EXCLUSIVE: Pro-Hillary group takes $200K in banned donations

By Harper Neidig and Jonathan Swan - 06/29/16 06:04 AM EDT

A super-PAC backing Hillary Clinton has accepted $200,000 in donations from a company holding multiple contracts with the federal government — despite a ban on such contributions.

According to a review of contributions by The Hill, Boston-based Suffolk Construction made two contributions of $100,000 to Priorities USA, which is backing the presumptive Democratic presidential nominee.

At the time it made the contributions, Suffolk held multiple contracts worth $976,560 with the Department of Defense for maintenance and construction projects at a Naval base in Newport, R.I., and the U.S. Military Academy in West Point, N.Y., according to the government website USASpending.gov.Suffolk — which, by Forbes’s estimate, brings in some $2 billion in revenue annually — also donated $10,000 in 2015 to Right to Rise, a super-PAC that supported Republican Jeb Bush’s now-defunct presidential bid.

The donations from Suffolk highlight how a 70-year-old campaign finance law meant to prevent pay-to-play deals between public officials and companies making money from the government is often ignored by those making the donations and those on the receiving end.

The two contributions, one made in July and one in December, came during Clinton’s presidential primary battle with Bernie Sanders, who rose to prominence partly because he railed against super-PACs and the wealthy donors who fund them.

A review of campaign finance records by The Hill shows that the practice of skirting or openly flouting the contractor ban has become widespread in both congressional and presidential politics.

There are multiple reasons why the law is ignored.

Some lawyers believe the prohibition on a contractor giving to a super-PAC is unconstitutional. The Supreme Court has never issued a ruling on the specific matter.

Perhaps more importantly, donors face little chance of being penalized by a Federal Election Commission (FEC) that is so divided between its Republican and Democratic members it has proved incapable of deciding even the most basic questions, such as whether to investigate complaints.

Priorities USA stipulates on its website that donors can’t be federal contractors. Yet a spokesman for the super-PAC declined to comment in response to a question about whether the donations from Suffolk would be returned.

Clinton’s campaign also declined to comment.

“The increasing trend of contractors violating the law comes as no surprise,” said Craig Holman of Public Citizen, an advocacy group that was involved in a high-profile case regarding the ban.

In addition to the donations to Priorities USA, The Hill found 14 federal contractors that had contributed a total of $173,250 to Right to Rise. Two had also given to Conservative Solutions PAC, a group that supported Sen. Marco Rubio’s (R-Fla.) bid for president.

One contractor, a Florida utility named Gulf Power Co., gave $44,000 to Right to Rise in March 2015. At the time, the company held more than $1 million in contracts with the Department of Defense.

The Hill asked Gulf Power whether the company was aware it was in violation of the ban and if it believed there was a conflict of interest in politicians benefiting from donations from federal contractors.

Jeff Rogers, a spokesman for the company, responded, “We believe Gulf Power’s right to make the contribution in question is constitutionally protected.”

Suffolk Construction, which since 2008 has received $169.7 million in federal contracts, according to USASpending.*gov, declined multiple requests for comment.

John Fish, the company’s CEO, has been a prolific donor to both parties over the years, though FEC records show he favors Democrats by a wide margin. He’s contributed thousands to President Obama’s White House bids and gave $500 to his 2004 Senate campaign.

Fish’s office did not return a request for comment.

The company itself has mainly funneled money to Republicans. In 2012 it gave $510,000 to Restore Our Future, a super-PAC supporting GOP presidential nominee Mitt Romney, and $50,000 to another group backing then-Sen. Scott Brown (R-Mass.).

Campaign finance lawyers say federal contractors that donate to super-PACs are taking a calculated risk that the politically deadlocked FEC will never take action against them.

History suggests they’re correct.

In 2012, a Los Angeles Times investigation found that a number of companies with federal contracts, including Suffolk Construction, had, at that point, contributed $890,000 to Restore Our Future.

None of the federal contractors were ever punished for their super-PAC donations.

A top official who worked for Romney’s now-defunct super-PAC declined to comment. Officials who worked for the Bush and Rubio super-PACs also declined to comment.

There are also loopholes in the federal contractor ban. The biggest allows employees and corporate officers of companies with federal contracts to contribute to any candidate or committee of their choosing. They can also establish super-PACs in the name of their own company.

Another way around the federal contractor ban is colloquially known as the “Chevron loophole” and gives contractors with multiple subsidiaries the freedom to make political contributions through business entities not named on the government contracts.

In 2013 Public Citizen filed a complaint with the FEC against the oil giant Chevron, which had held hundreds of federal contracts worth $1.5 billion. The complaint centered on a $2.5 million contribution it made to the Congressional Leadership Fund, a super-PAC linked to then-Speaker John Boehner (R-Ohio) that was committed to electing House GOP candidates.
In a 5-1 decision, the FEC ruled that the company’s contribution was legal because the federal contract went to a subsidiary, Chevron USA, which is distinct from Chevron, the entity that made the contribution.

The two Chevron entities share a headquarters in San Ramon, Calif.

A spokeswoman for Chevron declined to comment for this article.

Holman said the extraordinary development is that following the ruling, federal contractors aren’t even bothering to take advantage of the loophole, knowing they are unlikely to face any repercussions.

“Contractors now may circumvent the law either by creating an artificial division within the company for the purpose of making contributions, or even not bother with such machinations and make direct contributions, and can still feel assured they will not be prosecuted by a deadlocked FEC for violating the law,” he told The Hill.

The federal contractor ban survived a legal challenge in 2015, when the U.S. Court of Appeals for the District of Columbia upheld the law in a suit against the FEC.

Writing for the 11-judge panel, Chief Judge Merrick Garland — now President Obama’s nominee to the Supreme Court — wrote that the ban is a necessary defense against corruption.

“The statute was itself the outgrowth of a decades-long congressional effort to prevent corruption and ensure the merit-based administration of the national government,” Garland wrote. “And it was followed by subsequent scandals that led to further legislative refinements, again motivated by concerns over corruption and merit protection.”

Fred Wertheimer, president of Democracy 21, a campaign finance watchdog that has been working on fighting the influence of money in politics for four decades, said that the current open flouting of the federal contractor ban is emblematic of a much larger problem.

“Every political operative and campaign knows that the FEC will not enforce the campaign finance laws,” Wertheimer said.
“There’s an old line: ‘If you don’t have enforcement of laws, you do not have the laws.’

“And that’s what we’re dealing with.”