A bill now moving through the legislature would brand Microsoft a foreign-influenced corporation. It would forbid the “foreign-influenced” company from contributing money to influence any state or local election in Washington.
The foreign influence? The Norwegians.
The government of Norway invests billions in oil revenues in a fund for the future. Its fund owns stocks in hundreds of companies around the world — including a 1.13-percent stake in Microsoft. This triggers a definition in Engrossed Substitute Senate Bill 5284, now pending in the House State Government and Tribal Relations Committee. The bill would label as a “foreign-influenced corporation” any company in which a foreigner or foreign institution owns 1 percent or more of the stock. All companies with that much alien ownership would be forbidden from spending money to help any state or local political candidate.
In the public hearing on the bill, nobody mentioned the Norwegians. People here don’t worry much about Norwegians, but if the bill passes the House — it has already passed the Senate — the Norwegian connection will snuff out the political rights of Microsoft.
And not only Microsoft. The Norwegians own one-percent-plus shares in scores of companies. Locally, the list includes Weyerhaeuser, T-Mobile, Zillow, and Starbucks. Regionally it includes Umpqua Bank and Micron Technology. Nationally it includes Bank of America, General Motors, Procter & Gamble, Pfizer, Lowe’s, Home Depot, Apple, Adobe, Meta (Facebook), Netflix, Comcast, Verizon, and Paypal. Also McDonald’s, Coca-Cola, Marriott, Caesar’s Palace and News Corp., which owns the Wall Street Journal and Fox News.
And that’s just the Norwegians. Many other foreign investors own 1 percent-plus stakes in U.S. companies, and some own a lot more. A German company owns almost half of T-Mobile, and Canadian and Dutch investment funds own all of Puget Sound Energy.
Bill 5284 has another warning tripwire that companies are forbidden to cross. If all the foreign entities together own 5 percent of a company’s stock, it is declared to be foreign-influenced and out of electoral politics. The 5-percent standard probably takes out all the larger companies with publicly traded stock. Most of them have at least 5 percent foreign ownership, or the CEO cannot be sure they don’t. If Bill 5284 passes, a company that crosses either the 1-percent or 5-percent line will be forbidden to support any candidate, either through independent expenditure, or direct contribution.
“A company founded in Washington, that operates in Washington, pays taxes in Washington, whose officers and employees are in Washington, can be branded a ‘foreign entity’ and banned from political involvement,” said Dave Mastin, who testified against Bill 5284 for the Association of Washington Business.
As originally written, the bill didn’t do any of this. The bill began as a bag of technical reforms requested by the Public Disclosure Commission. The language on foreign-influenced corporations was added Feb. 15 by Sen. Joe Nguyen, the progressive Democrat who represents West Seattle, White Center, and Vashon Island. Nguyen is the assistant majority floor leader for the Democratic caucus.
The legislature is not the first to pass such a law. St. Petersburg, Florida, passed a similar law in 2017 with a 5-percent, 20-percent standard. The first jurisdiction to impose a 1-percent, 5-percent standard was Seattle.
Seattle’s action came shortly after October 2019, when Amazon contributed a million dollars to defeat the council members who had passed, then repealed, the infamous “head tax.” A million dollars is a huge amount for council races, and when Amazon’s act was disclosed, as was required, it backfired. Amazon was accused of trying to buy the election. Seattle voters responded by keeping Amazon’s adversaries in office.
In January 2020, Councilwoman Lorena González proposed the 1-percent, 5-percent bill defining “foreign-influenced corporations.” Councilwoman Lisa Herbold read a prepared statement. “Foreign interests can easily diverge from U.S. interests. That is true nationally and can be certainly true locally.” She went on, “Corporate governance experts and regulators agree that these thresholds as proposed in this bill capture the level of ownership necessary to influence corporate decisions.” Even the Business Roundtable, the national organization of big corporations, she said, has agreed “that 1 percent is a threshold at which a single shareholder is able to influence corporate decisions.”
Not really. Herbold was reading verbatim from a political argument posted by the Center for American Progress, the progressive group that had been promoting the 1-percent, 5-percent rule. The Center’s memo footnotes the statement from the Business Roundtable, so you can see what the group actually said. The 1 percent was a reference to gadflies who have no influence on corporate decisions.
To declare that a 1 percent owner poisons the pool is unfair on its face to the other 99 percent — or it would be, if corporations worked that way. But they don’t. Companies don’t make political decisions by consulting public shareholders. How much actual power, for example, does Norges Bank Investment Management have over Microsoft’s involvement in public questions in Washington? It is safe to say, none. And why would they want such a power?
The activists who support the 1-percent, 5-percent definition of a “foreign-influenced corporation” rarely argue that it makes sense. They just say it does. For Seattle’s famously progressive City Council, the anti-foreign rhetoric sounds oddly right-wing. Their supporters sound the same way. In public comment at the January 2020 meeting, Cindy Black, executive director of a progressive group called Fix Democracy First, said, “Foreign money in elections is a real issue.”
For the city council the real issue was getting back at Amazon. Beyond that, its purpose was to knock out all the big companies by labeling them as un-American. At Seattle’s version of the Business Roundtable, the Washington Roundtable, President Steve Mullin said, “It was the perception of the business community that it was an effort by incumbents on the city council to eliminate sources of funds for potential challengers.” The ordinance didn’t eliminate labor unions.
The Seattle ordinance requires that any company contributing to Seattle election campaigns certify, under threat of punishment, that it is not “foreign-influenced.” I asked Wayne Barnett, executive director of the Seattle Ethics and Elections Commission, what effect the rule has had. “It’s a hard thing to say,” he said. “We haven’t seen much in the way of people filing certificates of non-foreign influence.”
The ordinance is doing what was intended. In a broader sense, the purpose of the 1-percent, 5-percent rule in Seattle, and now for the state, is to make an end run around Citizens United v. Federal Elections Commission. That’s the U.S. Supreme Court decision that recognizes a First Amendment right of private organizations to engage in “electioneering communications.” Repeal of Citizens United is a key objective of the Center for American Progress, which sent senior fellow Michael Sozan to Olympia to testify for bill 5284. Repeal is also part of the state platform and the national platform of the Democratic Party.
The progressive left argues that Citizens United was a bad decision because it unleashed corporate power; and that corporations, not being “natural persons,” should not be protected by the First Amendment. People who support this position almost never mention that Citizens United also applies to labor unions and advocacy groups, which are also not natural persons. The focus is exclusively on corporations, which are only one class of donors.
You can see a similar focus in press coverage. On November 6, the Seattle Times ran a story by business reporter Renata Geraldo about contributions from Amazon, Microsoft, T-Mobile, and Boeing: “Four Big Companies Pour Money into Washington’s Elections.”
“These giant companies have combined annual revenues of more than $841 billion as of October,” Geraldo wrote. Well, yes; and in 2022 they spent one millionth of that sum on electioneering communications in Washington. The amount, $823,075, was hardly enough to buy one house in Seattle. Furthermore, the part that went directly to individual campaigns — about half — was evenly split ($210,450 to $210,525) between Democrats and Republicans.
The story doesn’t ask how much the big labor contributors spent last year. Had it asked, it would have found that the Service Employees International Union contributed $2.3 million to the New Direction PAC, which almost exclusively backs Democrats. Would any legislator propose a law to ban a union from electioneering communications if 1 percent, or 5 percent, of its members were not American citizens? It’s doubtful; a law like that would be denounced as anti-worker. Probably it also would be unconstitutional.
In January 2020, the Seattle attorneys Kevin Hamilton, Brian Svoboda and Shanna Reulbach of Perkins Coie issued a memo arguing that the Seattle’s ordinance was “too broad to withstand First Amendment scrutiny” and would likely be struck down if anyone wanted to bring a lawsuit. So far, nobody has sued, and the ordinance stands.
Former state Attorney General Rob McKenna, now an attorney at Orrick, Herrington & Sutcliffe, says about the Bill 5284 in Olympia. “It’s clearly unconstitutional because it violates the First Amendment,” McKenna said. “I hope that an effective company will choose to challenge it.”
Bill 5284 hasn’t passed yet, and there is still a chance that it won’t. State Rep. Peter Abbarno of Centralia, member of the State Government and Tribal Affairs Committee, is offering an amendment to strip out the language on “foreign-influenced” corporations, but he’s in the minority party.
Please tell me we haven’t reached this level of insanity…. I’m now spending the rest of the day emailing representatives in Olympia. Good God…
Say it is not so!
perhaps we should insist that every student who graduates from high school must have taken and course in the fundamentals of economics and personal finance,
I wrote about Seattle’s so-called “Clean Campaigns” legislation back in 2019 when it was introduced by Gonzalez, right after the November election when Amazon did the ill-advised, last-minute dump of a huge amount of money. It was clear back then that this was carefully written to punish Amazon and other corporations while letting unions slide through. In fact, at the time Gonzalez told me that she saw unions as different from corporations. https://sccinsight.com/2019/08/21/gonzalez-floats-campaign-finance-reform-legislation-asks-ethics-commission-for-opinion/ It’s curious that there have been no challenges to the ordinance in court.
Gonzalez actually wanted to go further and cap contributions to an IE at $5000. That never made it out of committee though, presumably because she was told in no uncertain terms that it would be thrown out in court.
No, Lorena killed her second ordinance, which would have capped any entity from contributing more than $5000 to an IE, because labor told her that the “bundling” loophole she had written into the ordinance, which was intended to exempt labor unions from the cap, didn’t work to actually exempt labor unions. Once it became clear that all entities (including labor) would have to adhere to the $5000 limit, Lorena dropped that part of the legislation.
It was a blatant indication that this “foreign influenced” bullshit was not a genuine attempt to reform campaign finance but rather an attempt to put the thumb on the scales to advantage one side of Seattle’s political divide over the other. And (not incidentally) to advantage her mayoral campaign-in-waiting against any potential rival backed by the business community.
Great article and very well researched.
So, while we may be looking at a major course correction in the City Council through the elections of 7 Council seats this August and November, it is clear that we will have to begin that process with the ultra-Left legislators who are pushing this insanity at the state level.
As usual, Mr. Ramsey is cherry-picking reality. Instead of Norway, let’s talk about realities in corporate governance.
First off, in order to get a seat on the board, to be recognized as an owner whose voice matters, one does not need to own a majority of shares or even closed to a majority. Owning 10% was enough at the turn of the century. Now it is even less than that.
Second, let’s look at families that DO own large blocks of shares of multi-national companies. Try the Saudi royal family as just one example. There are hundreds more non-royal families in Germany, Hong Kong, S Korea, Belgium, Mexico, Spain, India, etc. All one needs is for five members of ANY one of those families to buy up less than 2% each and voilà they have control. Or fewer than ten members to buy up 1% each.
Third, to suggest that progressives ignore the ability of unions to spend money on elections is flat-out dishonest. Progressives fully understood that Citizens United applied to them as well. But, again as usual, Mr. Ramsey is hiding context when speaking about this or that union spending some money. Corporate electioneering outspends unions by at least 30:1 The Court allowing unions to spend without restraint is a joke, a smokescreen, sort of like allowing a four year old to enter the Boston Marathon and claiming the child is somehow equal in his or her likelihood of winning against the current Olympic champion, or even a high school state champ.
In summary, Mr. Ramsey’s column is wholly misrepresentative.