Full Disclosure: How to Keep Foreign Money Out of U.S. Election Campaigns

Is foreign money influencing U.S. politics? With the lack of financial transparency into groups with nonprofit tax status, it's anyone's guess.
Is foreign money influencing U.S. politics? With the lack of financial transparency into groups with nonprofit tax status, it's anyone's guess.

The clash between Democrats and the American Chambers of Commerce (AmCham) has grown ever noisier this month after President Barack Obama implied the group could be spending foreign money on political advertisements. "Groups that receive foreign money are spending huge sums to influence American elections," he said at a Democrat rally Oct. 7, referring to AmCham.

Vice President Joe Biden and presidential adviser David Axelrod made similar allegations and asked AmCham to open its books to prove its innocence. And Sen. Al Franken, D-Minn., asked the Federal Election Commission to investigate the claims that AmCham uses foreign money for U.S. election activity, which is illegal.

Meanwhile, AmCham officials responded just as aggressively to the accusations, saying that dues from its overseas business councils account for less than $100,000 annually and are kept separate from any political funds. "Zero. As in, 'Not a single cent'" of AmCham's campaign money comes from foreign sources, Tom Collamore, a senior vice president at the chamber, said in an Oct. 11 statement.

One source, who was actively involved with Amcham and Republicans Abroad in Hong Kong until a few months ago and who spoke on condition of anonymity, said that money from foreign investors does indeed make its way into U.S. politics, albeit more indirectly than Democrats claim.

Asian AmCham Leaders "Overhwhelmingly Left"?

While he insisted that Amcham isn't using foreign money to finance U.S. campaign ads, he said it's a common practice for foreign investors to donate to other U.S.-based think tanks in exchange for promised or implied access to powerful people in the U.S. government.

Because many think tanks are organized under Section 501(c) of the tax code -- as are nonprofits and AmCham -- they aren't required to disclose their donors, potentially making it easy for foreign money to find its way into the political debate through many different groups, he said. The accusation echoes the crux of Democrats' complaint against AmCham: that anonymity makes it impossible to know if the group complies with the law or not.

In PolitiFact's attempt to fact check Obama's allegation that foreign money may be helping to fund attack ads for Republican candidates, political watchdogs confirmed that there is indeed no way to tell if 501(c) groups accept foreign money or to check up on how they use it, unless they voluntarily provide evidence. (PolitiFact is a St. Petersburg Times website where reporters and researcher check statements from politicians, lobbyists, pundits and others for accuracy and rate their truthfulness.)

As for AmCham, my anonymous source made some of the same arguments that the group has made publicly in response to the allegations – that the amount of foreign money it collects is tiny, for example – but also gave another reason for his belief that foreign money doesn't influence U.S. elections: The largest part of the foreign dues come from Asia, and the leadership of the Asian AmChams is "overwhelmingly left," he claims. "We don't know of a head of an Asian AmCham who is a Republican now."

Many AmCham heads go out of their way to keep their party affiliations private, so this argument has proven tough to confirm. Christian Murck, president of the Beijing Amcham, declined to disclose his political affiliation and said he's unaware of the personal political views of other AmCham leaders. "We are nonpartisan and do not endorse or contribute to candidates, political parties, or political action committees in the US or elsewhere," he wrote in an email. Other AmCham leaders in Asia also declined to disclose their political affiliations.

Regardless of whether money flows through AmCham or other organizations and think tanks, or not, perhaps it's time to get rid of the loophole that prevents the public from learning when any money trickles into Washington. If we can't halt the stream of money from corporations into politicians' pockets, we should at least know where it comes from.