Foreign Money in American Politics?

Jan. 24, 2010 — -- Some election lawyers believe that last week's landmark U.S. Supreme Court opinion may have opened a new avenue for foreign money to enter the American political system, and that the justices are inviting a repeat of the 1996 Chinese money scandal that bloodied the Clinton administration.

Thursday's opinion in Citizens United v. Federal Election Commission allows corporations to spend unlimited amounts on political commercialson the grounds that corporations should be treated just like individuals when it comes to First Amendment rights.

The problem, former Federal Election Commission Chairman Scott Thomas told ABC News, is that it's much tougher to determine whether foreign money is behind a political ad when the check is cut by a multi-national corporation.

"There are unfortunately lots of examples where foreign businesses or governments have tried to route money through U.S. subsidiaries and into party coffers," Thomas said. "Now we're permitting businesses to get involved directly in advocacy messaging. There will have to be a lot more scrutiny on the question of whether the money is coming from a foreign source, and whether it can be constrained."

Under current law, foreign nationals cannot donate to political candidates or pay for campaign ads.

Concerns that other countries might try to influence American elections are not merely academic. In the late 1990s the Justice Department and congressional investigators uncovered efforts by foreign donors to infiltrate the American political system through donations to the Democratic Party under Bill Clinton.

Among those implicated was Johnny Chung, a Clinton fund-raiser who told Federal investigators that a large part of the nearly $100,000 he gave the Democrats in the 1996 campaign came from China. According to published reports, Democrats had to return another $1.6 million brought in by another prominent Clinton money man, John Huang, after questions were raised about the source of the funds.

"It would be a very serious matter for the United States if any country were to attempt to funnel funds to one of our political parties for any reason whatsoever,'' President Clinton said at the time.

The FEC tightened its restrictions to make sure foreign individuals could not make contributions.

But what's to stop a foreign government from funneling money through an overseas company that has a U.S. subsidiary?