An Insidious Foreign Dark Money Threat

New reports about Russian money going to the NRA could prove watchdogs' fears correct.

January 19, 2018
Cross-posted from NY Daily News
The scenario McClatchy News reports the FBI is investigating might strike some people as outlandish: Whether a Russian banker close to the Kremlin steered funds through the National Rifle Association to help Donald Trump win the White House.
In fact, the likelihood that foreign funds — which are illegal in U.S. elections — would secretly flow through groups like the NRA and into political contests has burned in bright neon for years, because the nation’s fractured election laws practically invite such subterfuge.
Just days after the Supreme Court issued its Citizens United vs. Federal Election Commission decision allowing unlimited outside spending in elections, President Obama, in his first State of the Union address, warned that the decision “will open a floodgate for special interests — including foreign corporations — to spend without limit in our elections.”
According to the Washington Post, Justice Samuel Alito, who was sitting in the chamber alongside his fellow Supreme Court jurists as Obama spoke, “winced at the accusation and muttered ‘not true.’ ”
The new report raises the specter that Obama’s fears have been realized.
Since Citizens United, over $800 million in “dark money” has poured into federal elections. The source of these funds is largely untraceable for the public because it has been funneled through secretive nonprofits, such as the NRA and the U.S. Chamber of Commerce.
For many years now, good-government groups and campaign finance experts have warned that illegal foreign funds could be hiding in that dark money.
That’s because, in federal races, political spenders that go dark are exploiting a loophole between the campaign finance system overseen by the FEC, which typically insists on that all donors to campaigns identify themselves, and charities the Internal Revenue Service allows to collect funds donated anonymously.
Once the donation arrives at a nonprofit — either a so-called social welfare organization, such as the NRA, or a trade association like the Chamber — the nonprofit is free to spend the money on politics, so long as the group can show that influencing elections isn’t its main reason for being . Bam! The public can’t trace the money back its original source.
Foreigners are not allowed to spend in American elections — not in presidential races, not for state or city officials, not for dog catcher. But a nonprofit playing this dark money shell game could easily hide an illegal foreign source of money as just another anonymous donor.
Some liberal groups also play the anonymous-donor election game, from the Sierra Club to the Human Rights Campaign.
But the NRA’s spending in the 2016 elections was historically unprecedented at $54 million, $31 million of it spent in support of Trump’s election and the rest on Congress. The total was more than double what the NRA spent in the 2012 election.
Where did the new money come from? So far, the public doesn’t know.
A further unknown is whether the reported FBI probe will be folded into the larger investigation being led by Special Counsel Robert Mueller into links between Russia and the 2016 election.
We don’t know what evidence the feds have yet. The report about an NRA connection could turn out to be a lot of smoke with no underlying fire. But it could also be the nightmare scenario Obama warned about: a foreigner exploiting our campaign finance disclosure loopholes to spend illegal money in American elections.
If this turns out to be true, Congress should act to protect our democratic electoral process with greater transparency. Two reforms would help enormously to shine a light on where political money is coming from.
One: Pass a new law that requires all political spenders to name their financial backers through the Federal Election Commission.
Two: Pass a new law that requires corporations to inform the public where they are spending in politics through the Securities and Exchange Commission.
Without these reforms, the public will be left in the dark, while foreign criminals will wield ever more power to interfere with our democracy.
The views expressed are the author's own and not necessarily those of the Brennan Center for Justice.
(Photo: Gage Skidmore)