August 7, 2011

IT DIDN’T TAKE too long to smoke out W Spann LLC, the mystery corporation that sprang up, wrote a $1 million check to a political action committee backing Mitt Romney and then dissolved. W Spann, it turns out, is the creation of Edward W. Conard, a former managing director of Bain Capital, the investment firm once headed by Mr. Romney.

Like many mega-donors, Mr. Conard appears to have preferred the comforting shield of anonymity, masking his identity behind the corporate veil when he contributed to the Romney-backing group, Restore Our Future. But the campaign finance laws are premised on the notion that disclosure — effective disclosure — is essential. Mr. Conard said in a statement that he created the company and authorized the contribution “after consulting prominent legal counsel regarding the transaction, and based on my understanding that the contribution would comply with applicable laws.” That is subject to dispute.

The Supreme Court’s ruling in the Citizens United case cleared the way for unlimited corporate contributions to political action committees that make independent expenditures on behalf of candidates. That opened the door to the mischief illustrated by W Spann: donors who take the extra step of setting up a corporation to mask their identities. The federal election law prohibits making contributions in the name of another, but this has been most often applied in the situation of individuals, often employees of a particular business, who are reimbursed for making donations.

The Federal Election Commssion needs to overcome its current gridlock and make clear how the straw donor rules apply in the post-Citizens United environment of corporate contributions. In the meantime, two campaign finance reform groups, the Campaign Legal Center and Democracy 21, have asked the FEC and the Justice Department to investigate. If the W Spann dodge is permitted to stand, it would make a mockery of disclosure rules.

If you don’t think that’s a danger, imagine a foreign government, or a narcoterrorist, or an al- Qaeda sympathizer funneling money to a favored candidate through a sham corporation. Or imagine that a political committee, and the candidate that it’s backing, knows the identity of the seven-figure check-writer, but the public is left in the dark. Why wouldn’t a tobacco company take the minimal extra step of creating a new corporate entity to funnel checks on behalf of favored candidates without the taint of association? Yes, super-PACs such as Restore our Future are supposed to operate independently of candidates, but that doesn’t prevent a generous donor from informing the candidate of his generosity.

This episode does not speak well of Mr. Romney. His campaign declined to return our phone calls and referred questions to Restore Our Future. But that group is dedicated to electing Mr. Romney president. Nothing prevented — would prevent Mr. Romney now — from speaking out about the secret donation. Did he know about Mr. Conard’s generosity? Did he play any role in soliciting the donation? What is his view of the corporate cutout? During the last presidential campaign, a candidate inveighed against what he viewed as the pernicious effect of recent reforms. “Political spending has been driven into secret corners, and more power and influence has been handed to hidden special interests,” the candidate complained. Surely that candidate, one Mitt Romney, would be deeply concerned about W Spann.