INDIANAPOLIS (AP) — The largest single donation to an Indiana gubernatorial candidate in nearly a decade is raising questions about a loophole between federal and state election laws that critics say makes it impossible to know who supplied the money.

U.S. Rep. Mike Pence received a $1 million check from a political action committee known as RGA Right Direction.

The super PAC is backed by the Republican Governors Association, which is its lone funder, but it draws support from donations to the governor’s association. That allows organizations like gambling companies that are barred by state law from giving directly to a candidate to remain involved in politics by funneling the money to the federal groups, The Indianapolis Star reported (http://indy.st/NC58qc ).

The contributions are raising concerns among election reformers.

Julia Vaughn, policy director for Common Cause Indiana, said it was troubling and “obscene” that any group would give $1 million to a single candidate, “especially when we know that the bulk of this group’s money is coming from mega-corporations.”

She said Hoosiers deserve to know the source of the contribution and urged Pence to return the donation.

Spokeswoman Christy Denault said Pence will follow Indiana election laws about disclosure.

Daniel Altman, a spokesman for Democratic gubernatorial candidate John Gregg, called the Pence donation “a common Washington story.”

“Any time you get $1 million from an out-of-state group (without transparent understanding of who gave the money), it makes you raise your eyebrows,” he said.

Gregg also has benefited from super PACs. He received $43,000 in direct and in-kind donations since last year from the Democratic Governors Association, which is funded in part by national unions, and its Indiana PAC. Tracking the origin of that money is also difficult.

But the amount of the Pence donation is what has drawn the most scrutiny.

The Center for Public Integrity, a Washington-based, nonprofit, independent investigative news outlet, analyzed Internal Revenue Service records and found that 57 percent of the RGA’s $16.7 million in fundraising since April had come from corporations and corporate PACs.

The report said that since January, the RGA has transferred $1.3 million to the Right Direction PAC, including the money to Pence.

Contributors to the RGA include DLZ Indiana, an engineering firm that gave $50,000; Eli Lilly and Co., which contributed $50,000; Weaver Popcorn of Noblesville, which gave $125,000; and Roche Diagnostics of Indianapolis, which pitched in $25,000.

Indianapolis-based WellPoint has given the RGA $1.26 million over the past two years.

Contributions from those companies would be limited to $5,000 if they gave to Pence directly.

But one donor, Indianapolis gambling company New Centaur, wouldn’t have been able to give anything to a candidate if not for the PAC. Indiana law prohibits gambling companies from contributing directly to candidates.

New Centaur, which runs the Hoosier Park racino in Anderson, gave $50,000.

John Keeler, the general counsel for New Centaur, said New Centaur has given to both the RGA and DGA in recent years to support pro-business organizations at a national level.

He said the company’s intent wasn’t to skirt Indiana’s ban on political donations by gambling interests.

“The state law is very specific as to who you can give to and who you can’t. It names who you can’t give to, which I believe are all state and local officials, but it contains no prohibition other than that,” Keeler said.

RGA spokesman Michael Schrimpf says the group follows the law and that critics who portray its fundraising and donations as secretive are misguided.

Like its Democratic counterpart, the RGA’s mission is to help elect candidates from its party to each state’s top office. But Schrimpf dismissed the notion that donors could be using the PAC to do an end run around Indiana’s $5,000 limit on direct corporate and union contributions to candidates.

He said the RGA’s donors, which are disclosed to the IRS, cannot designate a particular candidate or state PAC they want the money to help.

“Nobody contributes to the RGA (with an earmark) for Indiana. Everybody knows their money goes into our general fund and it can be spent anywhere in the country,” he said.

Both the Republican and Democratic governors associations have participated in Indiana politics in the past.

Between his two campaigns in 2004 and 2008, Gov. Mitch Daniels received more than $3.4 million in support from the Republican association — including a check for $725,000. In the 2008 race, his Democratic opponent, Jill Long Thompson, received less than $500,000 from the Democratic association. The Democratic group gave $280,000 to then-Gov. Joe Kernan in 2004.

Posted 8/8/2012