Federal Election Commission Main Page
October 27, 1989
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
ADVISORY OPINION 1989-20
Bruce C. Bigelow, Esquire
Case & Lynch
P.O. Box 494
Honolulu, Hawaii 96809-0494
Dear Mr. Bigelow:
This responds to your letter dated September 5, 1989,
requesting an advisory opinion on behalf of Kuilima
Development Company, Inc. ("Kuilima") concerning the
application of the Federal Election Campaign Act of 1971, as
amended ("the Act"), and Commission regulations to
contributions in non-Federal elections by a political action
committee which depends on financial support from a Japanese
corporation.
You state that Kuilima proposes to "establish" a
political action committee which will make contributions to
candidates in state and local elections in Hawaii. According
to your request, Kuilima is a wholly owned subsidiary of
Asahi Jyuken (U.S.A.), Inc. ("Asahi USA"), which is, in turn,
a wholly owned subsidiary of Asahi Juken Co., Ltd. ("Asahi
Japan"). Kuilima and Asahi USA are incorporated under the
laws of Hawaii, while Asahi Japan is incorporated under
Japanese law. The principal places of business and the
executive and administrative offices of Kuilima and Asahi USA
are located in Hawaii. All of the directors and officers of
those two companies are Japanese nationals, but most of their
employees and consultants are citizens of the United States.
You note that Kuilima is involved in developing
commercial real estate projects in Hawaii and that all of its
projects are in the first stages of development. These
projects do not generate income for Kuilima. Kuilima,
therefore, obtains almost all of its funding from loans and
contributions to capital by Asahi USA which, in turn, obtains
most of its funding from loans and contributions to capital
by Asahi Japan.
You state that the proposed political action committee
"will be run independently of Kuilima," and will be governed
by three persons, each of whom will be a United States
citizen. These persons will exercise all decision-making
authority with respect to the committee. You state that
their decisions will not be dictated or directed by Kuilima,
Asahi USA, Asahi Japan, or any of their officers or
directors. The committee will not make contributions to
Federal candidates. It will not solicit or accept funds from
persons who are foreign nationals, but will obtain most, and
perhaps all, of its funding through corporate contributions
from Kuilima.
You ask whether, under the Act and regulations, the
committee will be permitted to make contributions to state
and local candidates in Hawaii. Implicit in your question is
the issue of whether the committee, as a contributor to state
and local candidates, may accept contributions from Kuilima.
Under the Act and Commission regulations, foreign
nationals are prohibited from making contributions, directly
or through any other person, in connection with an election
to any political office. In addition, it is unlawful for any
person to solicit, accept, or receive any such contribution
from a foreign national. 2 U.S.C. §441e(a); 11 CFR
110.4(a)(1) and (2). As defined in the Act, the term
"person" includes a corporation or a committee.F
The Commission notes that the Hawaiian statutory sections
pertaining to "Election Campaign Contributions and
Expenditures" permit corporate contributions up to $2,000 per
election for state and local candidates. HRS §§11-191(17)
and 11-204(a). Hawaiian election statutory provisions
cannot, however, allow a corporation to engage in activity
that is barred by 2 U.S.C. §441e.
F 2 U.S.C.
§431(11). Unlike most of the other provisions of the Act,
§441e applies to any election for any political office,
including state and local offices as well as Federal offices.
According to 2 U.S.C. §441e(b)(1), the term "foreign
national" includes a "foreign principal" as defined
specifically by 22 U.S.C. §611(b). Section 611(b) defines a
"foreign principal" as including:
(1) a government of a foreign country and a
foreign political party:
(2) a person outside of the United States,
unless it is established that such person is
an individual and a citizen of and domiciled
within the United States, or that such
person is not an individual and is organized
under or created by the laws of the United
States or of any State or other place
subject to the jurisdiction of the United
States and has its principal place of
business within the United States; and
(3) a partnership, association, corporation,
organization, or other combination of
persons organized under the laws of or
having its principal place of business in a
foreign country.
Under 22 U.S.C. §611(b), a corporation organized under
the laws of any state within the United States whose
principal place of business is within the United States is
not a foreign principal and, accordingly, would not be a
foreign national under 2 U.S.C. §441e. Section 441e,
however, also prohibits contributions by a foreign national
through any other person. Asahi Japan is a foreign national
under 22 U.S.C. §611(b)(3). Because Asahi Japan is the
predominant source of funds for Kuilima and, through Asahi
USA, owns all of Kuilima, it would essentially be making
contributions to the committee through Kuilima. Such
contributions to a committee supporting state and local
candidates would be contrary to the Act and regulations. See
Advisory Opinion 1985-3. In addition, because the committee
will accept most and perhaps all of its funds from such a
source, it would be acting as a vehicle through which funds
were sent to state and local candidates. Contributions by
the committee to such candidates would, therefore, be
prohibited. See Advisory Opinion 1981-36.
In determining whether a corporation that is not a
foreign national, but is a subsidiary of a foreign national
parent, is permitted to make contributions in connection with
state and local campaigns for political office, the
Commission has also considered the status of the
decision-makers involved. The Commission has conditioned
such permission on the basis that no director or officer of
the company or its parent who is a foreign national may
participate in any way in the decision-making process with
regard to making the proposed contributions. See Advisory
Opinions 1985-3 and 1982-10. Since all of the directors and
officers of Kuilima are foreign nationals, it appears that
the company will not be able to satisfy this condition.
Therefore, even if Kuilima were not funded predominantly by a
foreign national corporation, it still would not be able to
contribute to the proposed committee.
This response constitutes an advisory opinion concerning
application of the Act or regulations prescribed by the
Commission to the specific transactions or activities set
forth in your request. See 2 U.S.C. §437f.
Sincerely,
(signed)
Danny L. McDonald
Chairman for the
Federal Election Commission
Enclosures (Advisory Opinions 1985-3, 1982-10, and 1981-36)