The New York Attorney General has launched an investigation to determine if organizations are secretly channeling money to the US Chamber of Commerce to be used to impact political campaigns. The tax-exempt chamber is a major player in US politics, but not required to disclose the identities of its donors. AG Eric Schneiderman yesterday issued a subpoena to officials of a foundation affiliated with the chamber, seeking emails and bank records to determine if the foundation illegally funneled $18 million to the chamber for political and lobbying activities, sources tell the New York Times. Investigators are examining grants totaling $19 million from the philanthropic Starr Foundation—which is based in New York and headed by the former CEO of AIG—to the chamber's National Chamber Foundation, which loaned the Chamber of Commerce $18 million during the same period of time.
Though the money was supposed to be used for a "capital campaign," watchdog groups say the funds financed lobbying for “tort reform” legislation in Congress and to run largely anti-Democrat issue ads in the 2004 presidential and congressional campaigns. The $18 million loan was interest free, and no principal was paid on it for several years, say sources. The US Chamber of Commerce spent $66 million on lobbying last year, and plans to spend at least $50 million on issue ads this year. Now that limits have largely been lifted on campaign contributions, many major donors are currently intent on keeping their identities secret—and using tax-exempt "fronts" for their donations is one way to accomplish this, points out the Kansas City Star. Keeping donor identities hidden is the "next frontier" for conservatives, said Columbia University election law professor Richard Briffault. (Read more US Chamber of Commerce stories.)