Bill requires campaign-finance disclosure
Rep. Kathleen Clyde is proposing legislation to close a loophole exposed in last year’s prescription-drug ballot initiative.
The bill would prohibit campaign contributors from forming limited liability corporations — LLCs — to avoid disclosing the sources of political contributions the way pharmaceutical companies did in their fight against Issue 2.
“Too often, wealthy individuals, corporations and other entities can keep their influence secret by using innocuous-sounding companies and organizations while the names of the real players are hidden from the public. This lack of transparency is corrupting our democratic system by putting some politicians in the pockets of secretive special interests,” Clyde, a Democrat from Kent who is running for secretary of state, said in a statement.
“That’s why I’m sponsoring the Ohio DISCLOSE Act to strengthen disclosure requirements and ban foreign money from campaigns in Ohio.”
So far, no Republican lawmakers have signed up as co-sponsors of the bill.
Clyde’s opponent for secretary of state, Sen. Frank LaRose, R-Hudson, said he hasn’t seen the bill, but, “I have been a consistent supporter of greater transparency and introduced legislation to strengthen our campaignfinance laws. Ohioans deserve to know who’s funding campaign ads, so I look forward to reviewing the representative’s bill hoping that’s what it accomplishes.”
The issue surfaced last fall as part of the fight over Issue 2, which would have required Medicaid and several state agencies to pay no more for prescription drugs than the U.S. Department of Veterans Affairs does.
Big drug companies plowed $4.2 million into a successful fight to block the initiative, but Clyde they avoided having to disclose which companies gave and how much by forming an LLC and funneling funds through that into a political action committee. The Ohio Elections Commission ruled that the PAC only had to report that the money came from the LLC — not which companies making the original donations.
Clyde and other critics said that in this case, individual drug companies avoided bad publicity. But without more transparency, there’s no way to know whether funds spent influencing the political process are coming from a hostile foreign power.
Clyde noted a report by the left-leaning Center for American Progress saying that in 2015, a Chinese businessman used a similar vehicle to funnel $1.3 million to a super PAC supporting Jeb Bush for president.
In the 2010 Citizens United decision allowing unlimited corporate political spending, a majority of the U.S. Supreme Court said that would be OK so long as the public knew the sources of the funds used to communicate political messages. Critics note, however, that nontransparent “dark money” has flooded into the process since.
“The secret money flooding our elections every cycle is a grave danger to the health of our democracy and a government that works for the people,” said Tiffany Muller, president of End Citizens United. “Ohioans deserve full transparency and disclosure of election spending and we must no longer permit special interests to hide in the shadows. End Citizens United fully supports Rep. Clyde’s proposal to ban secret money and foreign contributions in Ohio elections.”
Muller’s group is supporting national legislation on which Clyde’s measure is modeled. Her bill, which was filed this week, would require PACs to report the original sources of their money or face fines of up to $100 a day.