Republican Nick Begich III is one of the wealthier candidates in the special election for Alaska’s U.S. House seat, and he’s leveraging that wealth with personal loans to his campaign totaling $650,000.
Candidate loans of any amount are legal, but how winning candidates are paid back makes campaign finance watchdogs shudder.
“It’s basically legalized bribery,” said University of Missouri Professor Kathy Kiely, a campaign finance expert. She said loans also leave the voters in the dark about information that may be critical to their ballot choice.
“Who is ultimately going to pay that candidate back and why?” she asked. “I think voters just don’t know the answer to that on election day.”
Thanks to a federal Supreme Court decision last month, Begich can now recoup all of his loan in post-election fundraising. Congressional candidates used to be able to recover no more that $250,000, a limit designed to minimize the potential for corruption, or the appearance of it. But in May, the Supreme Court struck that limit down as unconstitutional.
Professor Kiely, who used to work for the Sunlight Foundation as an advocate of government transparency, said it’s bad enough when successful candidates hold post-election fundraisers to pay off what they owe their consultants or pollsters.
“You’re hanging out a shingle and saying, ‘Anybody who’s interested in winning friends and influence over here, here’s the donation jar,’” she said.
It’s a whole new level of troubling, Kiely said, when the aim of a debt-retirement party is to pay back the candidate, who is now a member of Congress, for his or her personal loan.
“It’s one step short of putting money directly in the pocket of a lawmaker,” she said, “which, in most contexts, we would consider a bribe.”
Begich reported income last year of more than a million dollars from a software development company he founded, plus more than $100,000 from Earthpulse Press, a company that publishes his father’s theories about government mind control.
The Begich campaign did not respond to three emails asking about his campaign loans, including two asking if Begich would solicit post-election contributions if he wins.
That’s the scenario that rings alarm bells at the Campaign Legal Center, one of the groups that filed a brief in the recent Supreme Court case.
“Because the pitch to potential donors at that point is, you know, ‘I won the election. I’m going to be in office, but I have this large personal loan, which the campaign can repay me. I would love for you to make a contribution to help repay me,’” said Saurav Ghosh, the center’s director of campaign finance reform. “It just raises all kinds of very clear corruption concerns.”
Begich is not the only candidate in the race who made a large personal loan to his campaign. Nonpartisan Jeff Lowenfels lent his campaign $100,000. If he were to win, Lowenfels said he’d refuse repayment contributions, a practice he described as “a little bit disgusting.”
“Somebody’s going to come and try to help you pay your loan back? Gee, they’re being awfully nice, aren’t they?” Lowenfels scoffed. “I mean, it just doesn’t feel right. It feels like a bribe.”
Lowenfels said he made the loan to jumpstart his campaign and would consider repayment as long as he’s not a member of Congress. He’s relying primarily on radio ads and mailers to get the word out. As of May 22, the end of the reporting period, his personal loan was about two-thirds of his campaign total.
Nick Begich’s campaign report shows his loan comprises slightly more than half of his total, and he’s also made a contribution of $23,000. His major expenses include ads, strategic advising and payroll.
In terms of contributions from others, Begich is in second place, behind rival Republican Sarah Palin.
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Liz Ruskin is the Washington, D.C., correspondent at Alaska Public Media. Reach her at lruskin@alaskapublic.org. Read more about Liz here.
