New investigation reveals a loophole that allows foreigners to give to US electoral candidates

The Supreme Court in 2010 handed down a decision that changed the rules for how money can be spent in political campaigns. By determining that money equals speech, the nation's highest court provided a legal pathway for corporations and unions to spend unlimited amounts of money to convince people to either vote for or against a candidate seeking office.

Less than a week after the ruling came down, President Barack Obama delivered his annual State of the Union address, with the Supreme Court justices just feet away.  

"With all due deference to separation of powers, last week the Supreme Court reversed a century of law that I believe will open the floodgates for special interests, including foreign corporations, to spend … in our elections,” the president said.

What couldn't be heard but was captured by cameras was Justice Samuel Alito shaking his head and mouthing the words, "Not true.”

But was President Obama wrong?

Not according to a new multi-part, series on foreign influence in US politics from The Intercept and reporter Jon Schwarz.

“In this case, it is extraordinary that Obama predicted this — that he said that this could happen, and that he was roundly criticized [for his comments],” Schwarz says. “It was a very unpopular thing for him to say at the time, but as we demonstrate in these articles, he was completely right.”

Though he was publicly chastised for taking such a stance, Schwarz says that campaign finance lawyers were working to secure as much money as possible from donors of all kinds — including foreign entities.

“We found a memo that had been written by Charlie Spies, who is perhaps the most prominent and most influential Republican campaign finance lawyer,” says Schwarz. “[The memo] was essentially a roadmap about how a US corporation, which is owned by foreign nationals, can put unlimited amounts of money into US politics.”

When looking at Jeb Bush’s campaign, Schwarz found that a California-based corporation, American Pacific International Capital Inc., gave $1.3 million to a super PAC that was supporting the former Florida governor. Though based in California, the company is owned by two Chinese nationals — Gordon Tang and Huaidan Chen.

“The most important things that his memo explains is that a corporation, if it is owned and operated in another country, then it can’t put money into US politics, but a corporation that is organized under the laws of the United States can,” he says. “So that means this corporation — American Pacific International Capital — is in fact incorporated in California, and that makes it a US company, and it makes it, according to the law, American money.”

Schwarz says many of the campaign finance proposals put forward by former Democratic presidential candidate Bernie Sanders could seriously help address this issue.

“He has a lot of great ideas,” Schwarz says. “Hillary Clinton has at least pro forma adopted a lot of them, so if these things were to become law, that would for sure be a positive step forward, and we wouldn’t have to worry as much about this type of thing. But, in particular, I would say that Citizens United is the biggest [issue]. If this remains the law of the land, we will just really never know what’s going on with our political process.”

This story first aired as an interview on The Takeaway, a pubic radio program that invites you to be part of the American conversation.

The Supreme Court in 2010 handed down a decision that changed the rules for how money can be spent in political campaigns. By determining that money equals speech, the nation's highest court provided a legal pathway for corporations and unions to spend unlimited amounts of money to convince people to either vote for or against a candidate seeking office.

Less than a week after the ruling came down, President Barack Obama delivered his annual State of the Union address, with the Supreme Court justices just feet away.  

"With all due deference to separation of powers, last week the Supreme Court reversed a century of law that I believe will open the floodgates for special interests, including foreign corporations, to spend … in our elections,” the president said.

What couldn't be heard but was captured by cameras was Justice Samuel Alito shaking his head and mouthing the words, "Not true.”

But was President Obama wrong?

Not according to a new multi-part, series on foreign influence in US politics from The Intercept and reporter Jon Schwarz.

“In this case, it is extraordinary that Obama predicted this — that he said that this could happen, and that he was roundly criticized [for his comments],” Schwarz says. “It was a very unpopular thing for him to say at the time, but as we demonstrate in these articles, he was completely right.”

Though he was publicly chastised for taking such a stance, Schwarz says that campaign finance lawyers were working to secure as much money as possible from donors of all kinds — including foreign entities.

“We found a memo that had been written by Charlie Spies, who is perhaps the most prominent and most influential Republican campaign finance lawyer,” says Schwarz. “[The memo] was essentially a roadmap about how a US corporation, which is owned by foreign nationals, can put unlimited amounts of money into US politics.”

When looking at Jeb Bush’s campaign, Schwarz found that a California-based corporation, American Pacific International Capital Inc., gave $1.3 million to a super PAC that was supporting the former Florida governor. Though based in California, the company is owned by two Chinese nationals — Gordon Tang and Huaidan Chen.

“The most important things that his memo explains is that a corporation, if it is owned and operated in another country, then it can’t put money into US politics, but a corporation that is organized under the laws of the United States can,” he says. “So that means this corporation — American Pacific International Capital — is in fact incorporated in California, and that makes it a US company, and it makes it, according to the law, American money.”

Schwarz says many of the campaign finance proposals put forward by former Democratic presidential candidate Bernie Sanders could seriously help address this issue.

“He has a lot of great ideas,” Schwarz says. “Hillary Clinton has at least pro forma adopted a lot of them, so if these things were to become law, that would for sure be a positive step forward, and we wouldn’t have to worry as much about this type of thing. But, in particular, I would say that Citizens United is the biggest [issue]. If this remains the law of the land, we will just really never know what’s going on with our political process.”

This story first aired as an interview on The Takeaway, a pubic radio program that invites you to be part of the American conversation.