations

September 4, 2012

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Source: All Gov.

The United States, like most countries in the world, bans political campaign donations by non-citizens. Since the Supreme Court case of Citizens United v. FEC, however, foreigners—including even foreign governments—have been able to evade the law by donating to trade associations. Unlike other campaign committees, including labor unions and Super PACs, which must disclose the names of their contributors on a monthly or quarterly basis, trade associations face no such rules, and thus are able to influence elections using corporate and foreign money. As a result, in 2010, trade associations and related issue-advocacy groups outspent Super PACs $141 million to $65 million, according to the Center for Public Integrity and the Center for Responsive Politics.

The recent political activities of the American Petroleum Institute (API) are illustrative. API has roughly 400 oil and gas company members, but a small group of executives on its board of directors make all the real decisions, including regarding political campaigns. Among the leading members of the API is Saudi Refining Inc., the wholly-owned U.S. subsidiary of Saudi Aramco, the giant oil company owned by the government of Saudi Arabia. Aramco’s CEO, Saudi citizen Tofiq Al-Gabsani, sits on API’s board, where he helps make decisions about spending on U.S. elections.

Because he is a foreign national, federal law prohibits Al-Gabsani, who is also a registered lobbyist for the Saudi government, from leading a PAC, but nothing stops him from heading a trade group that makes campaign expenditures just like a PAC. On issues like global warming, the Keystone XL pipeline, drilling in environmentally sensitive areas, government subsidies for oil companies and a host of others, the Saudi government—one of the most regressive and least democratic in the world—is able to influence U.S. elections and U.S. policies, without ever having to acknowledge doing so.

Similarly, the US Chamber of Commerce, like many large trade associations, is international in scope and has many foreign business members. Although the Chamber claims that money received from foreign source is segregated from domestic money, there is no way of knowing if that is true, because there’s no way to audit foreign corporate spending when it occurs through trade associations. “Precisely because there is no disclosure by these groups, there is no way to monitor what they’re doing,” Trevor Potter, a former FEC chairman, told The Nation.

This lack of transparency makes a mockery of Super PAC disclosure rules. “Prior to Citizens United, all federal election money could be traced back to an individual who expended it or contributed to a political committee,” said Karl Sandstrom, a former FEC commissioner now with the law firm Perkins Cole. “Once you enable artificial entities to contribute, money is no longer traceable back to identifiable individuals.” That includes foreign individuals, foreign corporations and foreign governments, all of which are spending millions to influence the 2012 elections.

-Matt Bewig

To Learn More:

Never Mind Super PACs: How Big Business Is Buying the Election (by Lee Fang, The Nation)

Petroleum Industry Claims Cutting Its Tax Breaks is “Discriminatory” (by Noel Brinkerhoff and David Wallechinsky, AllGov)