We don’t know much about how the US Chamber of Commerce funds its political campaigns. In fact, that’s the essential feature of its operations—as a 501(c)(6) trade organization, the chamber has no obligation to disclose who funds its electioneering campaigns, and so corporations can give massive amounts of money to the chamber without having any fingerprints on the resulting attack ads that hammer Democrats and push for industry deregulation.
But it’s a funny thing—every time we get a glimpse into how the chamber operates, there are whiffs of impropriety.
For years, good-government groups have been raising red flags about potential tax fraud that the chamber may have committed in 2003 and 2004, in which it may have used $18 million illegally funneled through charitable groups to support a campaign to roll back the Sarbanes-Oxley financial regulation, “reform” tort laws, and defeat Democrats in the federal elections. Now, New York Attorney General Eric Schneiderman has taken up the cause, and issued wide-ranging subpoenas Wednesday targeting those transactions. The New York Times aptly calls this the “first significant [investigation] in years into the rapidly growing use of tax-exempt groups to move money into politics.”
There are three players in this alleged scheme—the US Chamber of Commerce itself and these two organizations:
The Starr Foundation. This is a 501(c)(3) charitable group that, during the period in question, was headed by AIG chairman Maurice Greenberg. In the mid-aughts—before he was forced to resign from AIG amidst an investigation by another New York attorney general, Eliot Spitzer—Greenberg was a vocal opponent of financial regulation and Sarbanes-Oxley in particular, saying the law had a “chilling effect on the economy” and would discourage financial firms from “risk-taking.” He also vowed to wage “all-out war” to push for tort reform that limited class-action lawsuits. (As an insurer, AIG had good reason to hate big lawsuits, and in 2003, AIG lost $1.8 billion and blamed “egregious jury awards and settlements for litigation.”)
The National Chamber Foundation. This is also a 501(c)(3) charitable organization, affiliated with the US Chamber of Commerce, that bills itself as a think tank that “drives the policy debate on key topics and provides a forum where leaders advance cutting-edge issues facing the US business community.” Interestingly, however, 86 percent of the NCF’s assets are outstanding loans to the chamber itself.
As 501(c)(3) organizations, the Starr Foundation and NCF are strictly prohibited from engaging in political activities. But an exhaustive analysis of the two groups’ public filings by the good-government group US Chamber Watch revealed a very intriguing flow of money in 2003 and 2004.