Despite Supreme Court’s prohibition, companies can influence on campaigns through their partners’ donations

By Bruno Carazza, Brazilian political and economic analyst.

In 2010, in a tight decision (5 to 4), the US Supreme Court decided that campaign donations are an individual expression of political preferences, so they cannot be restrained by State regulations. According to Citizens United v. FEC, contributions made by corporates, unions, and non-profit organizations are protected by the First Amendment’s freedom of speech right, so the 2002 Bipartisan Campaign Reform Act (BCRA) could not curb them.

Seven years before, although, the Supreme Court was in the opposite direction. Also by a margin of just one judge, the slim majority concluded that balancing the freedom of speech right with the risks of corruption would be a government mission to reduce the economic influence on State action. In McConnell v. FEC, judge Stevens has concluded that “money, like the water, will always find an outlet”, so legislations like BCRA should be considered valid to minimize the predominance of corporate over public interests.

This twist on the Supreme Court’s take about electoral financing shows how controversial this issue is. From an international perspective, there are no dominant models to be followed. Some countries are very permissive, with almost no restriction regarding corporate donations – like the USA since 2010, the UK, Australia, and Germany. Other nations accept contributions by companies but subject them to a ceiling (it is the case of Japan, Italy, Finland, and most Latin American countries). Yet in the last years, countries like France, Spain, Portugal, and Canada have banned any money transfer from corporates to parties or candidates.

In 2015 Brazil also changed its regulation regarding political financing. After two decades of mixed sources of money – public funds, personal and corporate donations –, the Brazilian Supreme Court has declared that companies’ contributions to campaigns are not constitutional. That verdict came after several shreds of evidence of quid-pro-quo involving politics, lobbyists and CEOs and directors of some of the Brazilian biggest companies – culminating with the huge Carwash corruption scandal.

Inauguration session of Brazilian National Congress in 02/04/2019. Credits: Luis Macedo/Câmara dos Deputados

According to the leading vote of judge Luiz Fux, Brazil has become a plutocracy – the government of the richest businessmen. Even though there was a significant winning advantage against corporate donations, the three losing votes were prophetic. Judges Teori Zavascki, Gilmar Mendes and Celso de Mello have alerted that companies could avoid the donations veto employing indirect contributions made by their owners, top executives, collaborators or even third parties. And without harsher sanctions against unofficial donations, money would probably be flowing from companies to politicians.

A recently launched initiative proves that the minority was right. A collaborative among NGOs Dado Capital and Open Knowledge Brasil, alongside with computation professors and students from Universidade Federal de Campina Grande, is using data science and artificial intelligence to map politicians’ relationships and behavior on Brazilian parliament. Baptized as Parlametria, the app used Brazilian Internal Revenues Service’s public data, as well as electoral information, to find out that companies’ partners applied more than US$ 25 million into senators and representatives’ campaigns in 2018 elections.

Data also show that, as before the Supreme Court’s prohibition, the same economic activities prevail as the most important donators: construction, banks, health, and governmental suppliers. This is evidence that the rent-seeking logic of Brazilian business is still in place: sectors dependent on government procurement, regulations and tax benefits tend to invest in election campaigns trying to develop an intimate relationship with legislators.

US Supreme Court Stevens has recently passed away. In Brazil, as he stated, money continues to irrigate politics. Fortunately, codes and algorithms are helping citizens and civil society organizations to follow its course from companies to Congress.