Money

A complex web of front groups is masking corporate election spending almost entirely

California’s Fair Political Practices Commission forced a mysterious $11 million donor to two ballot measures to reveal its secret funding sources today, and the result showed how most of these independent expenditure groups work, mostly through money laundering:

Ending a mystery that captivated the run-up to Election Day, the Arizona group behind an anonymous $11 million donation revealed under court order today that the shadowy donation was laundered through two groups, including one tied to David and Charles Koch, the billionaire brothers who have played a huge role in spreading anonymous political cash around the country.

The donation, the largest anonymous contribution to a ballot measure campaign in California history, was made to the Small Business Action Committee, a conservative group running a campaign for Proposition 32, the measure that would curb labor’s ability to collect political cash, and against Proposition 30, Gov. Jerry Brown’s tax-hike initiative.

“This isn’t going to stop here,” said Ann Ravel, chairwoman of the Fair Political Practices Commission, the state’s political watchdog. “They admitted to money laundering. We agreed to do this without an audit because we wanted to get information to the public before the election. But we in no way agreed this would preclude further action.”

Ravel said Phoenix-based Americans for Responsible Leadership conceded it was the intermediary and not the true source of the contribution. The true source was Americans for Job Security and was made through a second intermediary, the Center to Protect Patient Rights, she said.

Americans for Job Security was both active in the 2010 election cycle. They are a corporate front group which received initial funding from the insurance industry. And the Center to Protect Patient Rights is run by a Koch Brothers operative, Sean Noble, who admitted the money laundering to the FPPC. This is a misdemeanor under California law, but conspiracy to commit money laundering is a felony.

What we really see in these revelations is the complex web of front groups that mask corporate spending almost entirely. Hearing that Americans for Responsible Leadership donated a large sum of money that was seeded by Americans for Job Security just replaces one brick wall with another, as far as transparency is concerned. And this is par for the course in campaign finance – layers of spending and intermediaries and front groups to make it as difficult as possible to divine the true source of the donations.

The spending in California went toward two ballot measures. Prop 32 would essentially eliminate union participation in politics in the state, while Prop 30 would increase taxes to fill a budget gap on education spending. The funding went toward Yes on the former and No on the latter. Prop 32, opposed by a strong union-based campaign, will lose tomorrow. But even with that loss, you may be able to describe it as a victory, because it pulled focus from the most effective groups from the left in state politics, leaving the critical Prop 30 generally on its own to fend off right-wing attacks. Polls show Prop 30 too close to call, after being solidly ahead earlier in the cycle. So all this spending did its job, by spreading thin the spending on the left and possibly defeating a tax measure that, if it fails, will lead to more stinging cutbacks in public services and a further drowning of government in the bathtub.

This is the textbook for how these funding networks work: spend huge, everywhere, secretly if at all possible, and keep chipping away at the state until you can notch a victory. The FPPC struck a small blow for transparency here, but the system remains unbowed.

Photo by (401)K 2012 under Creative Commons license