US Chamber of Commerce in Political Campaign Abuse Spending Probe

The U.S. Chamber of Commerce holds itself out as the voice in Washington, D.C. that speaks on behalf of businesses large and small, in all sectors and regions and across the country. To carry out its work, the Chamber depends on its status as a tax-exempt business league, a categorization that does not require the Chamber to disclose its corporate donors. But now an investigation led by New York State Attorney General Eric Schneiderman may be using this status for partisan politics. In fact, an editorial in the New York Times calls the Chamber “little more than a rigid conservative fighter” in battles over taxes, health care and government spending.

Schneirdman’s investigation is looking into a series of questionable transactions of the Chamber of Commerce. One of those transactions involves the charitable arm of the Chamber, the National Chamber Foundation, which due to its charitable status cannot participate in political or lobbying efforts. Yet, in 2003 and 2004 it loaned money to the Chamber of Commerce that has yet to be paid back. Meanwhile in 2010, the Chamber spent at least $80 million on ads that helped Republican parties attack Democrats. The connection between the loans and the spending on political ads is particularly questionable because one of the biggest donors to the Chamber Foundation is the Starr Foundation, headed by Maurice Greenberg who is a former member of the Chamber’s board.

Attempting to shed light on what might be going on with these financial transactions, Schneiderman has begun “issuing subpoenas that examine the connections between” the Chamber, the Chamber Foundation and the Starr Foundation.

In a similar move, the IRS has said that it would begin investigating the spending practices of other so-called “social welfare” organizations like Crossroads GPS, founded by Karl Rove. The agency announced it would begin sending questionnaires to these organizations, alleged to be making secret donations on behalf of political candidates in violation of their tax-exempt status.

According to the Times editorial, "This is the first step in a belated effort to determine whether these groups are primarily political in nature, which would mean they are violating their tax-exempt status."