CHINESE STATE-OWNED CHEMICAL FIRM JOINS DARK MONEY GROUP POURING CASH INTO U.S. ELECTIONS
The 2010 Supreme Court Citizens United ruling and related decisions made it possible for corporate trade associations like the ACC — known as nonprofit 501(6) corporations — to spend as much as they want directly advocating for or against candidates for office “so long as that is not its primary activity,” the IRS says.
This in turn made such organizations an ideal conduit for foreign money to influence U.S. races.
It is formally illegal for foreign nationals — which includes foreign individuals, corporations, and governments — to spend any money attempting to influence U.S. elections.
Therefore, any contributions the ACC accepts from a foreign corporation like Wanhua must theoretically go to an account separate from that which the ACC uses for political spending. But whether this actually happens is extremely difficult for the public to find out, and even if the ACC is following the law, it would be essentially irrelevant.
“I’m sure ACC will claim that any foreign funds it receives will be segregated from the money used for elections, but how will we know?” asks Brendan Fischer, a campaign finance counsel with the Campaign Legal Center, which advocates for stricter enforcement of campaign finance law. “And in any case, money is fungible, so the influx of Wanhua funds could free up other ACC resources for political activity.”
“This is one of those situations where the scandal is what is legal,” continued Fisher. “The FEC will almost certainly accept ACC’s claim that it does not use foreign money to funds its ads, and because the FEC also allows dark money nonprofits like ACC to ignore disclosure requirements, neither the FEC nor the public will have any way of proving otherwise.”
Secondly, and even more strangely, even a wholly owned subsidiary of a foreign company is considered American if incorporated in the U.S. — and therefore, can legally spend as much as it wants on American elections as long as it follows complicated, difficult-to-enforce regulations. “Even if Wanhua Chemical directly funded political ads,” says Fisher, “it could probably get away with it if the money came from its U.S. operations and was formally directed by U.S. citizens.”
The ACC is by no means the only trade association to take advantage of Citizens United: After the decision came down, a number of organizations in the U.S. with foreign-owned members began spending corporate money on elections. The U.S. Chamber of Commerce, another 501(6) with foreign corporate members, now routinely spends directly on congressional elections. Trade associations are in some ways the perfect vehicles for foreign money: Not only do they not have to disclose donors, most already maintain sophisticated lobbying operations, so that campaign cash is targeted in a way with the most political impact.
The American Petroleum Institute is another trade group with foreign members that spend big on U.S. elections. Wanhua appears to be the second partially state-owned corporation paying dues to ACC. SABIC, the majority state-owned Saudi chemical company, is also a dues-paying member.