New Foreign Money Bill Introduced in Congress Aims to Maintain Integrity of Our Elections

foreign money.

Our nation prohibits foreign nationals from directly or indirectly spending money to influence elections at the federal, state and local levels. But while that may be the letter of the law, the reality is, it’s become even easier for foreign money to creep into U.S. elections.

Here’s why:  In 2010, the prohibition against corporations – including nonprofits – from using their treasury funds to engage in campaign activities was found unconstitutional. As a result, a growing number of 501(c) organizations are engaging in activities aimed at influencing the outcome of elections. Given the way the Federal Election Commission (FEC) enforces the disclosure laws, these nonprofits are not being required to disclose their donors.  Nor are they required to separate their foreign funds from the domestic funds used on permissible campaign activities. The result is that it is almost impossible to decipher whether foreign funding is involved in campaign activities of social welfare groups.

While we may not be able to count on the FEC to enforce the prohibition on the use of foreign funds in our elections, Congress is taking steps today to prevent the increasing chance for foreign money to infiltrate American elections. Reps. Derek Kilmer (D-Wash.) and Richard Hanna (R-N.Y.) introduced the Election Protection and Integrity Certification Act (EPIC).

The EPIC Act requires 501(c) organizations that engage in campaign activity to certify, under penalty of perjury, that foreign funds were not used to make any contribution or expenditure in connection with any election in the U.S.  The bill creates an additional check box on the form 990 filed by these social welfare organizations.  Also, 501(c) organizations would certify to the Federal Election Commission that no foreign funds were used for independent expenditures or electioneering communications.

It’s important to continue to strengthen our laws to prevent foreign money entering our elections. In fact, in 2012, the Supreme Court summarily affirmed a lower court decision upholding the foreign national prohibition in Bluman v. FEC. As the lower court said

“It is fundamental to the definition of our national political community that foreign citizens do not have a constitutional right to participate in, and thus may be excluded from, activities of democratic self-government.”

This bill is a step in the right direction and we commend Reps. Kilmer and Hanna for working together to improve the integrity of U.S. elections.

Foreign Money Scandals in U.S. History

Johnny Chung, a fundraiser for President Bill Clinton, famously stated, “The White House is like a subway:  You have to put in coins to open the gates.” 

Throughout history, our government has worked to strengthen laws banning foreign nationals from making political contributions. The ban was first introduced as part of the Foreign Agents Registration Act (FARA) and subsequently incorporated into the Federal Election Campaign Act in 1974.  The provision was strengthened in 2002 after Congress found that foreigners were able to use soft money contributions to gain access to the White House. 

Still, despite these measures, here are some examples of cases where it has been alleged that  foreign money has been used to influence U.S. elections.

  • The Senate Governmental Affairs Committee’s report “Illegal or Improper Activities in Connection with 1996 Federal Election Campaigns” noted the questionable source of $1.6 million in contributions organized by John Huang and Ted Sioeng, an Indonesian with close ties to China, who funneled money to the Democratic Party.  The Committee found that of the $400,000 that Mr. Sioeng gave to the Democrats, half came from the Chinese government.
  • In 2008, an executive of a biotech company was indicted for soliciting and making illegal cash contributions on behalf foreign nationals to the election campaign of Senator Lindsay Graham (R-SC).  Jian-Yun Dong was found guilty on all but one count relating to illegal campaign contributions.

While these prosecutions received a lot of public attention, it is not clear whether these are outliers or are simply the tip of the iceberg.  One of the difficulties with enforcing current law is that, short of inside information from a whistleblower, it is extremely difficult for law enforcement officials to determine whether or not foreign funds were used for campaign activities. 

Meredith McGehee advises on legislative and media policy efforts.