Tuesday, October 21, 2008


Plea for Help of the Day: Foreign contributors

The Russian mission to the UN in New York says it has turned down a request from John McCain to help fund his presidential campaign. —BBC reporting in "Russians reject McCain cash plea"

A computer glitch, they say.

9:32 — Meanwhile over in Britain, financier Nathan Rothschild has alleged that two leaders of the Conservative Party tried to solicit a donation of 50,000 pounds from Russia's richest billionaire Oleg Deripaska while aboard his yacht.

Mr. Deripaska is currently banned from entering the U.S. because of alleged ties to the Russian mafia. He is however allowed to float off the Greek island of Corfu, to which British Conservatives flock like swallows in the summer.

As in the U.S., contributions by foreigners to British political parties are illegal. So it is alleged that the would-be Chancellor of the Exchequer (the equivalent of our Secretary of the Treasury) and the party's chief executive made the suggestion that Mr. Deripaska might hide the contribution through his British company Leyland Daf. That too would be illegal but far less detectable.

Accusations and counter-accusations are being hurled in the British press. And I would be the last to want to contribute to the sliming of names among British Conservatives.

What interests me is the issue of campaign donations from corporations owned or partly owned by foreigners and by non-citizen employees of the corporation.

Corporations organize their contributions through political-action committees ("PACs"), which are normally devoted either to state or federal politics. So a corporation might organize a federal PAC and various state PACs.

According to "A Guide to New York Political Action Committees,"

... a PAC cannot knowingly solicit or accept contributions from a foreign national1 in connection with any federal, state, or local election. Under the FEC regulations, a foreign national cannot direct, control, or participate in the decision making process of any person, such as a corporation, labor organization, or political committee, regarding such person’s federal or nonfederal election-related activities.

As the British so helpfully demonstrate from time to time, I cannot think of a law that is harder to enforce, with the possible exception of the American drug laws. Indeed, although the direct contribution of a U.S. corporation to a PAC is limited, it would be hard to argue that a contribution of whatever size does not constitute a foreign intrusion into American elections if that corporation has foreign investors—and even more so if the corporation has essentially foreign ownership.

Since the U.S. Treasury has been urging banks and businesses to look for other sources of capital, which is mainly to be found abroad, the influence of foreign money in American elections promises to be harder and harder to control.

But is it really a problem? I propose a simple test: Let's ban all corporate donations to both candidates and to PACs—and while we're at it, the legal construct of the "corporate citizen." If this affects the level of foreign investment, we'll know it was a problem.



1You may be surprised to learn that—

A foreign national is defined as a foreign principal under 22 U.S.C. §611(b), or an individual who is not a citizen of the United States and who is not lawfully admitted for permanent residence.

In other words, permanent residents—otherwise known as "green card" holders—are free to use their money to attempt to influence elections. [back]

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