November 29, 2007
Straw men and dodgy donors, US style
Even in the midst of yet another "sleaze" scandal, it almost seems unfair to compare campaign finance in America and Britain. Before a candidate has even been chosen, enough money has been rustled up in the 2008 US presidential campaign to pay for five UK general elections. And - so far - no Britons have found themselves behind bars for breaking electoral laws.
Yet there are some striking similarities in the extraordinary misjudgements made by donors and politicians on both sides of the Atlantic. And some differences that certainly do not bolster the Labour party defence.
Take the story of the Paws. In an outstanding investigation, the Wall Street Journal discovered that one of the biggest sources of funding for Hillary Clinton’s campaign came from a family of six living in a modest house under the flight path of San Francisco airport. Here’s a picture of the Paw house:
The Paw household lived on the income of a postman but managed to scrape together enough pennies to donate more than $200,000 to Democratic candidates.
The family were linked to Norman Hsu, who now sits in prison facing charges of grand theft. Before his fall from grace, Mr Hsu become the "Hillraiser", a title awarded to people who "bundle" donations of more than $100,000 for the Clinton campaign. It is worth comparing the Paw dwelling to the house of Ray Ruddick, seen below.
The jobbing builder and bingo enthusiast found himself at the centre of a British political storm after donating £196,850 to Labour on behalf of David Abrahams, a wealthy landlord from Newcastle. The blue transit van is owned by Mr Ruddick.
Since the Sunday Mail contacted a startled Mr Ruddick it has emerged that Mr Abrahams channelled money through a total of four associates: a builder, a lollipop lady, a lawyer and a secretary. A bishop and a judge are leading an investigation for the prime minister.
Now the Paws and the Ruddicks are not the first households to be used as "straw men" for overenthusiastic donors to political parties.
The Republicans dug up a string of financing scandals through the 1990s that are so farcical they make the Paws and the Ruddicks look rather boring.
My favourite is the story of Maria Hsia, a longtime supporter of Al Gore who was sent down for using Buddhist monks and nuns to funnel $55,000 of donations to Democratic candidates (Mr Gore had made an appearance at the temple but says he was unaware the nuns were opening up their wallets).
Other examples include John Huang, who used front men to hide donations from foreign donors; Johnny Chung, a fax-machine spammer (yes, remember them) who claims to have taken money from Chinese intelligence and given it to the Clintons; and "Charlie" Trie, a restaurateur in Little Rock, Arkansas, who sent Bill Clinton’s defence fund an envelope containing about 460 money orders of $1,000 made out in different names - but with exactly the same handwriting.
Most of these characters were sentenced to heavy stints of community service. We await to see what happens in the Abrahams funding scandal. But, as far as I am aware, no party officials in America have been prosecuted for breaking electoral laws by helping donors use middlemen. Plus in America parties receive thousands and thousands of individual donations - especially since donations were capped - giving officials a decent excuse about the administrative cost of vetting each donor.
In Britain, by contrast, parties need only look into the background of a few dozen people. It would have taken very little digging to discover a builder, a lollipop lady and a secretary were giving bundles of cash to the Labour party. Even a simple fundraising call would have rung some alarm bells. Why wasn’t it done?
Sir,
As a political-economist I understand that a common problem for efficient government in democracies (achieving “Public Good”) is the unbalance between the proportionally strong pressuring power of specific interest groups (interests are concentrated and well organised), versus the proportionally weak pressuring power of the general population (interests are spread out and not well organised). This distorts parties’ and governments’ policies. It is a common problem, and well explained by Rational Choice Models, such as Games Theory. Party funding is one of the best examples of it.
To minimise it, the state should finance parties. Just a very small amount would be more than enough - say just £1 (ONE pound) per person per year. The total, £60 million pounds/year, should be shared among the parties proportionally to each election’s votes (and maybe with a small fee for new/small parties – details can be arranged). The parties would then concentrate SOLELY on the electorate, the general public, with policies towards the Public Good, instead of attending powerful organised interest groups.
(Note: Labour’s proposed reduction of spending limits would be counter-democratic, as it would increase even more the power of a few media tycoons. Parties need some voice of their own, some communication media.)
M. Castelli
Posted by: M. Castelli | December 6th, 2007 at 12:05 pm | Report this comment