In today’s globalized world, U.S. subsidiaries of foreign corporations play a significant role in the U.S. economy. And it is common for foreign nationals to have lead roles in both U.S. corporations and the domestic subsidiaries of foreign entities. Companies whose business success requires engagement with federal, state and local lawmakers must understand the restrictions on political activity that apply to foreign national persons and entities. Missteps in this arena can lead to civil and criminal sanctions and damage to your organization’s reputation.
Federal law prohibits foreign national individuals and corporations from making political contributions to federal, state and local candidates and other political committees, including PACs. With regard to individuals, only U.S. citizens and lawful permanent residents (i.e., “green card holders”) can contribute to candidates and political committees. However, U.S. subsidiaries of foreign corporations can make state and local political contributions, where permitted by state law, provided that the contributions are not financed by the foreign parent and foreign nationals do not participate in decision making regarding the contributions. These U.S. subsidiaries can also establish and support a federally-registered PAC so long as the foreign parent does not finance PAC administration and safeguards are put in place to ensure that foreign nationals do not direct or manage the PAC’s activities.
Since indirect as well as direct contributions by foreign nationals are illegal, any contributions made by foreign nationals through intermediaries – by way of reimbursements, bonuses, or otherwise – will violate federal law. Also, third parties who knowingly solicit or accept foreign national contributions or provide “substantial assistance” in making or accepting foreign national contributions may face civil and criminal sanctions.
Opportunities do, however, exist for foreign nationals to engage in political activities that promote corporate objectives. In addition, to the avenues for corporate support by domestic subsidiaries noted above, the Federal Election Commission has recognized many ways that foreign national individuals can participate legally in the political process. For example, in a series of advisory rulings foreign nationals have been permitted on a voluntary basis to attend political fundraisers and speeches, distribute campaign literature, canvass voters, work on telephone banks, solicit contributions, and even serve as campaign staff members.
The FEC’s regulations in this area are complicated and the advisory rulings are fact specific. As a result, foreign corporations, their U.S. subsidiaries, and foreign national individuals are well advised to seek counsel prior to engaging in any U.S. political activity.