A bill co-sponsored by Congressman Trent Franks (R-AZ) is making its way through the the U.S. House.
The legislation, the Stop Settlement Slush Funds Act of 2016 (HR 5063), passed the House Judiciary Committee on May 11 by a vote of 18-6.
House Judiciary Chair Bob Goodlatte (R-VA), the legislation's primary sponsor, said the bill "bars the Department of Justice (DOJ), and all other government agencies, from requiring defendants to donate money to outside groups as part of their settlement agreements with the federal government."
“This bill is very simply about the Separation of Powers and who has the constitutional authority to determine how certain funds are spent. Congress, and not the DOJ, is responsible and H.R. 5063 addresses this institutional issue in a direct and bipartisan way,” Franks told Arizona Business Daily.
According to the House Judiciary Committee, a 20-month committee investigation found that the DOJ had used federal legal settlements with large banks and financial institutions to "funnel money to left-wing activist groups."
"When DOJ recovers money from parties who have broken the law, those funds should be going to victims, or to the Treasury so that Congress can ensure accountability for how the funds are spent," said Goodlatte in a statement. "These funds should not be funneled to the president’s pet liberal groups."
A December 2015 column by the Wall Street Journal's Kim Strassel spotlighted the "slush fund" issue.
"It works likes this," wrote Strassel. "The Justice Department prosecutes cases against supposed corporate bad actors. Those companies agree to settlements that include financial penalties. Then Justice mandates that at least some of that penalty money be paid in the form of 'donations' to nonprofits that supposedly aid consumers and bolster neighborhoods."
"The Justice Department maintains a list of government-approved nonprofit beneficiaries," continued Strassel. "And surprise, surprise: Many of them are liberal activist groups."
Former U.S. Congressman and California Attorney General Dan Lungren testified in support of the legislation in an April 28 hearing in the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law.
“This ability to use law enforcement authority to channel funds to favored groups creates a serious threat that the authority to prosecute is being used to further officials’ personal or political goals rather than the public interest standard that must govern law enforcement decisions,” testified Lungren. “Furthermore, these decisions are being made outside of the normal appropriations process.”
The legislation also is supported by the business community, with the U.S. Chamber Institute for Legal Reform (ILR) advocating for "swift" passage in the U.S. House and Senate.
"Advancing this legislation is an important step toward ensuring that federal enforcement officials make decisions in the public interest, not for their own personal or political interest," said ILR President Lisa A. Rickard. "Enforcement officials should be motivated by a search for justice, not by how much money they can generate for their office and their political allies from settlements."