Foreign money could be flowing into U.S. elections — will the FEC act?

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(Photo credit: Tracy O/Flickr; altered by Sunlight)
The Campaign Legal Center (CLC) filed a complaint this week with the Federal Election Commission (FEC) over a report by The Telegraph (U.K.) showing members of a pro-Donald Trump super PAC, Great America PAC, instructing a Chinese businessman on how he could move money into the U.S. election in clear violation of federal law.

In a press release, CLC general counsel Larry Noble said:

After viewing the recordings, it is clear Mr. Benton and Mr. Beach were soliciting an illegal contribution and explaining how to launder the foreign money to the super PAC to avoid detection,” said Noble. “While no money changed hands, the solicitation of the money itself is illegal and the FEC must investigate.”

CLC previously has filed complaints about the Trump campaign soliciting donations through emails to foreign nationals.

While many parts of U.S. election law are up for interpretation, this area is decidedly clear. Congress has passed legislation explicitly stating it, and the Supreme Court has upheld this law.

But it will be interesting to watch this complaint move through the FEC as the Citizens United decision has made the foreign nationals provision of the law murkier to enforce. The landmark ruling said corporations had the same right to “speech” in an election as an individual. That ruling left a looming question: In our global society, when is a company considered a foreign national and when is it a U.S. citizen?

The current FEC framework gives no indication about how to make that determination. The agency did broach the subject a few years back, but never reached a conclusion. Just this year, Commissioner Ellen Weintraub asked the FEC to revisit rulemaking on this issue; while it didn’t move forward with the rulemaking, the agency did allow Weintraub to assemble a forum to discuss the issue this past summer.

Weintraub asked the Sunlight Foundation to participate in a panel discussing this issue. We pointed out, though it hadn’t happened yet, how easy it would be for a foreign interest to put money into a U.S. election. The Panama Papers showed that organizations regularly use LLCs to move money in secret, so there should be no question that foreign interests could do the same in an election.

A foreign interest could form an LLC and either: Donate to a 501(c)4, a group that doesn’t have to disclose its donors; or, if the LLC was formed in Delaware or another place which doesn’t have to disclose beneficial owners, it could donate directly to a super PAC.

In recent weeks, the Republican members of the FEC have seemed willing to start discussing this issue. We’ll be watching to see if this “caught on camera” moment will motivate the commission to come to some sort of agreement about this issue.