[Congressional Record Volume 143, Number 13 (Wednesday, February 5, 1997)]
[Extensions of Remarks]
[Pages E171-E172]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            KEEPING FOREIGN MONEY OUT OF AMERICAN CAMPAIGNS

                                 ______
                                 

                           HON. MARCY KAPTUR

                                of ohio

                    in the house of representatives

                      Wednesday, February 5, 1997

  Ms. KAPTUR. Mr. Speaker, news stories about fundraising during the 
1996 Presidential campaign focused increasing national attention on the 
overwhelming need for campaign finance reform, and particularly the 
role of foreign money in U.S. campaigns.
  The problem indeed is money. During the 1996 election, candidates for 
all Federal offices spent approximately $1.6 billion. That's ``B,'' as 
in billion. The pressure to raise huge sums of money is so intense that 
some candidates from both parties, apparently have started looking 
abroad for new sources of campaign contributions.
  Since 1990, no matter which party controlled Congress, I have 
sponsored legislation that would ban foreign contributions to 
candidates for Federal office. Today, I'm reintroducing the Ethics in 
Foreign Lobbying Act of 1997.
  My bill has three major points:
  First, only U.S. citizens could contribute to Federal campaigns.
  Federal law already purports to prohibit direct or indirect 
contributions by foreign nationals in U.S. elections. In fact, section 
441e of the Federal Election Campaign Act [FECA] states:

       It shall be unlawful for a foreign national directly or 
     through any other person to make any contributions of money 
     or any other thing of value, or to promise expressly or 
     impliedly to make any such contribution, in connection with 
     an election to any political office or in connection with any 
     primary election, convention or caucus held to select 
     candidates for any political office; or for any person to 
     solicit, accept, or receive any such contribution from a 
     foreign national.

  This provision was enacted in response to longstanding congressional 
concern over foreign influence in American elections. Though this 
language appears to be locktight, many loopholes permit foreign 
influence on U.S. elections, many foreign entities are not covered by 
the statute, and there is a lack of enforcement of the law. Congress 
must strengthen and make sure the law is fully enforced.
  Second, foreign-controlled companies would be prohibited from 
contributing to Federal elections through the PAC's of their U.S. 
subsidiaries.
  My bill would prohibit contributions from PAC's sponsored by 
corporations that are more than 50-percent foreign owned, as well as 
contributions from PAC's sponsored by trade associations that derive 50 
percent or more of their operating funds from foreign corporations.
  Foreign citizens are already prohibited from contributing to U.S. 
political campaigns. Yet, every year foreign interests spend millions 
of dollars to influence the American political process. This money 
often comes in the form of political action committee contributions 
from foreign-controlled corporations or their trade associations. Just 
as foreign individuals are prohibited from contributing to U.S. 
campaigns, so should be PAC's that are controlled by foreign 
corporations and trade associations, for, in fact, under U.S. law, 
corporations are considered persons.
  Due to a loophole in the FECA, American subsidiaries of foreign-owned 
companies may operate PAC's--the only restriction being that the PAC 
cannot solicit funds from foreign nationals or permit them to be 
involved in the policymaking decisions of the PAC. Consequently, many 
of the world's largest foreign multinational corporations and financial 
institutions contribute to U.S. campaigns through their U.S.-based 
subsidiaries. Through the creation of these foreign-sponsored PAC's, 
foreign companies can thus assert their influence on the U.S. election 
process--and on U.S. policy.
  Consequently, administration of the FECA law has created a confusing 
system whereby it is illegal for individual foreign nationals to make 
political contributions, yet legal for foreign-controlled or foreign-
owned corporations, subsidiaries, and trade associations to contribute, 
expend funds, and influence U.S. elections. The Federal Election 
Commission [FEC] through its advisory opinions has twice voted to 
exempt PAC's representing U.S. subsidiaries of foreign-owned or 
controlled corporations, as long as the PAC's are funded and operated 
by Americans. The FEC has asked Congress to enact legislation 
clarifying this issue, but Congress, to date, has refused to do so.
  Third, contributors would be required to disclose the percentage of 
foreign ownership.

  The data collection and clearinghouse responsibilities section of my 
bill is one of its most important aspects, because of the current 
difficulty in identifying the activities of foreign nationals and 
corporations. The FEC has no coherent system for tracking the millions 
of dollars spent by foreign interests and their PAC's on lobbying the 
U.S. Government. The current, disjointed data collection system 
provides a veil of secrecy over how and where foreign interests spend 
their money.
  My bill would make this mysterious and inadequate process both more 
transparent and more accountable--without requiring new reporting. My 
bill would merely add an extra line to the statement of organization 
that is currently required by the FEC. PAC's controlled by corporations 
would be required to state the percentage that the corporations are 
foreign-owned, and PAC's sponsored by trade associations would be 
required to state the percentage of their operating fund that is 
derived from foreign-owned corporations. In addition, it would require 
that all data collected by Federal agencies on foreign campaign 
contributions and foreign agents, as well as any testimony before the 
Congress regarding the interests of a foreign principal, be sent to the 
FEC.
  Most important, my bill would make the disclosure of related 
expenditures available and visible at a central source by creating a 
clearinghouse for data that is currently collected, but is scattered 
among various Government agencies, including the FEC and the Department 
of Justice.
  In establishing a clearinghouse, we would create a greatly needed 
central point for collecting information. Most of the information is 
already available, but it is housed in a myriad of Federal agencies and 
offices. Bringing the information together under one roof will provide 
the Government, the Congress, and the public with improved access to 
the data. The timing requirement for reporting conforms with the 
quarterly reports required in the 1946 Foreign Lobbying Act. The 
reporting requirements

[[Page E172]]

place the burden of reporting the percent of foreign ownership on the 
PAC's themselves, with penalties for noncompliance.
  The United States is one of very few countries that allows foreign 
interests to contribute to its campaigns. Most of our major trading 
competitors--for example, China, Japan, South Korea, Thailand, 
Malaysia, and Mexico--all strictly forbid foreign campaign 
contributions. There is no reason why the United States should be any 
different.
  In the interest of protecting our sovereignty and maintaining a 
political system that reflects the will of the American people, the 
United States since 1938 has attempted to restrain the ability of 
foreign governments, individuals, organizations, and corporate entities 
to influence our domestic political system. By amendment, first to the 
FARA and later to the Federal Election Campaign Act [FECA], the United 
States has sought to prevent campaign contributions and expenditures by 
foreign interests.
  There is no reason to allow foreign money to influence our elections 
or permit foreign interests to buy access to our elected lawmakers and 
thereby put their imprint on public policy in this country.
  Mr. Speaker, clearly the time for campaign finance reform has come. 
Our system needs to be fixed. We must eliminate foreign money from our 
political system once and for all and regain sovereignty in our 
election system, which is the cornerstone of our democracy.
  This time Congress must act and must get it right.

                          ____________________