Editorial: FPPC opens a window into how dark campaign money travels

Published: Sunday, Oct. 27, 2013 - 12:00 am

In some ways, the Watergate era was a simpler time.

The Committee to Re-elect the President, Richard Nixon, had a slush fund. Cash from the slush fund ended up in the pockets of Watergate plotters and the five guys who bungled the third-rate burglary of the Democratic headquarters at the Watergate Hotel.

In 1974, California voters reacted by overwhelmingly approving the Political Reform Act. The act, which remains a model in many ways, requires public disclosure of campaign donations and created a strong commission to enforce its provisions.

However, the Political Reform Act was written when nonprofit corporations did charitable work. It needs to be updated to deal with nonprofit shells that are used to hide the sources of campaign money.

That became apparent once more last week when the California Fair Political Practices Commission and California Attorney General Kamala Harris concluded a yearlong effort to trace $15 million spent to promote Proposition 32, rejected last November. The initiative was intended to block unions from raising money, though its promoters claimed it would have taken special-interest money out of the system.

The investigation shed light on a network of nonprofit corporations led by David and Charles Koch, the billionaire industrialists who fund many conservative and libertarian causes and campaigns.

The commission levied separate $500,000 fines on two Arizona entities, the Center to Protect Patient Rights and Americans for Responsible Leadership. A $1 million penalty is not chump change. But because of holes in the 1974 law, the commission could not discover the identities of the individual donors.

Assemblyman Richard Gordon, a San Francisco Peninsula Democrat, is carrying Assembly Bill 800, which would make clear that the FPPC can audit a campaign before an election.

A second Gordon bill, AB 914, and Senate Bill 27 by Sen. Lou Correa, D-Santa Ana, would greatly expand disclosure requirements for nonprofit corporations engaged in political activity in California.

All three measures stalled last month as the legislative session ended. Lawmakers should approve the bills in one of their first orders of business when they return in January.

Thanks to documents released by the FPPC last week, the public got a glimpse into how dark campaign money travels these days.

Two Sacramento operatives, Tony Russo and Jeff Miller, raised about $28 million primarily to promote Proposition 32, promising donors they would remain anonymous.

Russo and Miller forwarded the money to a Virginia nonprofit, Americans for Job Security, which sent $24 million to the Center to Protect Patient Rights in Arizona.

The center gave $7 million to American Future Fund in Iowa, which created California Future Fund, and spent $4 million on ads in California for Proposition 32.

The center also gave $13 million to another Arizona entity, Americans for Responsible Leadership, which gave $11 million to Small Business Action Committee in California, which aired ads supporting Proposition 32.

Nixon and the people who ran CREEP would have nodded in appreciation.

No doubt, the irony was not lost on voters that Proposition 32’s promoters used $15 million in dark money to promote a measure that supposedly would have cleaned up the system. The sordid episode makes clear that legislators need to update the law so the public can follow the money before an election, not a year after the votes are counted.

Read more articles by the Editorial Board



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