AB 83, the “Stop Foreign Money in California Elections Act” passed out of the Elections Committee (5-2) and is now headed to the Appropriations Committee. The bill prohibits foreign influenced corporations from contributing to candidates, parties, or committees (including super PACs) in order to protect the integrity of California’s self-governance.
While existing federal law prohibits a foreign government, foreign political party, foreign-incorporated corporation, or individual foreign national who is not lawfully admitted for permanent residence from spending money on federal, state, or local elections, federal law does not address the issue of political spending by U.S. corporations that are partially owned by foreign investors. And, foreign investments in US companies have skyrocketed in recent years. In 1982, foreign investors owned about five percent of all U.S. corporate equity (public and private). By 2019, foreign investors owned 40% of U.S. equity including foreign governments.
Governments throughout the world own substantial positions in politically active U.S. companies. Norges Bank, the central bank of Norway, has a stake in more than 9,000 companies worldwide and on average holds 1.4% of the US’s publicly traded companies including Microsoft, Facebook, and Netflix. Saudi Arabia also announced earlier this year they plan to invest about $10 billion into companies, more than doubling its assets by 2025.
Recently, when Elon Musk acquired Twitter and took it private, Prince Alwaleed bin Talal bin Abdulaziz of Saudi Arabia agreed to convert his shares of Twitter, worth nearly $2 billion, and became Twitter’s second largest shareholder after Musk. He now owns approximately 4% of Twitter.
Since the US Supreme Court’s 2010 ruling in Citizens United v. FEC, there has been a massive loophole that allows foreign interests to acquire stakes in U.S. corporations and then use that leverage to influence or control the corporate political activity, including campaign contributions, contributions to super PACs, and independent expenditures. AB 83 would close that loophole and ensure that California elections are free from foreign influence by prohibiting foreign influenced corporations from making contributions. “The former CEO of US-based ExxonMobil once infamously said, ‘I'm not a US company, and I don’t make decisions based on what’s good for the US,’ said Assemblymember Alex Lee. “Our reform to stop foreign-influenced corporations from exerting influence in California’s elections is a major move to close a giant loophole in Citizens United.”
A corporation would be deemed “foreign influenced” if:
- 1% of shares are owned by a single foreign investor
- 5% of shares are owned by multiple foreign investors
- A foreign entity participates in decision-making with respect to state or local political spending
The bill is co-authored by Assemblymember Ash Kalra (D-San José) and co-sponsored by Free Speech For People, Money Out Voters In (MOVI), and Center for American Progress (CAP).