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California watchdog only half-way to bottom of Arizona donation

By Peter Henderson

SAN FRANCISCO, California (Reuters) - An Arizona-based nonprofit group that gave $11 million to two ballot proposition campaigns in California was forced by court order on Monday to reveal the organizational source of the money, but the individuals behind the donation remain a mystery.

The group Americans for Responsible Leadership, which has fought to keep the identity of its financial backers secret, complied with a California Supreme Court ruling by revealing that its contribution originated from a second entity known as Americans for Job Security, a pro-business advocacy organization.

According to the state's Fair Political Practices Commission, the group also acknowledged by letter that it was merely an intermediary in transferring funds to the campaign recipients and further revealed the existence of a secondary intermediary group called the Center to Protect Patient Rights.

The commission, California's election watchdog, said Americans for Responsible Leadership had thus admitted to having engaged in "campaign money laundering" in providing $11 million to the two politically conservative proposition campaigns.

The chair of the commission, Ann Ravel, said the disclosure was a victory, but nonetheless showed the shortcomings of state campaign finance law, since voters would not know the ultimate sources of the money on election day on Tuesday.

"While we did not get a lot of information about the individual human donors, ultimately we hope that we will be able to obtain that. This is not the end of the road," Ravel told Reuters.

One of the campaigns funded by the $11 million seeks to defeat a ballot tax initiative sponsored by Democratic California Governor Jerry Brown known as Proposition 30. The other, Proposition 32, seeks to win passage of a separate measure to ban payroll deductions for political purposes, a proposal seen as a potential blow to labor unions.

The episode underscores the murky nature of large-scale, anonymous contributions that have proliferated since a U.S. Supreme Court decision allowing unlimited giving by corporations and unions so long as they operate independently of the political campaigns they support.

The $11 million donation itself has become fodder for the campaign, as Brown and supporters have sought to portray their opponents as tools of rich, out-of-state, hidden interests.

"Secret $11M Az anti-30 donors keep giving + giving.. to us. Great issue 4 closing stretch - person behind curtain always scarier," Brown adviser Steve Glazer tweeted on November 2.

Ravel said evidence of a conspiracy to obscure donors could lead the attorney general to press felony charges and that her commission could seek an $11 million fine. Americans for Jobs Security did not return calls requesting comment.

The $11 million donation was one of the single largest contributions in the 2012 election season in California, and is also the largest out-of-state donation from one independent non-profit to another for the purposes of influencing an election.

Dan Newman, founder of Maplight, a non-partisan group which researches campaign finance, said lawlessness had won, since the individual donors would not be known before the campaign.

"Any fine the commission would reasonably levy is trivial compared with the stakes in this election for all Californians for decades," he said.

(Reporting by Tim Gaynor, Mary Slosson and Peter Henderson; Editing by Steve Gorman and David Brunnstrom)

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