WASHINGTON — In the wake of the recent Supreme Court ruling that ended most restrictions on corporate funding in elections, a congressional panel was asked Wednesday to enact greater limits on the influence of foreign companies in U.S. elections.
At the hearing of a House of Representatives Judiciary subcommittee, experts also sought congressional intervention to restrict contributions from out-of-state corporations.
The 5-4 decision last month in Citizens United v. Federal Election Commission has sparked debate about the prospect of a possible surge in corporate spending on election campaigns.
How to sort out who owns or controls a multinational corporation — which now would be free to use corporate funds to influence U.S. elections — troubled some on the subcommittee.
"I don't know who owns what in this global economy," said Rep. Bill Delahunt, D-Mass. For instance, he asked, who are the shareholders of Exxon Mobil, which has operations across the planet.
The majority opinion by the Supreme Court is vague on foreign corporations. The opinion, written by Justice Anthony Kennedy, said that the court need not resolve that issue because the case "is not limited to corporations or associations that were created in foreign countries or funded predominately by foreign shareholders."
Laurence Tribe, a professor at Harvard Law School, said that the dissenters, led by Justice John Paul Stevens, went out of their way to treat the majority's explicit decision to leave the matter open as an "acknowledgement that Congress might be allowed to take measures aimed at 'preventing foreign individuals or associations from influencing our nation's political process.' "
Tribe urged the Subcommittee on the Constitution, Civil Rights and Civil Liberties to act immediately to guard against foreign influence.
An increase in spending by corporate entities in campaigns and in lobbying for various agendas over the years also fueled support for limiting the influence of foreign corporations.
"Since corporations have been banned from contributing to candidates and restricted in their campaign spending, their political spending has generally taken the form of lobbying," said Monica Youn, the director of the campaign finance project at the Brennan Center for Justice at the New York University School of Law. For instance, she said, "the health care industry in 2009 spent approximately $1 million per day to lobby Congress on health care reform."
One way to tackle this issue could be requiring managers to get authorization from shareholders before making political expenditures with corporate treasury funds and to report such spending to shareholders, Youn said.
An existing statute prevents foreign corporations from influencing U.S. elections by donating to them but it doesn't prohibit spending by domestic corporations that foreign nationals own or control. An FEC regulation restricts the ability of a foreign national to participate in the "decision-making process" of a domestic corporation with regard to its political spending.
Some organizations that represent the domestic subsidiaries of foreign companies in the United States are worried that the debate over what's deemed a foreign company might harm the investment climate in the country.
"We are troubled by the fact that U.S. operations of foreign companies might be mischaracterized as foreign," said Nancy McLernon, the president and CEO of the Organization for International Investment. The organization represents issues faced by the U.S. subsidiaries of firms that are headquartered abroad, including Nestle, Siemens and Unilever.
The domestic subsidiaries of such companies account for around 4.6 percent of U.S. private-sector employment, according to the organization.
If these U.S. operations are singled out as foreign, they could be seen in a pejorative light, there could be a reaction against contracting with them and foreign investment in the United States might be discouraged, McLernon said.
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