By Kevin Bogardus - 05/04/10 11:48 PM EDT
Lobbyists for a number of multinational corporations with headquarters outside the United States says language in the Democrats’ proposed campaign finance reform bill could send a “chilling signal” to foreign investors and infringe upon legitimate electoral participation.
In lobbying disclosure records filed last quarter, Sodexo, Unilever and Zurich noted concerns that the proposed legislation could discriminate against their U.S. subsidiaries, some of which participate in the election process, according to a review by The Hill. Some of the firms’ American-based affiliates run political action committees (PACs) stocked with hundreds of thousands of dollars ready to give to federal candidates.
But lawmakers have also focused on whether the court decision would allow companies and governments outside the U.S. to interfere in American elections. While foreign nationals cannot contribute to campaigns or coordinate political spending, Democrats are worried that U.S. subsidiaries of foreign-owned companies will now give vastly more.
In his last State of the Union speech, President Barack Obama warned about foreign influence creeping into the U.S. political system because of the court ruling.
Accordingly, Schumer and Van Hollen included a provision in the bill that bans political spending by companies with 20 percent or more of their voting shares controlled by a foreign entity; whose corporate boards’ majorities are made up of foreign nationals; or that have a foreign national directing their U.S. operations.
“This lobbying campaign demonstrates the willingness of foreign-owned or -influenced corporations to insert themselves in our political processes. Unless checked, these same entities may well seek to interfere with our elections,” said a senior White House official. “That is why strong legislative protections against foreign influence are needed in the wake of Citizens United.”
Among foreign-owned U.S. subsidiaries, that specific measure in the bill has raised constitutional concerns as well as calls for equal treatment alongside U.S.-owned companies.
“We are concerned that the measure could implicitly undercut the principle of ‘national treatment’ embodied in U.S. investment policy and in bilateral investment treaties, deny equality of treatment to U.S. subsidiaries of foreign companies, send a chilling signal to potential foreign investors and encourage states to restrict the First Amendment rights of companies to defend their interests on initiatives and referenda,” said David Lustig, a vice president at Unilever.
Unlike the other firms, Unilever, a Dutch-English consumer-goods company, does not have a PAC in the United States, as the company’s own policy prevents that. But the firm has on occasion contributed to state initiatives where its interests are affected.
The Democrats’ bill would not ban PACs run by U.S. subsidiaries of foreign companies, according to Meredith McGehee, policy director of the Campaign Legal Center. Existing rules allow only Americans to contribute to — as well as organize and run — PACs.
Instead, the legislation aims to prevent those foreign-owned U.S. subsidiaries from using their general treasury funds for independent campaign expenditures on things like television ads and mailings. Under the bill, U.S. companies, unlike their foreign peers, could make such expenditures with those funds but must disclose them to the FEC.
“I think there is a legitimate national interest in controlling the ability of foreign entities in swaying American political actions. Where that line is drawn is where the sausage gets made,” McGehee said. “I haven’t heard anyone make the case that this is drawn in the wrong place yet.”
Nancy McLernon, OFII’s president, called the bill “the proverbial camel’s nose under the tent.”
“If it is redefining what a U.S. subsidiary is, the FEC may look to this when it crafts advisories on what PACs can do, as in who can organize and maintain them,” McLernon said. “It is still too vague if it will have an impact on a PAC or not.”
MccLernon said 28 states allow companies to fund independent expenditures from general treasury funds for state political campaigns. Foreign-owned U.S. subsidiaries can get involved in ballot initiatives and proposition campaigns at the state level; the OFII president believes this bill could lead to a ban on that participation.
“The concern is that this provision impacts the tools that are within other U.S. companies’ arsenals that are working on advocacy campaigns on issues that affect their companies,” McLernon said.
“There is no rationale for treating privately held, commercial companies differently just because their CEO sits in a different time zone.”
Other companies said they are monitoring the legislation and want to make sure that they can fully join in with the U.S. political system.
Reginald Gilliam, senior vice president of government affairs for Sodexo, said his company is “evaluating” the bill and plans to track its progress through Congress.
Based in France, Sodexo has an American subsidiary with more than $51,000 in cash on hand in its PAC, according to FEC records.
“Zurich American Insurance Co. is dedicated to ensuring we can continue to fairly and fully participate in the American political system, and we believe that any campaign reform measure must recognize this fundamental right for all Americans,” said Sean Kevelighan, a spokesman for Zurich, which is based in Switzerland.
Zurich also owns the Los Angeles-based Farmers Insurance Group; the firm mentioned discussions about proposed campaign finance legislation in its lobbying filings last quarter. A lobbyist for that company referred questions to OFII.
Zurich’s U.S. holding company has a large PAC with more than $104,000 in cash on hand, while Farmers’ PAC has more than $66,000 in cash on hand.
This story was updated at 9:04 a.m.