May 8, 2012

Today, Indiana voters will go to the polls to decide the political fate of Senator Dick Lugar. The Republican primary, as many observers have noted, has been rocked by the influence of outside spending groups. Richard Mourdock, Lugar’s right-wing opponent, has been boosted by some $3 million in outside spending by gun industry groups and big business Super PACs, like FreedomWorks. The flood of outside money, enabled by the Supreme Court’s Citizens United decision, may foreshadow a general election spending spree this fall.

Lugar has also benefitted from outside corporate attack groups. A recently set-up Super PAC called “Hoosiers for Jobs,” registered last month and began spending money to defend the embattled incumbent, who was first elected to the Senate in 1976. As iWatch News reported, Hoosiers for Jobs isn’t even based in Indiana; it’s registered in Sacramento, California. But what’s also interesting about this pro-Lugar attack group is the source of its money. According to new disclosures from the Federal Elections Commission, Hoosiers for Jobs received a $25,000 donation from 7-Eleven Inc. — the convenience store chain:

Watch Hoosiers for Job’s latest television ad against Lugar’s opponent here

What’s notable about this donation is the fact that it is a direct corporate contribution from a foreign owned company. 7-Eleven Inc. is a wholly owned subsidiary of Seven & i Holdings Co., Ltd, a Japanese company.

The 7-Eleven donation could be the very first direct disclosed contribution by a foreign-owned company to a Super PAC for the 2012 race. In previous years, 7-Eleven engaged in campaigns using a regulated political action committee funded by American citizens (largely executives and employees of the company). Indeed, before Citizens United, only individuals could give to campaign committees. The Supreme Court, however, smashed this rule and opened up American elections to foreign influence. Now, corporations can give unlimited amounts. And while 7-Eleven has American franchises and even an American corporate office in Dallas, Texas, the question about foreign influence may arise given 7-Eleven’s decision to engage in the Indiana Senate race using money derived from its corporate coffers, which are governed ultimately by Japanese executives.

While 7-Eleven’s donation may be the first disclosed contribution from a foreign-owned corporation to a Super PAC, it’s not the first time foreign money has influenced a federal race in the post-Citizens United campaign landscape. In 2010, ThinkProgress broke the story that the U.S. Chamber of Commerce solicited and received corporate cash from foreign companies, in Bahrain and India, to the same 501(c)(6) the group used to air millions of dollars worth of attack ads. The Chamber acknowledged the foreign cash, but claimed that the money was segregated somehow from its political expenditures budget. Of course, money is fungible, and since the Chamber does not disclose any of its fundraising, questions still linger. The Federal Elections Commission, despite being pressed by lawmakers to investigate, refused to probe groups like the Chamber. Similarly, the U.S.-subsidiary of AstraZeneca, a London-based drug company, gave direct corporate cash to both the DGA and RGA, the so-called 527 campaign committees set up to support electing governors for their respective parties.

Many predicted the influence of foreign money. Justice John Paul Stevens, shortly before retiring from the bench, wrote a scathing dissent of the Citizens United decision. Stevens argued that the legalization of unlimited corporate money in American politics would enable foreign interests to begin dabbling in our elections. “While American democracy is imperfect,” he added, “few outside the majority of this court would have thought its flaws included a dearth of corporate money in politics.”

Does the 7-Eleven direct corporate donation violate federal law? It’s not clear. While current law prohibits foreign corporations from donating to electioneering efforts, there’s a grey area for foreign-owned subsidiaries of businesses operating in America. As ProPublica noted, “FEC regulations ban foreign nationals from contributing, but they say nothing about a foreign corporation donating money through a U.S.-operated subsidiary.” Many experts expect the subsidiary loophole to be resolved in court or by an act of Congress. The first version of the Disclose Act, debated in 2010, included a clear ban on corporate giving by foreign-owned subsidiaries. The version of the legislation introduced earlier this year did not contain this provision after heavy lobbying by foreign-owned corporations.

Notably, Lugar cast a high-profile vote that prevented a delay in the so-called Durbin Rule to cap the amount banks can charge for swipe fees. The law has been a boon for retailers and businesses that accept credit card payments — like 7-Eleven.

Republic Report sent a request yesterday for comment to Seven & i Holdings Co corporate headquarters in Tokyo, but has not received a response.