Influence of Foreign Corporations

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Even in these divided times, Americans should be able to agree that foreign interests should not be able to influence our political system by pouring money into elections. Under current law, foreign governments and citizens (except lawful permanent residents) are forbidden from spending money in state elections. Yet a gap in the law allows foreign money to enter our politics through political spending by corporations. A new bill in Massachusetts would close that loophole.

In January, federal intelligence agencies reported that the Russian government deliberately interfered in our Presidential election in order to assist the candidacy of President Donald J. Trump. But that’s only one vehicle for foreign influence. What we still do not know is how much foreign money may have been used in the effort, funneled into our elections thanks to loopholes opened by the Supreme Court’s 2010 Citizens United decision.

While our national campaign finance laws prohibit foreign governments and citizens from influencing our elections, including state elections, Citizens United opened the door for corporations to pour money into American campaigns. This means that for-profit corporations under foreign control or influence can spend unlimited money in our elections. For example, a corporation organized under the Massachusets law might have many (or only) foreign nationals as shareholders, but as a corporation it can spend unlimited money to influence our electoral process. It's a loophole that is easily exploited, and it needs to be closed now.

Here in Massachusetts, we can act by passing legislation that protects our elections from political spending by companies under foreign influence. Here’s how the proposed law works: if a single foreign shareholder owns more than 5% of a company’s shares, it cannot spend on Massachusetts elections. Five percent is the threshold at which a single shareholder must be disclosed to the Securities and Exchange Commission and is considered a significant influencer in the corporation’s decision-making. Furthermore, any company with over 20% total foreign ownership is also considered foreign-influenced. These measures will ensure that the financing of our state elections are protected from foreign corporate influence.

Beyond the practical effect of curtailing corporate spending in elections, this prohibition is fully constitutional and would expose the contradictions in Citizens United that can help catalyze the legal argument to overturn it. In 2012, after Citizens United, the Supreme Court upheld the ban on foreign nationals spending in elections. Because foreign nationals do not have a right to spend directly on elections, they also lack a right to do so indirectly. The Supreme Court reinforced the notion that state, local, and the federal government can properly exclude foreign citizens from activities that are part of the democratic self-government of the United States. That is precisely what this proposal would do and that is why top legal scholars have supported similar measures elsewhere.

Our country’s Founders were rightfully worried about foreign influence in elections, fearing that Europe would try to corrupt and undermine the new Republic’s independence. The Constitution explicitly prohibits those in federal office from accepting any foreign “present, emolument, office, or title... without the consent of Congress.” The Founders’ concerns are as relevant now as they were then. This concern is not rooted in xenophobia or distrust of people or institutions in other countries. Rather, it stems from the belief that a successful democratic self-government requires that elections be decided by those who live there and whose day-to-day lives will be shaped by the outcome.

Here in Massachusetts, the Birthplace of the American Revolution, we should act now to protect our own state’s democracy and lead the way to fortifying America’s system of free and fair elections.

TAKE ACTION: Tell your legislator it’s time to close the foreign corporation loophole.

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