After the Federal Election Commission hit the Jeb Bush-affiliated Right to Rise super PAC with a record fine for illegally soliciting donations from foreign donors, focus has shifted to how many foreign-owned companies actually participate in American elections. The answer? Quite a few.
Foreign-based corporations or U.S. subsidiaries of foreign-based corporations have contributed millions of dollars to super PACs and hybrid PACs following Citizens United v. FEC, the 2010 Supreme Court ruling that opened up federal elections to direct corporate contributions.
Foreign nationals are barred from contributing to federal committees. However, a foreign corporation’s U.S. subsidiary is allowed to contribute to outside spending groups such as super PACs as long as no foreign national directs the contribution.
London-based British American Tobacco acquired Reynolds American, Inc. in July 2017 after owning a major stake in the U.S. company since 2004. Following the transaction, RAI ramped up its political giving, doling out $1.2 million to super PACs, more than any other domestic subsidiary in the 2018 cycle.
The company gave $600,000 to the Congressional Leadership Fund (CLF) and $450,000 to Senate Leadership Fund (SLF) in 2018. The GOP leadership-linked super PACs were among the top spenders in 2018 and were also particularly popular among foreign-owned corporations.
EnCana Oil & Gas USA, a subsidiary of Canadian company Encana, gave $200,000 to CLF and $100,000 to SLF in 2018. Jackson National Life Insurance, owned by British company Prudential PLC, contributed $100,000 to SLF and $25,000 to the “dark money”-supported Tennesseans for a Better Tomorrow.
Jane Seccombe, RAI director of communications, said RAI companies “have established internal policies and procedures to ensure that all political contributions are made in accordance with applicable laws and regulations.”
Like many large corporations, RAI and EnCana have public policies in place regarding their political contributions explaining that they comply with campaign finance laws. However, EnCana’s policy also notes that all political contributions of the company and its subsidiaries are reviewed by “any one of Encana’s Executive Vice-Presidents,” several of whom are Canadian citizens. EnCana did not respond to a request for comment on how the policy interacts with campaign finance laws that prohibit foreign nationals and foreign parent corporations from participating in any decision to make contributions in connection with a federal election.
Multinational corporations often employ diverse leadership — consisting of Americans and foreign nationals from a variety of countries — making it difficult in most cases to discern whether “foreign influence” is being exerted in the decision to invest in U.S. elections.
Beermakers Anheuser-Busch and MillerCoors — both of which are owned by foreign companies and respectively contributed $50,000 and $25,000 to CLF in 2018 — are run by a mix of American citizens and noncitizens alike.
FEC Chair Ellen Weintraub, a Democrat, has made attempts in the past to explore changes to rules regarding foreign-owned companies. She told the Center for Responsive Politics she believes foreign actors likely have influence over U.S.-based subsidiaries, whether it’s direct or indirect.
“The people who run the domestic subsidiary are naturally going to be very sensitive to the foreign owners … it’s their job to be responsive to their concerns,” Weintraub said. “We need to look more broadly about how owners control domestic subsidiaries and take a much harder look at who’s really calling the shots.”
As the FEC remains locked in a stalemate over how to regulate these contributions, dozens of foreign-owned corporations continue to give to outside spending groups that spend to influence U.S. elections.
Subsidiaries of The Stars Group, a Canadian online gambling company, contributed $150,000 to a mix of liberal and conservative super PACs. They sent $50,000 to the CLF, $50,000 to the liberal Our Atlantic City and $50,000 to pro-Patrick Morrisey super PAC 35th Inc. Another gaming company, International Game Technology — a maker of slot machines owned by the Italian De Agostini holding company — contributed $25,000 to CLF.
TV Azteca, a Spanish language media organization owned by Mexican conglomerate Grupo Salinas, contributed $30,000 to the liberal Latino Victory Fund. Syngenta Corporation, a subsidiary of a Swiss-based agrochemical corporation, contributed $15,000 to the conservative farming-oriented AG America hybrid PAC in 2018.
Potential Foreign Influence Extends to the State Level
Political nonprofits that file under section 527 of the Internal Revenue Code — known simply as 527s— are not barred from taking foreign contributions, from individuals or corporations. Though they cannot coordinate with or give to federal candidates, they spent heavily in state-level elections.
The Republican Governors Association (RGA) and Democratic Governors Association (DGA) are two of the largest and most influential 527s. Funded primarily by corporations and special interest groups, both groups took in countless contributions from foreign corporations in 2018 which they then used to influence gubernatorial races.
Both governors associations received $450,000 from British and Swedish pharmaceutical company AstraZeneca Pharmaceuticals during the 2018 election cycle, one of many contributions from foreign-based pharmaceutical companies. Sanofi, Otsuka Pharmaceutical, Horizon Pharma, Sunovion and Novartis also gave significant sums to one or both of the organizations.
T-Mobile, owned by German telecommunications company Deutsche Telekom AG, gave $55,000 to DGA and $50,900 to RGA. Siemens, Toyota, Nissan, RAI, Anheuser-Busch and Deloitte also show up as donors to one or both of the groups, among other foreign corporations.
The two associations funnel millions of dollars to groups that back gubernatorial candidates. In 2017, the Wall Street Journal reported that corporations donate to the DGA and RGA and earmark it toward a specific candidate in hopes of receiving favors later on.
Though they are funded by donations strictly from American employees, company PACs are another avenue with which foreign-owned corporations can show their support for federal candidates. PACs connected to foreign corporations contributed nearly $21.7 million to federal candidates in 2018, $13 million of which went to Republicans.
The PAC for Swiss investment bank UBS, which employs tens of thousands in the U.S., was by far the biggest spender in this group. The PAC shelled out $1.4 million to federal candidates, split nearly equally between Republicans and Democrats.
Toyota Motor North America, another major U.S. employer, gave $889,999, the second most of any foreign-owned company.
Weintraub said contributions from PACs of foreign companies are a “red herring issue” that distracts from real challenges of foreign influence.
“I don’t have a problem with that at all — those are American citizens and that is their money that they’re using,” she said. “But when you’re talking about corporate money to these super PACs that can accept unlimited contributions I think we really need to be asking hard questions about who is making the decisions and whose interests are being served by those donations.”
FEC Stalemates Likely to Continue
Weintraub said she has not decided whether she will reintroduce rule changes regarding foreign corporation contributions. That’s because she and former Democratic commissioners have previously introduced several measures on the issue but the commission has always remained gridlocked due to Republican objections.
In 2016, Democratic commissioner Ann Ravel proposed barring domestic subsidiaries of foreign corporations from making contributions in connection with federal state and local elections. Republican Commissioner Lee Goodman introduced a proposal that would require super PACs and other groups to confirm that they are not taking money from foreign national sources. The commission appeared to be at least somewhat close to an agreement in 2016 — before it all fell apart.
Weintraub said she worries foreign nationals are influencing corporate contributions, but under current rules the commission has no tools to stop any sort of influence from foreign nationals, and violations are notoriously hard to prove.
The FEC recently levied a massive fine against Right to Rise and a Chinese-owned company after it found that foreign nationals directed the company to give the super PAC $1.3 million. The case was relatively easy for the FEC, as the agency had substantial evidence that all parties involved knew where the contributions were coming from.
“We won’t always have that,” Weintraub said. “My concern is that there’s probably a lot more stuff like that out there and if we don’t have a smoking gun, it’s not clear we’ll be able to do anything about it.”