How Foreign Money Can Find Its Way Into Political Campaigns

In Plain Sight: How Foreign Money Can Find Its Way Into Political Campaigns

WASHINGTON -- Every election cycle brings new concerns about foreign interests influencing U.S. elections and secretly funneling money to U.S. political campaigns.

Yet foreign governments and corporations are openly spending tens of millions of dollars a year buying influence in Washington by hiring well-connected lobbyists, according to research by the Sunlight Foundation and others who have examined the filings those lobbyists have to make to the Justice Department.

And some of that money may well be wending its way into politicians' election coffers through the generous campaign contributions those lobbyists routinely make to buy access and reward friends.

"There's pretty clear evidence that foreign money is being used, at least indirectly, to finance U.S. elections," says Benjamin J. Freeman, a post-doctoral fellow at the Project on Government Oversight, a nonprofit advocacy group that focuses on investigating waste, fraud and abuse in the federal government.

As part of the research for his book about foreign lobbying, "The Foreign Policy Auction," slated for publication in late 2011 or early 2012, Freeman says he has documented "dozens of instances where lobbyists meet with representatives to advocate for foreign clients, and then give the exact same representative a campaign contribution that very same day."

"These folks can't give directly, so what you're finding is these firms want to represent the interest of their clients the best they can," explains Jon Pevehouse, a political science professor at the University of Wisconsin who is in the process of creating a foreign lobbying database for his research.

Pevehouse estimates that foreign interests spent about $200 million on lobbying in 2008, the most recent year for which he has data. He has not yet calculated how much the lobbyists hired by those interests then turned around and gave to political campaigns.

But at the very least, campaign finance experts say, foreign interests are doing what a lot of other groups in Washington are doing: buying influence.

"Our influence system works with lobbyists using campaign contributions as a means of obtaining access and influence for their clients -- and the lobbying system in this country is available to anyone," says Fred Werthheimer, who runs Democracy 21, a group that promotes and defends campaign finance laws. "What foreign interests have learned is if they want to try to obtain influence in Washington, they ought to do it the same way that corporations do it."

"Generally speaking, what they are trying to do when they hire these lobbyists who make these contributions is get the access," says Bill Allison, editorial director of the pro-transparency Sunlight Foundation.

But foreign lobbying is distinct from domestic lobbying because of the possible divergence with U.S. interests. "If you're cynical," says Pevehouse, "then you think this stuff is dangerous, because it's really distracting Congress from what it should be doing in foreign affairs."

And while federal candidates are allowed to accept campaign donations from American citizens -- even lobbyists -- as long as there is no explicit quid pro quo, when it comes to foreign nationals, it's a different story entirely.

Federal election law forbids political candidates from knowingly soliciting, accepting or receiving donations from foreign nationals or foreign entities under any circumstances. A candidate need not have direct knowledge that the source is foreign to be in violation of the law. It suffices for the candidate to be "aware of facts that would lead a reasonable person to inquire whether the source of the funds solicited, accepted or received is a foreign national" and have "failed to conduct a reasonable inquiry."

But Pevehouse says nobody seems to be raising questions at all. "On all of this stuff, I think there's a lack of enforcement," he says. "You would think the attorney general and the Department of Justice would take an interest." (A spokesperson for the Department of Justice declined to comment.)

The federal government's Foreign Agent Registration Act (FARA) -- initially a response to Nazi propaganda -- imposes surprisingly rigorous disclosure requirements for anyone in the employ of foreign powers. As a result, foreign lobbyists must identify specifically which federal officials they meet with, and why and when -- and to whom they give money and when.

"They actually have to report who they're lobbying and you can actually see those contributions going to who they're directly lobbying," says Allison. That allows watchdogs to connect the dots in ways they can't with the less-detailed reports required of domestic lobbyists.

Consider the window FARA filings offer into the ongoing political battle over U.S. trade agreements with South Korea, Panama and Colombia. All three countries are lobbying ferociously to get those agreements ratified by Congress. South Korea alone has hired a number of top K Street firms.

One of the many lobbyists in the scrum is Kirsten Chadwick, a partner at the Republican boutique lobbying firm of Fierce, Isakowitz & Balock. Chadwick's latest FARA report shows that the Korean government paid her $300,000 in the four months between Nov. 29, 2010 and March 29, 2011.

Earlier this year, Bloomberg BusinessWeek named Chadwick one of its 15 Washington "power brokers." "What Kirsten Chadwick may soon have to show for her skills of persuasion is a U.S.-South Korea free-trade pact," the magazine wrote.

So what exactly did Korea get for its money? Chadwick's FARA report lists dozens of meetings with members of Congress and their staffs advocating on her client's behalf for passage of the U.S.-Korea Free Trade Agreement. The report also lists 14 campaign contributions. In some cases, their timing does not appear coincidental.

On Jan. 28, according to Chadwick's filing, she met with Sen. Orrin Hatch (R-Utah) -- and that very same day, she reported, contributed $2,400 to his campaign.

Chadwick also reported that on March 8 she met with then-Rep. Dean Heller (R-Nev.) -- now the junior senator from Nevada -- to talk about the trade pact. That very same day, she reported, she contributed $1,000 to his campaign.

And here's the sequence of events Chadwick reported in her courtship of Sen. Scott Brown (R-Mass.): On Feb. 8, 2011, she made a $1,000 contribution to his campaign. A week later, she spoke on the phone with Jeff Farrah, Brown's counsel for commerce, trade and judiciary. On March 29, she met with Brown himself -- and that very same day, contributed another $1,500 to the senator's war chest.

None of these senators' press offices were forthcoming when asked by HuffPost whether the senators might have been aware of any connection between Chadwick's visits and the contributions; whether they discussed the contributions with Chadwick, or inquired about them; whether they had any concerns now that the source her donations was foreign; and whether they intended to return the money.

Hatch's press secretary, Antonia Ferrier, said there was no record on Hatch's calendar of a meeting with Chadwick on Jan. 28 -- but wouldn't say whether such a meeting took place on another date.

"Senator Hatch follows the law to the letter -- all contributions are disclosed and can only be made by U.S. nationals," Ferrier wrote in an email.

"What Orrin Hatch does as a Senator and as Ranking Member of the Finance Committee is kept completely separate from what he does running for reelection," she wrote, adding, "he always has and always will fully comply with the law. And the law is very clear that no foreign national can make contributions."

Ferrier did not respond to follow-up questions.

Heller press secretary Stewart Bybee replied elliptically, in an email: "Mr. Heller did not have a meeting with the South Korean Government on March 8th. In fact, there has never been a meeting in Mr. Heller's House or Senate office with the South Korean government."

Bybee did note that "Ms. Chadwick has a long history of supporting Senator Heller and represents a number of interests important to the State of Nevada including the American Gaming Association." Bybee declined to respond to follow-up questions on the record.

Despite repeated attempts, HuffPost was unable to get a response from Brown's press office. Chadwick herself also did not respond to several detailed messages requesting comment.

One lobbyist willing to speak to HuffPost was William H. Nixon, chairman of the Washington firm Policy Impact Communications. His firm's name came up earlier this month when POGO asked the Justice Department to investigate allegations that the government of Kazakhstan had made illegal campaign contributions through its lobbyists.

The allegations emerged after a dispute between Rahkat Aliyev, the ex-son-in-law of Kazakh President Nursultan Nazarbayev, and his former father-in-law spawned a lawsuit in D.C. federal court. Relatives of Aliyev, who are suing alleged agents of the Kazakh government for seizing their assets, entered as evidence a letter they say shows that the Kazakh government planned to financially reward members of a congressional caucus created by the embassy. The defendants say the letter was forged.

What is not in dispute is that both sides hired lobbyists for their causes; lobbyists working on behalf of the Kazakh president did help create two pro-Kazakh congressional caucuses; and some of those lobbyists made campaign contributions to some of the caucus members.

Nixon's firm helped create one of the pro-government groups, called the Central Asia Caucus, in late 2009, The New York Times reported. The group was ostensibly devoted to strengthening relations between the U.S. and Central Asia, and Kazakhstan in particular.

Federal Election Commission records also show that Nixon made campaign contributions to three of the co-chairs of the caucus, including $2,400 (a sum also matched by Nixon's wife, Tamera) to the reelection campaign of Eni F. H. Faleomavaega, the delegate from American Samoa.

But Nixon says none of this had anything to do with foreigners funding American elections or trying to buy off members of Congress. It's just a lobbyist doing his job, he says, which largely involves building relationships, which in turn involves making campaign donations.

"There's really no distinction between one client and another, when you engage in the political process here," Nixon says. "The relationships are built, frankly, independently -- with friends and ideological partners, often independently from the clients you're actually representing."

As for the delegate from Samoa: "The fact is Congressman Faleomavaega has been a dear friend of mine for years and years," Nixon says. "And the relationship he had -- independent of me -- with Kazakhstan had nothing to do with the donation I made to the campaign."

Nixon says that he had stopped representing Kazakhstan by the time of the donation.

"There's no question that when you are in this industry, that you support your friends and allies with whom you've had association for many years. But that support never comes -- at least from my perspective -- it never comes with any expectation of favoritism or quid pro quo," he says.

"Obviously, money is the mother's milk of politics and it's a constant effort these senators and congressmen need to make to support their political campaigns," Nixon says.

But he laughs off the notion that governments are trying to buy off members of Congress with the kinds of campaign contributions lobbyists are making. "The contribution to the elected officials frankly is de minimus," he says -- in other words, small change.

"The idea that you could own a politician for 2,000 bucks? Maybe they've got their price," he says, chuckling, "but it's not 2,000 bucks."

Concern about foreign influence on U.S. elections is hardly new, of course. The issue made headlines in 1997, when allegations emerged that the Chinese government had tried to funnel money to the Democratic National Committee during the 1996 election. In the 2008 race, Republican nominee John McCain's top foreign policy adviser was found to have lobbied McCain's own staff on behalf of the Republic of Georgia even while he was advising the campaign. In 2010, liberal groups accused the U.S. Chamber of Commerce of spending both domestic and foreign money in a $33-million anti-Democratic ad-buying spree. (The Chamber insisted it keeps foreign money segregated.)

When it comes to foreign lobbying and campaign donations, campaign finance reformers suspect that everyone involved is being careful not to cross certain lines.

"The client is likely not directing those contributions -- because they're relying on the lobbyist to know when the contributions help. But everyone knows the contributions help," says Sheila Krumholtz, executive director of the Center for Responsive Politics, a group that tracks the influence of money in politics.

As for lobbyists who make campaign contributions the same day they make requests of members of Congress, "when you have that kind of sequence of events, that's about as close to a quid pro quo as you can get," says Sunlight's Allison.

Adds Krumholtz: "I think the timing is, at a minimum, worth scrutiny and possibly suspect."

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Dan Froomkin is senior Washington correspondent for The Huffington Post. You can send him an email, bookmark his page; subscribe to his RSS feed, follow him on Twitter, friend him on Facebook, and/or become a fan and get email alerts when he writes.

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