Election Agency Mulls Options to Curb Foreign Political Money, Punts Until Summer

During its meeting on April 14, the six commissioners of the Federal Election Commission were supposed to hear a motion for proposed rulemaking from Commissioner Ellen Weintraub concerning foreign corporations putting money into US elections — but the agency pushed it off, leaving the matter unresolved for now.

At the meeting, Weintraub announced that Chairman Matthew Petersen suggested that she hold a forum with academic and legal scholars to discuss and educate people about this potentially dangerous loophole in US election law.

“I think this is a good step forward, and I think it is about time that we had discussions on this topic,” Weintraub said to the FEC.

Federal law is pretty clear that foreign nationals may not donate to a political campaign. However, the Supreme Court’s decision on Citizens United may have opened up unconventional avenues for foreign nationals to funnel money into the political process.

How would a foreign national do that? There are a few possibilities. The Citizens United decision established that corporations have rights comparable to individuals when it comes to outside spending in an election, allowing companies to exercise free speech through uncapped independent expenditures. In theory, foreign-based and foreign-controlled organizations could legally make these disbursements under the name of a shell corporation based in the US.

Or, in the dark money world we live in right now, a foreign national potentially could set up an LLC just to give to a political campaign. (It’s particularly easy to do that in Delaware.) Even a foreign government could take this route — considering that there are places, like China, where corporations are partially owned by their government.

Some commissioners feel there needs to be more guidance to prevent that from happening.

Weintraub wrote a an op-ed for The New York Times about the issue earlier this month. The proposal on the agenda for the April 14 meeting would open rulemaking so that the commission could have more specific guidelines about how to regulate foreign corporations. Commissioner Steven Walther also placed a recommendation on the agenda to reexamine draft rules which were made immediately following the Citizens United decision. Those drafts ranged in recommendations from only allowing companies with less than 20 percent foreign ownership to those with 50 percent foreign ownership and where a majority of board members were not foreign nationals.

Weintraub announced that they hope to assemble a forum on June 23. But the big question still remains: Will the FEC act after this forum, or will this move suffer the fate of another deadlocked vote that has become all too common?