Campaign finance: Supreme Court declines case on contributions by corporations

A ban on contributions to candidates from corporations has been in effect since 1907. On Monday, the Supreme Court turned away a campaign-finance case seeking to allow such contributions.

The US Supreme Court declined on Monday to take up a case testing whether a century-long ban on political contributions to candidates from corporations violates corporations’ freedom of speech.

The action came without comment by the justices.

At issue in the case was a section of federal election law that permits contributions of up to $2,500 from individuals, partnerships, and limited liability companies. But campaign-finance laws ban the same amount when coming from a corporate treasury.

The ban on corporate contributions to candidates has been in effect since 1907.

The case, Danielczyk v. United States (12-579), arose in the wake of the high court’s controversial 2010 decision in Citizens United v. Federal Election Commission.

In the Citizens United case, the Supreme Court ruled that corporations are entitled under the First Amendment to spend unlimited corporate money when making independent political expenditures during election season. The justices struck down a ban on such expenditures, saying that corporations enjoy free-speech rights just as individuals do.

Critics say the ruling opened the floodgates to independent expenditures by advocacy groups organized as corporations, drowning federal elections in massive amounts of corporate money that has funded a blitz of independent political advertisements.

In Danielczyk v. US, lawyers had sought to extend the Citizens United decision to lift a ban on corporate contributions to candidates.

The issue arose in a case filed against two corporate officers who allegedly sought to channel funds from their company to support Hillary Rodham Clinton during both her reelection campaign in the Senate and her unsuccessful run for the Democratic presidential nomination in 2008.

William Danielczyk and Eugene Biagi were officers of Galen Capital Group and Galen Capital Corp., both of Nevada. According to briefs in the case, the men hosted fundraisers for Mrs. Clinton in 2006 and 2007.

Mr. Danielczyk asked his employees to attend the fundraisers and assured them that they would be reimbursed for the amounts they contributed to the Clinton campaign, according to the indictment.

The indictment charges that the employees served as “straw donors” who were reimbursed $156,400 in corporation funds for their contributions to the Clinton campaign. The corporate officials listed the repayments to their employees as consulting fees. The repayments to the staff were slightly larger than the amount of the political contributions.

The Clinton campaign was unaware of the scheme, according to the government’s brief. Clinton campaign officials reported the funds as legitimate contributions.

After Danielczyk was charged in a seven-count indictment, his lawyer challenged one of the counts that accused him of knowingly contributing corporate money to a political campaign.  

The lawyer argued that the ban on corporate contributions was unconstitutional in the wake of the high court’s decision in the Citizens United case.

A federal judge agreed, ruling that if a $2,500 contribution given by an individual was not a source of corruption, then a similar $2,500 contribution given by a corporation could also not be a source of corruption.

The Fourth Circuit Court of Appeals overturned the decision. The appeals court said that other, earlier campaign-finance precedents that were not overruled in the Citizens United case were still binding law that upholds the ban on corporate contributions.

The high court action – declining to take up the case –allows the Fourth Circuit decision to stand.

US Solicitor General Donald Verrilli urged the justices to reject the petition for review. “[T]he century-long ban on corporate-treasury contributions is a fundamental feature of campaign-finance regulation, and its approval by this Court should not be revisited,” Mr. Verrilli wrote in his brief.