Last Friday, Commissioner Ellen Weintraub of the Federal Election Commission (FEC) announced a new proposal to launch rulemaking to keep foreign money out of U.S. politics. In her memorandum, Weintraub argues that current rules do not do enough to ensure that foreign-owned corporations, or their American subsidiaries, cannot illegally participate in U.S. elections by funding independent expenditures, through groups like super PACs.
Both legal precedent and court decisions state that foreign corporations and individuals have no right to participate in U.S. elections. Congress has repeatedly forbidden those entities from spending on American campaigns.
Weintraub notes that previous attempts to write such a rule have faced deadlock on the six-member FEC. She published a New York Times op-ed that the Supreme Court’s Citizens United decision only protects corporate spending in elections insofar as companies are “associations of citizens.” But Weintraub notes that some shareholders are foreign nationals or government contractors, who are not allowed to spend in federal elections.
In June, she presided over an FEC forum to discuss how foreign money could affect U.S. elections through corporate spending. Sunlight’s Melissa Yeager was one of the panelists and cited deep concerns around how little we know about some limited liability companies (LLCs), especially those registered in states like Delaware where there is little required disclosure of such companies. In addition, LLCs have the ability to move unaccountable dark money into super PACs, which can then spend money to influence our elections. For example, a recent Intercept article showed that an American firm controlled by a Chinese couple contributed $1.3 million to a super PAC supporting the presidential candidacy of Jeb Bush. This forum discussed a variety of ideas for preventing such illegal participation by companies under foreign control.
Weintraub suggested that these proposals could form the basis for a rulemaking. These suggestions included:
- Requiring corporations to show that the share of their foreign ownership is less than 20 percent (or potentially some other threshold)
- Establishing rules to distinguish between publicly traded corporations, private corporations, nonprofit corporations and LLCs
- Considering whether U.S. corporations that re-incorporate in other countries to avoid U.S. taxes should retain the ability to spend in U.S. elections
- Tying enhanced disclosure of dark money to requirements that certifications be made that no foreign money has spent on U.S. political activity.
The Sunlight Foundation has long been concerned about the problem of foreign money in elections. Though the FEC’s recent rulemaking record is mixed, it is clear that more robust and specific rules governing how LLCs are allowed to participate in our election is a good step.