Virginia Democrat Terry McAuliffe's gubernatorial campaign in July raked in $350,000 from a mysterious, New Jersey-based telecom company owned by a Sri Lankan-British national, a donation that could run afoul of federal laws that prohibit candidates from taking money from foreign nationals.
LycaTel, a discount calling card provider, boasts a complicated web of offshore businesses and has been the subject of tax-fraud and money-laundering allegations overseas. The company is owned by Sri Lankan-born British national Allirajah Subaskaran, who holds 99 percent of the company's shares through his London-based company, WWW Holding Company Ltd., according to U.K. corporate records reviewed by the Washington Free Beacon. In a Federal Communications Commission filing in August, Subaskaran describes himself as "a natural person and Citizen of the United Kingdom" and lists his U.S. business office as the same address and phone number as LycaTel.
The company does not appear to have contributed to previous Virginia campaigns or federal races. LycaTel in July retained D.C.-based Thompson International Group to lobby on "Telecom" issues, according to disclosure records. Before that, the Thompson International Group had registered as a foreign agent that represented Subaskaran as part of a "business expansion within the U.S.A.," according to records filed with the Department of Justice.
LycaTel's contribution is one of the largest received by McAuliffe's gubernatorial campaign this election cycle. Ethics experts say the donation raises foreign-influence red flags. It's also reigniting questions about McAuliffe's previous foreign-donor controversies. The FBI in 2016 reportedly opened an investigation into a $120,000 donation McAuliffe received from a company owned by Wang Wenliang, a Chinese citizen and U.S. green card holder who served as a delegate to China's parliament.
LycaTel did not respond to emailed questions. When reached by phone on Thursday, LycaTel's general counsel said the company had no comment and was "waiting to hear back from management as to what they want to disclose and what they don't." A lawyer for Subaskaran did not respond to a request for comment. McAuliffe's campaign did not respond to a request for comment.
Federal law prohibits campaigns from accepting money from foreign nationals and entities, directly or indirectly, in local, state, and federal elections. While U.S.-based subsidiaries of foreign corporations can contribute, the donation can't be made under the direction of the company's foreign leadership—which legal experts said can be a murky legal distinction.
"This is effectively a really easy way to launder foreign money into the U.S. political process and to avoid the FEC prohibition on foreign nationals making contributions in U.S. elections," said Ben Freeman, director of the Foreign Influence Transparency Initiative at the Center for International Policy.
Freeman said the McAuliffe campaign's decision to accept such a large donation from a foreign-linked source was also troubling from an ethics perspective.
"Three-hundred-fifty-thousand dollars to Terry McAuliffe, that's a huge sum of money, even by campaign finance standards," said Freeman. "If I was a part of that campaign, or if I was any way connected to that, I'm not going to accept that money because I don't want even the semblance that we have foreign influence on my campaign. If I was them, I'd give the money back."
Tom Anderson, the director of the Government Integrity Project at the National Legal and Policy Center, said his organization was concerned about the size and source of the donation.
"McAuliffe probably has one of the most prolific dark money machines in politics but brazenly soliciting and accepting $350,000 from a foreign source is crossing a very bright red line in our opinion," said Anderson.
Subaskaran, through his WWW Holding Company and other entities, owns a globe-spanning web of companies in the technology, media, and gaming sectors, many of them with the word "Lyca" in the names. The Lyca network is so complicated that its accounting firm, KPMG, acknowledged in a corporate filing that it was unable to account for $134 million on the balance sheet due to the "complex nature of the related party structure the company operates within," according to the Guardian.
The Lyca group has also come under scrutiny for its financial activities overseas. LycaMobile is one of the largest donors to the United Kingdom's Conservative Party but has clashed with British authorities over allegations of unpaid taxes. French authorities in 2016 raided LycaMobile's Paris headquarters and arrested "19 people suspected of being involved in a money-laundering system implicating Lycamobile and Lycamobile Services," according to a statement from French prosecutors.
LycaMobile couriers in 2015 were photographed transporting tote bags of cash—reportedly as much as $1 million per week—to various post offices around the United Kingdom, according to a series of articles by BuzzFeed. LycaMobile denied any wrongdoing related to the deposits and noted that it operates a cash-heavy business.
LycaTel's operations in the United States have come under scrutiny as well. The Federal Communications Commission in 2011 fined the company $5 million for "deceptively marketing prepaid calling cards" to largely immigrant buyers. The company reportedly claimed the low-cost cards could be used to make "hundreds of minutes of calls" overseas, but buyers were only able to use "a fraction of those minutes for calls, because LycaTel applies a variety of fees and surcharges that quickly deplete the card," said the FCC.
Published under: Campaign Donors , FEC , foreign agents , Terry McAuliffe , Virginia Governor