New Bill Seeks to Ban Multinational Corporations From Spending Money in California Elections

California Assemblymember Alex Lee introduced today AB 1819 to bar multinational or foreign-influenced corporations from spending money to influence elections in the state.

The "Stop Foreign Influence in California Elections Act" would prohibit foreign-influenced corporations from contributing to candidates, parties, or committees (including super PACs) or from engaging in their own direct election spending. Significant foreign ownership is defined as any business that meets one of the following conditions:

• A foreign owner holds, owns, controls, or has beneficial ownership of one percent or more of the business;

• Multiple foreign owners hold, own, control, or have beneficial ownership of five percent or more of the business;

• A foreign owner participates directly or indirectly in the business entity's decision-making process with respect to political activities;

The Supreme Court's January 2010 decision in Citizens United v. FEC sanctioned unlimited political spending by corporate entities as political "speech" protected by the First Amendment on the claim that corporations are "associations of citizens." As many major corporations are owned in substantial part by foreign shareholders, they can now circumvent federal law which explicitly prohibits foreign nationals from making any political expenditures in U.S. elections.

In California and across the country, multinational corporations have used their money to influence the outcome of elections and to advance political agendas in their favor. Fossil fuel giant Chevron, which counts Norges Bank among its top stockholders, spent $3 million in 2014 in an attempt to replace progressive city councilors in Richmond with candidates less intent on regulating emissions.

In 2019, Amazon spent $1.5 million to try to influence the outcome of city council elections in Seattle. The corporation, which includes significant foreign ownership, has notoriously opposed workers' rights legislation proposed by the Seattle City Council, including an increase to the minimum wage in Seattle to $15 per hour, and a per-employee tax on high-grossing corporations that the City Council passed and then rescinded following pressure from the company. In response to this unprecedented political expenditure, the Seattle City Council, in January 2020, unanimously passed a law to end foreign-influenced corporate spending in the city's local elections, model legislation which Assemblymember Lee is now seeking to advance in California.

In 2020, the Canadian Government's public utility, Hydro-Quebec, spent nearly $10 million to oppose a ballot measure in Maine. The political expenditure has ignited bipartisan concern in Maine about the role of foreign-influenced corporations in Maine elections.

All of these companies fit the definition of having significant foreign ownership as set forth by Assemblymember Lee's bill and would therefore be barred under this legislation from exerting future influence on state elections through campaign spending.

Foreign investment in U.S. companies has increased dramatically in recent years. In 1982, foreign investors owned about 5% of all U.S. corporate equity (public and private). By 2019, foreign investors owned 40% of U.S. equity.

"President George Washington, in his Farewell Address, warned of the insidious wiles of foreign influence as one of the biggest threats to a republic government," said Assemblymember Alex Lee. "Our reform to stop foreign-influenced corporations from exerting influence in California's elections is crucial to protecting the integrity of our democratic self-government."

Assemblymember Lee's bill is based on model legislation drafted by Free Speech For People, a leading organization in the country fighting to end foreign-influenced corporate spending in our elections. Following the passage of this legislation in Seattle in 2020, similar legislation has been introduced in the US Congress and in Hawaii, Massachusetts, Minnesota, New York, and Oregon.

"Foreign-influenced corporations spend millions of dollars in our elections," says Alexandra Flores-Quilty, the Campaign Director of Free Speech For People. "Their dollars overwhelm the voices and votes of Americans. This poses a critical threat to the integrity of our elections and democracy. Assemblymember Lee's legislation will help put elections back into the hands of voters by banning foreign-influenced corporations from political spending."

"I think most Californians would be shocked to learn that 40% of all the shares held in US corporations is held by foreign investors - I know I was," says Michele Sutter, President and Co-Founder of Money Out Voters In (MOVI), "When Justice Kennedy wrote that corporations could spend as much money as they wanted to in our elections, he justified it by saying that a US corporation is "an association of citizens." Well, it turns out a lot of them are not associations of citizens. Justice Kennedy and the Court created a loophole for foreign money to pour into our elections and Assemblymember Lee's bill closes it. This is about our sovereignty. US election law says there shouldn't be any foreign money in US elections, so there shouldn't be any foreign money in US elections."

"With the introduction of this people-powered legislation, Assemblymember Lee has taken a big step toward protecting California's elections and ballot initiatives," says Michael Sozan, a senior fellow at the Center for American Progress. "This pro-democracy bill would stop foreign-influenced U.S. corporations from spending unlimited money to warp California's self-government. The Center for American Progress looks forward to working with Assemblymember Lee and other lawmakers to pass this much-needed legislation."