So now there’s a big debate about whether the recent Supreme Court decision really opens the door for foreigners and foreign corporations to spend money to influence US elections:
The president, a former teacher of constitutional law, had asserted that the ruling, known informally as Citizens United, would open the floodgates to a torrent of new political spending by corporations, including foreign ones.
But the court’s majority opinion, written by Justice Anthony Kennedy and joined by Justice Alito and three others, specifically said it was not deciding whether foreign corporations have a First Amendment right to advertise for or against American political candidates. A 1996 law currently prohibits foreign nationals or corporations from such efforts.
On the morning after the back-and-forth between the president and the justice, the White House issued a news release citing the minority dissent, by Justice John Paul Stevens, to support the president’s assertion about the impact of the majority opinion.
“If taken seriously, our colleagues’ assumption that the identity of a speaker has no relevance to the Government’s ability to regulate political speech would lead to some remarkable conclusions,” Justice Stevens wrote. “Such an assumption would have accorded the propaganda broadcasts to our troops by ‘Tokyo Rose’ during World War II the same protection as speech by Allied commanders. More pertinently, it would appear to afford the same protection to multinational corporations controlled by foreigners as to individual Americans …”
Pressing the sensitive question of foreign influence, Justice Stevens later added that the majority opinion “all but confesses that a categorical approach to speaker identity is untenable when it acknowledges that Congress might be allowed to take measures aimed at ‘preventing foreign individuals or associations from influencing our Nation’s political process.’ ” The dissent continued: “Such measures have been a part of U. S. campaign finance law for many years.”
But Justice Kennedy, writing for Justice Alito and the rest of the majority, appears to have sought to head off such critiques. Despite the president’s assertion, the majority opinion explicitly sought to leave room for such laws to stand in the wake of the decision. “We need not reach the question,” Justice Kennedy wrote, “of whether the government has a compelling interest in preventing foreign individuals or associations from influencing our nation’s political process.”
So will or won’t foreign corporations now be able to meddle in our politics? I guess it all depends on the definition of a foreign corporation, doesn’t it?
After all, almost every US corporation has some foreign shareholders (both human and corporate). The law obviously doesn’t say that no US corporation with a minority foreign shareholding may exercise the newly granted election-free-speech rights. I’m not sure if there’s a legally established bright line which determines how high the foreign shareholding has to be before you’re deemed to be a foreign corporation and not allowed to meddle in elections. And I didn’t bother to try to look it up, because I don’t think it even matters.
For example, suppose the bright line is majority ownership, anything over 50%. Well, it’s a well known fact that in most widely held corporations, you can control the corporation even with a minority holding, say 40%. So corporations effectively in control of foreign interests would be able to spend unlimited amounts of money to influence US elections.
Now let’s say the bright line is substantially less than 50%. Let’s make it 25%. And let’s say I’m a wealthy foreigner who bitterly hates the US (or even a terrorist organization, if you like), and is convinced that a Sarah Palin presidency would be a recipe for US self-destruction. And let’s say I want to spend twenty or thirty billion in support of a future Palin presidential campaign.
All I have to do is conceal my true motives, and partner up with some wealthy “Real Americans” who are all gung-ho about Palin. We could take control of an existing US corporation, with me buying 25% of the stock and my gung-ho partners picking up 15%. Then they sit back as silent partners, and let me control the corporation. Once again we have a corporation effectively in control of foreign interests being able to spend unlimited amounts of money to influence US elections.
Alternatively, me and my gung-ho partners can set up a new dummy US corporation in which we are the only shareholders. I take a 25% stake, they take a 75% stake, but they leave the running of the corporation to me. Very little money is put up up front as capital (so almost anyone could be recruited as the silent partners). Huge amounts of money are then siphoned in by me (using any of the many ingenious ways that businessmen have evolved over the ages to siphon money from one corporation to another). And this money is then spent by the corporation to run Palin-for-President ads.
There’s also the well-known dodge of setting up corporations that own corporations that own corporations that own corporations that own… . Put enough dummy shell corporations between an actual corporation and its real owners, incorporate enough of them in impenetrable offshore havens, and it becomes impossible to figure out that the true owner of the final US corporation is actually a foreign individual or corporation.
So I think Justice Kennedy et al are being extremely disingenuous when they blithely declare that their new license for corporations to spend unlimited amounts of money on US elections can be made to meaningfully exclude foreign interests.
*** Update, 7:35 a.m. ***
It’s true that foreign nationals are currently prohibited by law from making independent expenditures in U.S. elections. But that prohibition has little teeth. According to experts, it doesn’t apply to foreign-owned corporations that incorporate in the U.S., or have U.S. subsidiaries — meaning most foreign multinationals likely aren’t covered. So there’s “essentially no difference” between domestic and foreign corporations in terms of their ability to pump money into U.S. elections, says Lisa Gilbert of U.S. PIRG — a view backed by several other advocates of increased regulation.