Old Tricks Never Die (Or Even Fade Away)


There’s a story in today’s New York Times about insurance giant AIG deftly avoiding New York state’s contribution limits by bundling their gifts to favored politicians through a network of little-known subsidiaries. The story brought back a flood of old memories for me; bundling through subsidiaries was one of the first tricks of the campaign finance game that I first observed in Alaska when I started tracking money in politics more than 20 years ago.

Here’s how it worked for AIG. New York State allows corporate contributions of up to $5,000. So back in 2003, when AIG wanted to give big money to Gov. George Pataki, for example, they wrote 18 checks on the same bank account – with consecutive check numbers – all listing different AIG subsidiaries as the donor. Grand total: $90,000 to the governor. (Click the attachment below for a chart showing the details.)

The Times found more bundles to other politicians using the same technique, which is not explicitly outlawed in New York. As Times reporter Mike McIntire explained:

Often, the subsidiaries’ identities give no hint of their affiliation with A.I.G., making it difficult to determine the extent of A.I.G.’s giving. For example, 10 companies — with names like Green Hills Corporation and Yosemite Insurance — gave $5,000 checks to Mr. Spitzer’s campaign on a single day in December 2003. The only clues that the checks came from a common source were that they all had sequential numbers and bore an address of 70 Pine Street in Manhattan, A.I.G.’s headquarters.

(The company’s contributions to Spitzer abruptly ended when, as state attorney general, he began investigating AIG and other insurance firms in 2004.)

Back in 1985, I stumbled into precisely the same technique used in Alaska. I found that one by noticing clusters of contributions from the same companies – obscure names I’d never heard of before – that started showing up in the campaign coffers of different Democratic candidates for the state house and senate. Sometimes four companies showed up on a candidate’s report, sometimes eight or more. All gave the same amount on the same day – usually $250 each.

Eventually I picked up on what was going on the same way the Times did – by noticing the pattern, the addresses and the check numbers. (Alaska, like New York, requires that the check numbers for contributions be reported.)

All the money, it turned out, was coming from two Anchorage men whose main business was supermarkets and real estate. When the news came out, the state of Alaska changed the law and prohibited gifts from subsidiaries to avoid this very thing in the future.

New York has no such provision, and it appears that what AIG did may have been technically legal, even though it makes a mockery of the state’s $5,000 contribution limit.

And that’s what makes this story so noteworthy. Technically legal techniques that make a mockery of the contribution limits have been around as long as campaign finance laws themselves. This particular one – subsidiary bundling – isn’t found at the federal level since corporate contributions are illegal. But in states that allow corporate money in political campaigns, the practice seems to be alive and well – and just as tough to uncover today as it was in Alaska 21 years ago.