Sep. 14, 2016

Public Citizen to FEC: Close Loophole to Curb Foreign Campaign Spending

FEC Commissioner Proposes to Close Loophole That Allows Foreign Money in U.S. Elections

WASHINGTON, D.C. – The Federal Election Commission (FEC) should close a loophole of its own making that has allowed foreign money in U.S. elections, Public Citizen told the agency today.

The agency will consider on Thursday whether to rescind Advisory Opinion 2006-15, which permits subsidiaries of wholly foreign-owned corporations to make campaign contributions and expenditures.

Even though federal law expressly prohibits foreign money in U.S. elections, it is nonetheless seeping into the process. For instance, the head of Jeb Bush’s super PAC laid out a road map in a 2015 memorandum detailing how foreign companies can make unlimited donations to super PACs through their subsidiaries. One month later, a Chinese-owned company did precisely that – making a $1.3 million contribution to Bush’s Right to Rise PAC.

“When the Citizens United decision opened the floodgates of unlimited corporate spending in elections, the FEC advisory opinion allowing subsidiaries of foreign companies to make campaign contributions and expenditures was transformed from a nuisance into a gaping loophole in the law that would otherwise ban foreign money in U.S. elections,” said Craig Holman, government affairs lobbyist for Public Citizen’s Congress Watch division. “What used to be a trickle of foreign campaign money has now turned into millions of dollars.”

The advisory opinion places some constraints on campaign spending by subsidiaries of foreign companies. The money must come from U.S. sources, and the spending decisions must be directed by American citizens of the companies.

“The obvious problem in these guidelines is that they ignore the reality of how corporate decisions are made,” said Lisa Gilbert, director of Public Citizen’s Congress Watch division. “Lower managers are not likely to make any decisions on spending company money without the tacit, if not explicit, approval or direction of the foreign owners.”

Public Citizen also is encouraging citizens from around the nation to submit comments to the FEC asking the agency to close the foreign money loophole and rescind Advisory Opinion 2006-15.

Read Public Citizen’s comment to the FEC on the foreign campaign money problem.