Since the 2016 presidential election, news organizations around the world have filled the Internet and the airwaves with with stories alleging foreign participation in the federal campaigns in the United States. What exactly is meant by the charges of “meddling” and “interference” by foreign organizations? With the 2020 cycle around the corner, it’s important to know a few things about the potential for foreign influence in our elections beyond Facebook ads and Twitter.
The Law Concerning Foreign Participation in U.S. Elections:
According to the Federal Election Campaign Act (FECA), foreign nationals are not allowed to directly or indirectly donate or spend money on anything to influence the outcome of U.S. Elections. A foreign national can be a foreign government, foreign political party or a foreign citizen. There is no specific prohibition on methodology: quite simply foreign nationals are not allowed to spend money or donate to any candidate, regulated political committee or regulated party account to affect the elections. Furthermore, they cannot make any independent expenditures that would indicate a desire to participate in U.S. elections (expenditures without the consent of or coordination with a political candidate).
The Exception to the Rule
Individuals with dual U.S. citizenship are allowed to make contributions as are individuals who are admitted as lawful permanent residents (i.e. “Green Card holders”) of the United States.
Is it Possible for Foreign Individuals or Foreign Companies to Make Contributions Legally?
Federal law prohibits contributions to candidates, registered committees and registered political party committees from foreign nationals and even U.S. banks, corporations and labor unions. With this in mind, there are instances where foreign individuals or companies could be able to spend money influencing U.S. elections.
Some of the more common paths for these types of expenditures are:
- Regulated Contributions Through a U.S. Subsidiary
Based on the current FEC rules, foreign-owned corporations can actually spend regulated amounts on Super-PACs and, in the case of corporations, from Separately Segregated Funds (SSFs or “Corporate PACs”) as long as they have a subsidiary registered in the United States. Note: these subsidiaries can only spend revenue booked from operations in the United States (in the case of a contribution from general treasury funds) or from funds contributed by employees to a company PAC – which by default will necessarily only have U.S. citizens or legal permanent residents as its members.
- Unregulated Contributions to Tax-Exempt Organizations:
As discussed above, regulated campaigns may not solicit or accept contributions from foreign nationals. This prohibition includes contributions or donations made to regulated political committees and building funds and to make electioneering communications. Furthermore, it is a violation of federal law to knowingly provide substantial assistance in the making, acceptance or receipt of contributions or donations in connection with federal and nonfederal elections to a political committee, or for the purchase or construction of an office building. This prohibition includes, but is not limited to, acting as a conduit or intermediary for foreign national contributions and donations.
With that in mind, within the past few years, Supreme Court precedent and revised Treasury regulations have made it easier for foreign nationals and corporations to contribute directly to tax exempt organizations organized under section 501(c) of the Internal Revenue Code. Dubbed “dark money” these organizations are sometimes openly political and can nonetheless indirectly influence the course of debate within an election cycle without crossing the line into regulated areas governing contributions.
- Trade Associations
If you have been following U.S. politics for a long time, you already know the power of trade associations. Similar in form and substance to the aforementioned tax-exempt organizations and “dark money” trade organizations can spend unlimited money indirectly influencing U.S. elections without the need to disclose the donors as it is not mandated by law.
Conclusion
As you can see, although there are broad prohibitions on direct participation by foreign individuals, governments and corporations in U.S. elections, there are (and have been for quite some time) methods far beyond mere advertising on Facebook, Twitter and Google, for foreign interests to make their voices heard in our country’s election cycles. Accordingly, in the upcoming presidential cycle, it is more important than ever that voters pay close attention to the messaging, delivery and source of political advertising aimed at them to help ensure the continued validity of our electoral system.