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Foreign-connected PACs invest millions in US elections

Michael KniggeJune 1, 2016

It isn’t only American companies and unions that spend money on the US election, subsidiaries of European firms also make themselves heard. The biggest spenders so far are a Swiss bank and a British defense company.

USA Symbolbild Zinswende
Image: picture-alliance/dpa/A. Burgi

A DW analysis of campaign finance data compiled by the Center for Responsive Politics finds that US subsidiaries of international companies have so far spent almost #link:https://www.opensecrets.org/pacs/foreign.php:ten million dollars# (9.8 million euros) supporting candidates in this election cycle with most of the contributions coming from European-based firms ($8.6 million). The only other foreign, but non-European-based, companies that have spent money on the US election so far hail from five countries: Japan ($597,000), Israel ($159,000), Canada ($108,000), Mexico ($61,000) and Australia ($32,000).

While foreign nationals without permanent US residence status and foreign entities are prohibited from contributing to US elections, American subsidiaries of foreign companies are not. Just like their US counterparts, they can legally establish so-called Political Action Committees (PACs) to collect contributions for political candidates from their US employees and families. All PACs are registered with the Federal Election Commission.

"It doesn't surprise me," said James Davis, dean of the School of Economics and Political Science at St. Gallen University in Switzerland, when asked about the fact that PACs set up by European-based companies have so far contributed more than eight million dollars to the US election campaign.

Swiss bank making itself heard

PACs and Super PACs, noted Davis, these days are major players in articulating their political interests, a trend that has been only growing since the US Supreme Court's historic Citizens United decision which drastically loosened campaign finance rules.

"And the way you make yourselves heard in American politics today is that you make a big donation," said Davis.

The #link:https://www.opensecrets.org/pacs/lookup2.php?strID=C00012245:biggest spender# among foreign-affiliated PACs is the one set up by Swiss banking giant UBS. It contributed $741,750 to Congressional candidates with most of the money going to Republicans.

Recipients of UBS PAC money were, for instance, Republican Congressman Jeb Hensarling, chairman of the US House Financial Services Committee and Republican Congressman Sean Duffy, chairman of the House Financial Services Subcommittee on Oversight & Investigations both of which received the largest contribution ($10,000, respectively). The House Financial Services Committee has jurisdiction over the banking and financial sector.

Asked by DW about details of its spending policy on the US election, UBS said in a statement that, "the UBS political action committee (PAC) gives equally to political candidates on a bipartisan basis as part of our goal of being engaged with the House and Senate on public policy issues." The bank added that "the UBS PAC does not give to presidential candidates, party conventions or any Super PACs."

Infografik Europäisches Geld US Wahl Englisch

British defense company and French pharma firm

The second biggest #link:https://www.opensecrets.org/pacs/lookup2.php?strID=C00281212:spender# is British defense company BAE Systems. Its BAE Systems USA PAC spent $412,500 so far on Congressional candidates, most of it on Republicans. Among legislators receiving the biggest contribution ($10,000, respectively), were Republican Congressman Mac Thornberry, chairman of the House Armed Services Committee and Republican Senator John McCain, chairman of the Senate Committee on Armed Services. BAE Systems did not respond to a request for comment.

#link:https://www.opensecrets.org/pacs/lookup2.php?strID=C00144345:Rounding out# the top three foreign-connected PACs is the one established by the US division of French pharmaceutical company Sanofi which contributed $404,975 so far for federal election candidates. Among those receiving major contributions ($9,000) is Republican Congressman Fred Upton, chairman of the House Energy and Commerce Committee, which has jurisdiction over public health issues.

Asked to comment on the spending policy of its American PAC, Sanofi told DW via email that its PAC "contributes to candidates in US elections based on voluntary donations from Sanofi employees, not Sanofi Corporation or its subsidiaries." Spending decisions "are made by a Board of Directors made up of Sanofi employees and supported by outside counsel," added Sanofi. Candidates are eligible for contributions, wrote the company, "when their public record includes a strong commitment to medical innovation and research, integrity, and leadership in medical R&D policy."

Asked why it has so far only contributed to Congressional, not presidential candidates and why most of its funds go to Republicans, Sanofi said that its US PAC "rarely contributes to candidates in a primary election. In circumstances where one political party or another has control over a federal or state legislative body, the Sanofi US PAC's contributions will tend to reflect the incumbent candidates of the majority party."

German chemical giant

The biggest #link:https://www.opensecrets.org/pacs/lookup2.php?strID=C00340075 :German-connected# PAC contributing to the US election candidates is that of chemical giant BASF, ranking fifth among foreign-affiliated PACs. BASF's US PAC so far spent $312,250 on federal election candidates. Among those receiving the biggest contributions ($8,500) is Republican Congressman Kevin McCarthy, currently the Majority Leader in the US House of Representatives.

Approached for comment on its spending for the US election, BASF said via email that its US PAC "provides financial support to candidates based on a variety of factors, including a candidate's positions on policy, his/her seat on a relevant legislative committee (if they are an incumbent), or the candidate's representation of a company facility or a location where a large number of company employees reside."

The company noted that its US PAC "does not contribute to candidates for President" and that its PAC, "established by our employees in the United States, is an independent, federally registered employee association that collects donations for political purposes and independently decides how these are used."

Strategic spending

That everyone - whether a company or labor union affiliated - who contributes to a PAC is doing so entirely independent of any kind of influence is something "you can only believe if you also believe in the tooth fairy," said Professor Davis. "I don’t think those claims to independence are really persuasive."

Infografik Europäisches Geld US Wahl Englisch
The majority of contributions are slated for legislators in CongressImage: picture alliance/AP Photo

Instead, most PACs spend their money very targeted and strategically, said Davis. He explained that there are clear reasons why most of the funds are slated for Republicans or why certain industries and individuals are selected for contributions.

"The donations are going to Republicans because Republicans control the Congress," said Davis.

That committee and subcommittee chairmen in relevant areas are targeted for contributions is also no coincidence, noted Davis.

"This is strategic behavior that is not about buying influence, but access so that people remember who contributed and then when the time comes to explain your position on an issue you get a meeting."

Clustered contributions

Generally, continued Davis, contributions tend to cluster in areas like the pharmaceutical sector, financial services or environmentally sensitive industries in which regulatory issues play an important role. Other hotspots are sectors, like the defense industry, with a large stake in government procurement issues.

That most foreign-connected PAC have focused their election spending so far on Congressional candidates and refrained from giving money to presidential candidates is also no surprise. Since Congress makes the laws and has the power of the purse contributing money to established members of Congress instead of various presidential hopefuls, particularly in the primary, is a better investment for companies, said Davis.

That's why the PAC of T-Mobile USA, a subsidiary of Germany's Deutsche Telekom, is an exception as it contributed $4,000 to former Republican presidential contender Marco #link:https://www.opensecrets.org/pacs/lookup2.php?strID=C00361758:Rubio#. But it also spent more than $220,000 on Congressional candidates.