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Foreign donations spark row ahead of US midterm elections

US President Barack Obama has accused the Republican Party of taking undisclosed donations from foreign companies, sparking a row over election funding. But non-US firms are already legally giving money to both parties.

Michelle Obama muster support for Democratic candidates during a rally at Ohio State University in Columbus, Ohio

Obama wants political donations to be more transparent

US President Barack Obama has hit out at the Republican Party for allegedly accepting funds from foreign companies. He did not name the donors explicitly, but he was most likely referring to the US Chamber of Commerce, which has pledged $75 million to the Republican campaign in 2010.

"Just this week, we learned that one of the largest groups paying for these ads regularly takes in money from foreign corporations," Obama said at a Democratic rally in Bowie, Maryland at the beginning of October.

"So groups that receive foreign money are spending huge sums to influence American elections, and they won't tell you where the money for their ads comes from,"

Obama based his comments on a report by the liberal blog Think Progress, which recently said the US Chamber of Commerce is using money from foreign corporations to finance campaign ads, a charge the Chamber denies.

US Supreme Court

The US Supreme Court recently relaxed rules on election financing

"Threat to democracy"

While Obama sees the lack of transparency on where the funds come from as "a threat to democracy," Republicans like strategist Karl Rove say Obama's allegations smack of hypocrisy.

"Mr. Obama had no problems with liberal non-profits keeping donor lists private as allowed by law," he said.

"He never insisted that the unions that spent $450 million to elect him in 2008 disclose their donors…Mr. Obama's own campaign refused to make public the names of more than 10% of its donors," he added.

Some Democrats are also upset about a January Supreme Court ruling that generally allows unlimited corporate funds to be used to attack candidates in TV commercials without having to disclose the donors.

The ruling applies to all donations, but political donations from foreign companies are subject to additional regulation. No foreign nationals can directly contribute funds to a campaign, nor can they decide how the money is allocated. The donations have to come from US citizens or residents.

But, as the Washington Post points out, foreign companies have been donating to both Republicans and Democrats for years, and perfectly legally too - through their US subsidiaries. Multinationals are allowed to set up so-called political action committees, or PACs, to make donations.

Siemens logo

German multinationals regularly donate to US candidates

German companies involved

While two of the leading contributors are UK multinational giants such as arms firm BAE Systems and pharmaceutical heavyweight GlaxoSmithKline, German companies are also heavily involved in donations to US parties - companies like Siemens, Bayer, EADS or BASF, the world's biggest chemicals group. T-Mobile USA is the eighth-biggest foreign donor in the current midterm campaign.

Steve Goldberg, a US vice president at BASF told the Washington Post the company "assesses candidates on the basis of their position on key issues of relevance to our business," and that their "PAC is bipartisan and regularly supports candidates of both parties."

Foreign companies employ roughly five million Americans and have donated nearly $60 million in the last 10 years. And it's by no means just business-friendly Republicans who benefit. In fact, since George W. Bush left office, there's been a shift towards donating to Democrats, according to an analysis by the Washington Post.

Despite that shift, Democrats have been trying to limit the influence of multinationals by introducing new legislation that would have limited the US activities of foreign companies. But the bill was blocked by Republican senators, after heavy lobbying from big foreign players such as BASF and Swiss bank UBS.

Authors: Silke Hasselmann, Nicole Goebel
Editor: Matt Hermann

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