TITLE OF BILL: An act to amend the election law, in relation to the
treatment of corporate subsidiaries for purposes of the application of
contribution limits and reporting requirements
PURPOSE: To include corporations owned or controlled by a parent corpo-
ration or the individuals who own or control the parent corporation
within the same $5,000 limit on the amount of the parent corporation's
contributions to political party committees and political candidates.
To require disclosure of the names and addresses of parent corporations
and individuals who own or control related corporations.
SUMMARY OF PROVISIONS: The bill amends section 14-116 of the election
law to add a new subdivision defining "corporation" to include its
subsidiaries and corporations owned and controlled by the same individ-
ual or group of individuals that own or control the parent corporation.
It also amends section 14-102 to require campaign reports to include the
names and addresses of parent corporations and individuals who own or
control shares of either the parent or subsidiary corporation.
EXISTING LAW: Corporations are subject to a $5,000 limitation on
contributions to political party committees and candidates. However,
subsidiary corporations and corporations owned and controlled by the
same principals are subject to a separate $5,000 limitation. There is no
requirement that campaign reports contain information about corporate
subsidiaries or individuals who control them.
JUSTIFICATION: Senator Leichter exposed a scheme under which more than
a dozen corporations disguised campaign donations to the State GOP by
using shell corporations and obscure subsidiaries to make contributions,
thereby facilitating hundreds of thousands of dollars worth of campaign
contributions to be made by corporations that do not appear to exist at
the addresses listed on campaign reports filed with the State Board of
The State's current system for reporting campaign contributions, which
makes it easy for corporations to get around the $5,000 donation limit
and allows donors to hide the true source of the contribution, reveals
how warped the State's campaign finance laws are and how pointless
having public disclosure is when corporations can disguise contributions
by having shell corporations or little-known subsidiaries do their
donating for them. Currently, the State election law does not require
corporate contributors to disclose the name of their parent companies.
And while corporations are prohibited from donating more than $5,000
(except to housekeeping accounts, which have no limits), the law does
nothing to prevent everyone of the firm's subsidiaries from also giving
One of the largest contributors to political committees of either party
in 1996 was Rivkalex Corp., which contributed $103,300 to the Republican
State Committee's (RSC) housekeeping account. Upon closer examination,
it was learned that Rivkalex is an inactive shell corporation set up by
D.H. Blair Corp. to make campaign contributions. Rivkalex Corp. listed
its business address as 44 Wall Street on the RSC's campaign reports,
but phone records and a listing of the building's tenants showed that no
company by this name exists in New York City. In fact, a library search
of business documents and other records showed that the only mention of
Rivkalex Corp. was on an Internet listing of the top-I00 soft-money
contributors to national political parties. While Rivkalex Corp. is not
one of the listed tenants at 44 Wall Street, D.H. Blair Corp. is one of
the building's tenants. In addition, a check of files at the New York
State Department of State's Division of Corporations revealed that one
D.H. Blair subsidiary changed its name to Rivkalex Corp. in 1979. Inci-
dentally, D.H. Blair made a $25,000 contribution under its own name to
the RSC housekeeping account.
In another example, two companies that have no known business presence
in New York City, but which made at least $325,000 in campaign contrib-
utions in 1996 from the same New York City address, appeared to be
controlled by billionaire Ronald Perelman. Both companies--AGI Manage-
ment and Auto Holdings--listed their address as 35 East 62nd Street.
However, records showed no trace of either company in New York City.
One of the building's two actual tenants was MacAndrews Forbes, a hold-
ing company owned by Perelman. In addition, Perelman showed up on both
companies' disclosure statements with the Department of State. AGI
Management contributed $25,000 to the RSC housekeeping account and
$250,000 to the New York Salute Committee, which is controlled by
Senator Al D'Amato, while Auto Holdings donated $50,000 to the RSC
While it is bad enough that the current filing system allows corpo-
rations to disguise contributions and exceed donation limits by giving
money through subsidiaries, it is even worse that the law permits
donations from shell corporations, which seem to have no activity what-
soever other than to make political contributions. It leaves the public
and State auditors in a blind guessing game as to who is the true source
of campaign contributions. Further evidence that some corporations
clearly evaded the $5,000 limit on contributions by giving monies
through little-known subsidiaries included: Van Dorn Realty Corp., a
real estate company owned by the Durst family, contributed $5,000 to the
Senate Republican Campaign Committee (SRCC) in October 1966, the maximum
permitted under the law. Although that Durst company could not legally
contribute any more money, four other real estate companies owned by the
Durst family and listed at the same address. all contributed $5,000 to
the SRCC on the same day. While the Leichter study was able to link many
of the corporate contributors to parent corporations after extensive
research, there were numerous corporate donors to the RSC housekeeping
account for which no known information was available. Under the current
filing system, corporations need only to put down an address (even if
they do not have an office there) and are not required to identify
whether they are part of a corporate family or who solicited the
contribution. For example, Ocean Consulting Service, which made $13,300
in contributions to the RSC housekeeping account in 1996, but the
Department of State has no records of any company operating under that
name in New York. And, while Ocean Consulting Co. listed 99 Madison
Avenue as its address, the company was not listed in New York City tele-
phone directories, and a list of the building's tenants showed no firm
by that name.
Many of the corporations that have disguised their campaign contrib-
utions may be trying to hide from the public that they are seeking
favors from State officials. Meanwhile, candidates can avoid revealing
to the public that they accepted contributions from certain corpo-
rations, especially if the firms have business pending before the State.
FISCAL IMPLICATIONS: None.
LOCAL FISCAL IMPLICATIONS: None.
EFFECTIVE DATE: This act shall take effect immediately.
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