FEC Commissioner Ann Ravel has proposed banning political contributions by domestic subsidiaries of foreign corporations. This would overturn an advisory opinion produced in 2006 which has been the foundation for subsequent actions by the FEC. Ravel argues that since the Citizens United v. FEC decision has greatly expanded the opportunities for corporate spending in American elections, the FEC needs to revisit its treatment of the political involvement of the subsidiaries of foreign firms.

Foreign nationals are expressly forbidden from spending any money in American elections. Ravel noted that Justice John Paul Stevens’ dissent in Citizens United pointed out that corporations, unlike individuals, can be foreign-controlled. She cited a recent article in The Intercept that found a domestic subsidiary of a Chinese firm (which is entirely controlled by a married couple) contributed $1 million to a super PAC supporting Jeb Bush. Ravel also noted cases where a foreign national funneled money through “sham” American corporations in order to spend money on American elections.  

The Intercept article showed that American Pacific International Capital (APIC), a California corporation owned by two Chinese nationals, contributed $1.3 million to Right to Rise, a super PAC supporting Jeb Bush’s presidential aspirations. The article included a memo from Republican lawyer Charles Spies that drew upon the 2006 advisory opinion to argue that domestic subsidiaries of foreign corporations could make campaign contributions, as long as they do not use money generated outside the United States, or allow foreign nationals to play any role in the decision-making process.

The FEC held a hearing in June to discuss the possibility of foreign funds entering American elections through corporate spending. At the time, the conversation focused on the possibility of American firms with significant foreign ownership making independent expenditures or contributing to politically active nonprofits. But the APIC case involves a wholly owned subsidiary engaging in this activity — the hypothetical has become a reality.

It’s unlikely that Ravel’s proposal will move with the ongoing deadlock at the commission, but it shows that a long-discussed scenario has actually occurred, and that attention is growing to one of the legacies of Citizens United. The APIC case points out that while “corporations are people, my friend,” (to quote Mitt Romney) not all of those people are legally permitted to participate in U.S. elections. And we are reminded that corporations remain different from human beings in some fundamental ways.