Following the Supreme Court’s Citizens United decision in January, the right-wing U.S. Chamber of Commerce has taken record-breaking steps to influence the 2010 midterm elections. Pledging to spend an unprecedented $75 million this year, the Chamber is in the midst of launching one of the largest partisan attack campaigns to defeat Democrats, including candidates like Jack Conway (KY), Sen. Barbara Boxer (CA), Jerry Brown (CA), Rep. Joe Sestak (PA) and  Rep. Tom Perriello (VA). Having aired more than 8,000 campaign ads on behalf of GOP Senate candidates alone and having spent 85 percent of its current expenditure on Republicans, the Chamber’s spending has “dwarfed every other issue group and most political party candidate committee spending.” It is well-established that the Chamber has used dues from corporations like health insurance giant Aetna to try to defeat health care reform, received contributions from bailed-out banks to lobby against Wall Street reform, and solicited funds from Fox News’ parent company News Corporation for its election season attack campaign. But a new ThinkProgress investigation reveals that the Chamber is leveraging foreign companies to help fund its activities. Foreign corporations that join the Chamber pay dues that go into the Chamber’s general account, which the Chamber then employs to fund its attack campaign. The Chamber “firmly denies the charge, saying its internal accounting rules prevent any foreign money from being used for political purposes.” But, as a New York Times editorial notes today, foreign money is fungible, so “it is impossible for an outsider to know whether the group is following its rules.” “We want to know what the system is. Basically, they claim they have a system, it’s not enough to simply trust them, we need to verify,” said ThinkProgress’ Editor-in-Chief Faiz Shakir on MSNBC’s Hardball with Chris Matthews yesterday. While Congressional members and watchdog groups are calling for further investigation into the charges, such campaign actions fall into “something of a regulatory netherworld” leading campaign finance watchdogs, lawyers, and current and former federal officials to believe regulatory agencies like the IRS or the FEC will not examine them closely. Thus, with the Citizens United ruling and the Chamber’s abuse of its 501(c)(6) standing, the Chamber is set to use “unlimited money from donors who have no fear of disclosure.”

HOW IT WORKS: Under the Federal Election Campaign Act (FECA), it is illegal for “foreign nationals” to “directly or indirectly” contribute, donate, or spend funds in connection with any federal, state, or local election in the U.S. It is also illegal to “solicit, receive or accept contributions or donations from them.” The U.S. Chamber of Commerce is a trade association that qualifies as a 501(c)(6) organization which can engage in limited political activity, lobbying, and accept dues from foreign members. While regular dues from American companies like Aetna or News Corp. can be used for any purpose deemed necessary by the Chamber leadership, 501(c)(6) organizations, like any organization, cannot use foreign funds to advocate for a political candidate or cause. What the ThinkProgress investigation found is that the Chamber has spearheaded efforts “to raise money from foreign corporations, including ones controlled by foreign governments” and funneled that money into its general 501(c)(6) account. Foreign members send money either directly to the U.S. Chamber or to their country’s local American Chamber (AmCham), which then transfers dues payments back to the Chamber’s H Street office in Washington, D.C. While the Chamber may claim to have internal controls, foreign funds are fungible and all dues go to the same general account, which is then used to fund the Chamber’s political attack campaign. Essentially, as Shakir pointed out , “they’re acting as a [Political Action Committee]” which “run[s] ads against political candidates. But the difference here is PACs disclose where they get the money from.” The Chamber refuses to disclose its donors.

OUTSIDE PLAYERS: The Chamber has aggressively cultivated foreign business connections to raise significant sums to augment domestic funds in its general account. In 2006, the Chamber created the “U.S.-Bahrain Business Council” (USBBC), a local office of the Chamber’s 501(c)(6) trade association to help Bahranian businesses take advantage of the Chamber’s “network of government and business relationships in the US and worldwide.” Many of the USBBC board members are Bahranian, including Bahrain Martime & Mercantile International, Aluminum Bahrain, and the state-owned Bahrain Petroleum Company. USBBC’s membership form explicitly states that foreign-owned firms are welcome and directs applicants to send or wire dues directly to the Chamber. With each USBBC board member contributing at least $10,000 annually, the Chamber of Commerce raises well over $100,000 a year in funds from its operation in Bahrain. The Chamber also operates a “U.S.-India Business Council” (USIBC) in its U.S. headquarters that includes some of India’s largest corporations like the state-owned State Bank of India and the ICICI Bank as members. Annual membership dues range from $7,500 to $15,000 or more, and the funds are funneled directly into the Chamber’s 501(c)(6) bank account. The USBIC, which advocates changing American manufacturing policy to help guide U.S companies to India, generates over $200,000 a year in dues from foreign businesses. While foreign “AmChams” operate outside the Chamber’s direct sphere, they nonetheless send dues back to the U.S. In the Middle East, for example, the AmCham in Egypt calls itself one of the Chamber’s “most active affiliates” and Abu Dhabi AmCham — which includes a subsidiary of the state-run Abu Dhabi National Oil Company — claims it is a “dues paying member” of the U.S. Chamber. The AmCham of Russia’s relationship to the U.S. Chamber is less clear because many of the dues-paying members are Russian state-run companies, like VTB Bank, and controlled by the Russian government. When asked if members do pay dues, the Russia AmCham membership development manager replied, “Unfortunately, the information that you require is closed for the public.” And in what looks like an attempt to raise money for election from foreign nationals, the Chamber also commissioned former U.S. Ambassador to Singapore and McCain-Palin campaign aide Frank Lavin to speak before foreign Chamber affiliates to talk about the stakes for the midterm elections. If such solicitation occurred, it would be a clear violation of FECA law.

TRUST AND DON’T VERIFY: Following ThinkProgress’ report, Sen. Al Franken (D-MN) wrote to the FEC — a federal agency that has ironically “been rendered toothless by its Republican members” — to launch an investigation and insist that foreign companies prove whether their funds had been used in campaign activities. He also asked the FEC to change its regulations allowing foreign companies that are incorporated in the U.S. to spend on elections. Rep. Tom Perriello (D-VA) also repudiated the funding as “fundamentally un-American and undemocratic” and called on his Republican opponent to denounce the ads. And finding Lavin’s actions to amount to “indirectly soliciting contributions from foreign nationals for the use in U.S. elections” thereby violating the FECA law prohibiting anyone “to solicit, accept, or receive” contributions, the public advocacy group MoveOn.org requested the Department of Justice yesterday to launch a criminal investigation. The Chamber, however, has responded to the allegations by claiming it does not use foreign funds for political activities, calling ThinkProgress’ report “completely erroneous” and a “partisan” “smear.” But instead of rebutting the actual allegations with evidence, Chamber spokeswoman Tita Freeman offered unverifiable assurances that the Chamber complies “with all applicable law.” “We have a system,” she said, that ensures AmChams “are not government-controlled entities.” But as for addressing whether the AmChams transfer money from government-controlled entities, the Chamber was demonstrably silent. Indeed, as ThinkProgress’ Lee Fang noted on MSNBC’s Countdown with Keith Olbermann Tuesday, “what’s alarming is the Chamber of Commerce hasn’t put out any documentation. They haven’t proved that there’s a firewall. They’re just saying, ‘hey, trust us.'” What’s more, with the Citizen’s United decision and the Chamber’s successful effort to kill a campaign finance reform bill mandating disclosure, the Chamber could continue to use foreign dues while funding more attack ads against Democrats without ever having to reveal any of its foreign contributors. Still, the Chamber insists that its unverified “system” should be enough to quell concern. As the Washington Monthly’s Steve Benen puts it, “there’s nothing like vague, terse responses from an already-secretive, conservative lobbying group to set minds at ease.”