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Critics of the District’s campaign finance system say the current setup gives too much power to developers, contractors, and other business types with access to multiple limited-liability corporations. An individual who controls 10 separate corporations can write 10 separate checks—all at the maximum level—and be perfectly legal. Not only can that individual far surpass the giving of other would-be donors, but the multiple checks from multiple corporations makes it difficult to keep tabs on where all the money is coming from.
Ward 6 Councilmartyr Saint Tommy Wells has so far tried unsuccessfully to ban this age-old practice, known locally as “bundling.” Other anti-bundling activists came very close to getting a citywide vote on whether to ban on corporate donations altogether.
Lawmakers who don’t see a problem with bundling, which is almost all of them, have maintained that as long as donations are properly disclosed and everyone knows where the money financing campaigns is coming from, then nothing needs changing.
But following the money behind corporate donations just got a whole lot harder in D.C. A little-noticed provision in a massive overhaul of the city’s business code makes it possible for individuals to create corporations in D.C. without leaving any public paper trail tying them to those corporations.
Before this year, when a corporation was established in D.C., the individuals creating that corporation had to be listed in the articles of incorporation filed with the city’s Department of Consumer and Regulatory Affairs. So if you wanted to look up who was behind the campaign cash coming from a certain corporation, you could pull up DCRA’s records to find out. That’s pretty cumbersome for anyone trying to piece together who is funding a particular political candidate, but at least it was an option. (It was not an option for limited liability corporations, which city law did not require its founders to make their names public when forming a new LLC.)
But when the “District of Columbia Official Code Title 29 (Business Organizations) Enactment Act of 2009” went into effect at the beginning of this year, the individuals forming a corporation were no longer required to list their names. Instead, the corporation needs only list its registered agent, who is often a lawyer that’s not one of the owners or organizers of the corporation. That registered agent is under no obligation to say who the corporation’s organizers are.
Former DCRA Director Linda Argo argued against the move, but a unanimous D.C. Council made the changes anyway as part of a massive 467-page overhaul of the city’s antiquated business organization laws.
What this means in the world of campaign finance is that it’s now easier to obscure the source of campaign donations. Regardless of where you stand on bundling, that’s not a step in the right direction.
UPDATE: LL mistakenly assumed that limited-liability companies also had to report who their organizers were under the old rules. They did not, according to DCRA spokesman Helder Gil. Argo asked the D.C. Council to “correct a deficiency” in city law that allowed LLCs not to have to report who was behind the company. That request was also denied. LL has modified the original post to reflect the difference in the old rules between LLCs and corporations.