U.S. regulators have hit a Canadian steel magnate’s company with one of their largest election-related fines in history after he illegally helped orchestrate US$1.75-million in donations to a Donald Trump campaign group.
Barry Zekelman broke campaign finance law by helping direct the contributions from Wheatland Tube, a U.S.-based company he controls, to Super PAC America First Action in 2018, the Federal Election Commission (FEC) ruled.
In an agreement between the FEC and Mr. Zekelman’s companies, Wheatland will pay a US$975,000 fine and ask America First to either return the donations or give them to the U.S. Treasury.
Under U.S. law, it is illegal for foreign nationals to make campaign contributions or take part in decisions by American companies to donate. The fine on Wheatland is the largest ever levied by the FEC for a foreign national contribution, and its third-largest overall.
U.S. subsidiaries of foreign companies, including Canadian-owned ones, regularly make American political contributions, but they rarely get in trouble because it is difficult to prove that their foreign owners took part in the decision to donate.
In Mr. Zekelman’s case, he acknowledged to The New York Times that he had approved the contributions after America First Action solicited his company. “They contacted our people; our people brought it to me. I said ‘Great, I would love to find a way to support him,’ “ the paper quoted Mr. Zekelman as saying in a 2019 profile. The Campaign Legal Center, a watchdog group, complained to the FEC on the basis of that comment.
The donations came in the middle of a trade war between the U.S. and Canada, part of Mr. Trump’s protectionist push to help U.S. steel companies by keeping out foreign imports.
Mr. Zekelman lobbied the Trump administration to impose steel tariffs on other countries, and also supported punitive trade action against Canada. On one occasion in 2018, Mr. Zekelman advocated for a crackdown on foreign imports directly to Mr. Trump over dinner at his Washington hotel.
Mr. Zekelman, a native of Windsor, Ont., is owner and chief executive officer of Zekelman Industries. The company has assets on both sides of the border, including Pennsylvania-based subsidiary Wheatland.
The FEC decision is a warning to the many other foreign-owned companies making campaign donations that it is illegal for foreign owners or executives to play any part in the contributions.
“The magnitude of this penalty is unprecedented,” Campaign Legal Center vice-president Adav Noti said in an interview. “What the FEC is saying is that there is at least one area of law now that they are actually watching and enforcing. If you are a Super PAC and you take a foreign corporate contribution, you are taking significant risk.”
Mr. Zekelman did not respond to a request for comment.
In an e-mail, American First president Brian Walsh would not say whether the Super PAC would return Wheatland’s contributions or donate them to the Treasury. He attached a letter from the FEC that said the commission had decided not to take action against America First over the Wheatland donation.
In his response to the regulator, Mr. Zekelman said he discussed the donations with Mickey McNamara, the president of Wheatland, who then decided to go ahead with the contributions. Mr. Zekelman’s companies argued the donations were legal because Mr. McNamara, a U.S. citizen, used his “independent judgment” in deciding to cut the cheques.
The FEC rejected this argument, saying that any participation in a donation decision by a foreigner is illegal.
“The key issue is not whether a U.S. citizen or national had final decision-making authority or final say regarding the making of the contribution or donation, but whether any foreign national directed, dictated, controlled, or directly or indirectly participated in a decision-making process in connection with election-related spending,” the commission wrote in its ruling.
During Mr. Trump’s presidency, Mr. Zekelman supported the administration’s tariffs on China, the European Union and South Korea, which put Mr. Zekelman’s competitors at a disadvantage. Mr. Zekelman told CTV Windsor in 2018 that he also backed tariffs on Canadian steel: The levies would hurt his business, Mr. Zekelman said, but they would push Ottawa to renegotiate the North American free-trade agreement.
Mr. Zekelman frequently called for Canada to make concessions to Mr. Trump on trade, including by acquiescing to U.S. demands that Ottawa agree to export quotas on Canadian steel. The Canadian government ultimately reached a deal in which the U.S. removed tariffs without imposing quotas on Canada.
In April of 2018, Mr. Zekelman attended a dinner that Mr. Trump held with major campaign donors in a private suite at Trump International Hotel in Washington. The conversation was recorded by businessman Igor Fruman and later released during Mr. Trump’s first impeachment trial because it also contained a discussion about firing the U.S. ambassador to Ukraine.
During the meal, Mr. Zekelman praised Mr. Trump for cutting the amount of South Korean steel exported to the U.S. by 30 per cent. Mr. Zekelman urged the president to impose similar quotas on other countries in order to “throttle back the raw quantum of these imports coming in.”
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