As a huge documents leak turns a spotlight on the global tax evasion industry, a Swiss company in hot water for similar activity is responsible for the greatest amount of known foreign-connected money in U.S. elections so far this cycle.
News outlets brought together by the Washington, D.C.-based International Consortium of Investigative Journalists this week began publishing numerous reports, called the Panama Papers, linking the names of the world’s most rich and powerful individuals to secret shell companies in offshore tax havens. The journalists used as source material documents from “the biggest leak in whistleblower history,” according to Wired, which came from a Panamanian law firm that has for decades helped conceal vast amounts of wealth in tax shelters.
But ICIJ had been tracking tax evasion long before helping bring the Panama Papers to light, and in February wrote on the findings of an investigative report by the French newspaper Le Monde on UBS AG. The report showed the Swiss bank “knowingly helped French citizens hide their money from the taxman,” according to ICIJ.
French authorities in 2014 said the bank helped French citizens hide between U.S. $14 billion and $26 billion, according to ICIJ. The bank denied the charges. The report also notes that American authorities opened a new tax evasion case on UBS last year — after the bank paid the U.S. a $780 million fine in 2009.
It’s the bank’s U.S. subsidiary — UBS Americas — that has directed more money to Congress through its political action committee than subsidiaries of any other foreign company. UBS Americas’ PAC has given $645,250 to candidates so far in 2016 and gave about $1.5 million in 2014. The firm in second place isn’t even close: The U.K.’s BAE Systems has given $363,500 so far.
There isn’t much foreign nationals and companies can do — legally — to try to influence U.S. elections. They can lobby Congress, but no foreign national or corporation may give money to candidates, parties or other political committees under federal election rules (with the exception of foreign nationals who hold “green cards” giving them permanent resident status).
Like many foreign-owned companies, though, UBS has a U.S. subsidiary with employees who, as American citizens, may legally give to candidates and committees, including the company’s PAC. Company lobbyists — including former Sen. Phil Gramm (R-Texas), a onetime chairman of the Senate Banking Committee — can help direct contributions from the PAC (up to $5,000 per candidate, per election, per cycle) to congressional candidates, among them incumbents who sit on committees relevant to the company’s interests.
It’s the bread and butter of Washington influence, and foreign companies get in on the action to the tune of about $20 million — the combined amount they all gave to candidates in 2014.
Concern about the possible seepage of foreign money into U.S. elections has been around a long time. One of the central issues in the campaign finance scandal that enveloped the 1996 elections was the true source of funds contributed by people tied to Chinese interests (remember names like John Huang and Charlie Trie?). Since the Supreme Court’s 2010 Citizens United decision, there have been questions about whether money used by politically active nonprofits who don’t have to publicly disclose their donors may be coming from foreign sources. And secretive limited liability companies have been turning up with increasing frequency as contributors to super PACs; the LLCs provide another route for possible foreign influence.
Just last week, FEC Commissioner Ellen Weintraub, in an op-ed in the New York Times, raised questions about the fact that even American companies have foreign shareholders — so should those corporations be allowed to give large sums of money to super PACs?
As for UBS Americas, it has led the pack in PAC giving for the past three cycles. Its political giving shot up in 2012 to $861,500 from $469,500 in 2010.
The PAC favors Republicans this cycle, sending $443,750 to GOP candidates and $201,500 to Democrats. Like others in the securities and investment industry, it used to support both parties nearly evenly, but has leaned more and more to the right over the last six years.
So far in 2016, 20 members have received maximum contributions of $10,000 from the bank’s PAC. Among them are Rep. Jeb Hensarling (R-Texas), who chairs the House Financial Services Committee, along with six other Republicans and one Democrat on the committee — Reps. Sean Duffy (R-Wis.), Scott Garrett (R-N.J.), Bruce Poliquin (R-Maine), Ed Royce (R-Calif.), Steve Stivers (R-Ohio) and Ed Perlmutter (D-Colo).
Per Dyrvik, who leads the PAC, did not reply to a request for comment.