Much corporate political spending stays hidden

WASHINGTON — Despite mounting calls for greater transparency, only a few of the country’s 75 leading energy, health care and financial services corporations fully disclose political spending, according to a review of company records and state and federal campaign finance reports.

While

complying with legal requirements to report direct donations to candidates, the vast majority of these companies — many of which are seeking legislative favors from the new Congress — do not reveal information even to their shareholders about support for politically active trade associations like the U.S. Chamber of Commerce.

Groups such as the chamber, some of which spend millions of dollars on elections, are not required to reveal their financial supporters. And companies are not required to report their donations to those groups.

The money fuels a parallel, opaque system of political giving that plays a growing role in national elections and is emerging as a 2012 campaign issue. President Barack Obama is considering an executive order requiring government contractors to disclose political donations, and congressional Democrats have filed a lawsuit against the Federal Election Commission demanding more disclosure.

What information is publicly available suggests that substantial corporate political spending remains in the dark, leading to an incomplete, and at times misleading, picture of companies’ efforts to influence legislation and elections, the Los Angeles Times review indicates.

Only 14 of the country’s 75 leading energy, health care and financial services companies reported payments to industry trade associations in 2009. But those 14 alone gave more than $23.5 million for lobbying and political purposes, according to company postings.

The remaining 61 companies in those industries did not disclose any payments. That same year, however, the chamber and seven other leading trade groups representing the three industries took in more than $1.3 billion, more than the state of Vermont collected in taxes. These groups, in turn, spent $500 million on lobbying and other political activity such as television advertising, tax records show.

Company giving to trade associations for political campaigns can dwarf direct donations to candidates, according to records from corporations that voluntarily report such giving.

Political action committees operated by Prudential Financial, for example, gave $218,230 to candidates and other committees in 2010. By comparison, the company gave the chamber and other trade groups more than $2.2 million for lobbying and other political purposes. In all, the company paid these groups nearly $6.6 million in dues in 2009.

While some companies that don’t disclose may not have contributed to trade groups, others simply defend their right to keep their giving out of the public eye.

“Information about our financial support for certain causes is proprietary,” said Adam Shores, a spokesman for insurance giant Allstate.

That has prompted some investors to push companies to post annual reports where the public can view a comprehensive list of a corporation’s political spending, including what it gives to trade groups. “We understand that company voices need to be heard,” said Julie Gorte, senior vice president at mutual fund Pax World Management. “As shareholders, we think we have a right to know how the money is being spent.”

But industry leaders ExxonMobil, ConocoPhillips, JPMorgan Chase and Citigroup have fought such shareholder initiatives, arguing in corporate filings that they comply with existing laws and that disclosing more is “unnecessary.”

Other companies say they present a complete picture of their political spending, while leaving off select contributions.

Goldman Sachs, for instance, says on its corporate website that it “does not make any political contributions in the United States.” And Morgan Stanley reports that its only corporate political contribution in 2010 was a $500 check to the New York Senate Republican Campaign Committee Housekeeping Conference Account.

Nowhere on their websites do the two financial powerhouses say that they gave a combined $105,264 to a political action committee run by the California Public Securities Association.

State campaign finance reports, which show the contributions, indicate that the trade group spent $400,000 on two 2010 ballot measure campaigns.

Quoting the company’s 2010 proxy statement, Goldman spokesman David Wells said the company did not control how trade groups spend. “They take a wide variety of positions on a number of matters, not all of which are supported by us.”

To conduct the review, The Times asked the nation’s 75 largest publicly traded energy, health care and financial services companies to outline their reporting practices. The information was checked against corporate websites, financial filings and state and federal campaign finance reports.

Under current law, companies that donate directly to campaigns or political parties must report this giving to regulators.

Companies are not required to report giving to certain types of not-for-profit organizations, including trade associations and “social welfare” nonprofits organized under Section 5019 (copyright) 4 of the tax code.

Trade groups may use members’ dues or specifically earmarked corporate contributions to fund political activity.

This system ensures companies can participate in the political process without risking their reputations, said R. Bruce Josten, the U.S. Chamber of Commerce’s chief lobbyist.

Citing retailer Target, which faced public protests for supporting an organization that backed a candidate opposed to gay rights, Josten said disclosing company donations would threaten free speech.

“When you have members that are outed in such a fashion and are harassed and intimidated and attacked and threatened, I think it is pretty clear,” he said. “The attempt here is to have a chilling effect on our ability and our members’ ability to engage in a debate.”

But unless a company voluntarily provides information about all its giving, as Prudential does, citizens and shareholders cannot see the full extent of its political spending.

Health insurance giants UnitedHealth Group and WellPoint each post a list of contributions to state candidates and donations made by the companies’ political action committees. Neither reports what they pay to America’s Health Insurance Plans, however. The industry’s Washington-based lobbying arm spent more than $130 million on lobbying and other political activity in 2009, including an $86 million campaign funded through the chamber that targeted healthcare legislation being debated on Capitol Hill.

Insurer Aetna, which does report its trade association dues, also would not disclose how much it contributed to that campaign, which the company describes as educational, not political.

Valero Energy Corp., a leading refiner, posts in a policy on its website that it “does not use corporate funds to make contributions to political candidates, political parties, political committees or other political entities organized and operating under Section 527” of the tax code.

But Valero did not disclose on its website $5.05 million in contributions to a committee organized to pass Proposition 23, an initiative to delay California greenhouse gas regulations. Valero spokesman Bill Day said the committee was incorporated as a 501(copyright) 4 nonprofit, and therefore not covered by the company policy.

Contributions to ballot committees are treated as political contributions in California, however. They must be reported to the California Secretary of State, which Valero did.

With unregulated political spending expected to play an even larger role in next year’s presidential campaign, many companies are coming under increasing scrutiny from shareholders and advocacy groups such as the Center for Political Accountability and the Sustainable Investments Institute.

Wells Fargo, Oppenheimer and other leading mutual funds have begun to support shareholder resolutions at major corporations to require disclosure of giving to trade associations and other groups.

Several companies, including CVS, Pacific Gas & Electric and Capital One Financial, have posted new information about their political giving since The Times began its review.

“Corporate America has classically been more inward-focused,” said Michael G. Morris, chief executive of American Electric Power, which began posting its giving to trade groups in 2007. “We just believe telling the world is the best practice.”

Talk to us

More in Local News

Security footage depicting an armed robbery at Buds Garage in Everett on Tuesday, Jan.18, 2022. (Contributed photo)
Everett pot shop robbed twice; others targeted in recent months

Armed robbers have hit Buds Garage off Everett Avenue twice since December.

A SWAT team responds during an 8-hour standoff between police and a man brandishing a knife at a home in south Edmonds on Sunday night. (Edmonds Police Department)
Edmonds man barricaded in house arrested after 8-hour standoff

Police said he was brandishing a knife and threatening “homicidal violence” on his family.

Connie L. Bigelow at her store Miniatures & More in Edmonds on Tuesday. (Janice Podsada / The Herald)
Woman who lit her own Edmonds doll store on fire gets house arrest

Connie Bigelow, 54, was sentenced Friday in federal court for lighting her business on fire to collect insurance money.

The Washington National Guard arrived Friday at Providence Regional Medical Center Everett to help with a surge of COVID-19 cases at the hospital. (Providence) 20220121
State offers free home tests; National Guard arrives in Everett

Supply is limited at a new online portal, but Washingtonians can now order five free rapid COVID tests.

A car drives by Everett Station where Everett Mayor Cassie Franklin's proposal for its ARPA funds includes funding a child care center at station. (Olivia Vanni / The Herald) 20211118
Billionaire Bezos wants to bring free preschool to Everett

The Amazon founder’s program would be housed at Everett Station. Admission would be determined by lottery.

A rendering of the Compass Health Broadway Campus Redevelopment looks southwest at the building. The facility is planned for 82,000 square feet with a behavioral health clinic with a 16-bed inpatient center and a 16-bed crisis triage center. (Ankrom Moisan Architects)
Demolition eyed in spring for Compass Health Broadway campus

The Everett-based behavioral health care provider wants to replace the 1920-built Bailey Center with a modern facility.

A car drives by flowers placed at a memorial for two pedestrians killed at the corner of 204th Street NE and Highway 9 on Friday, Jan. 21, 2022 in Arlington, Washington. (Olivia Vanni / The Herald)
$500K bail for driver accused of killing 2 Arlington pedestrians

Elliott Bagley, 28, told an officer he’d had a couple beers before the crash Thursday, according to police.

Logo for news use featuring the municipality of Lake Stevens in Snohomish County, Washington. 220118
Lake Stevens proposes cutting ties with Sno-Isle Libraries

Sno-Isle’s director called the move a “drastic and unnecessary action to privatize our shared public library.”

The Snow Goose Transit bus at one of it's stops outside of the Lincoln Hill Retirement Community on Thursday, Jan. 20, 2022 in Stanwood, Washington. (Olivia Vanni / The Herald)
Catch a free bus between Camano, Stanwood, Smokey Point

Snow Goose Transit runs on weekdays, offering 15 stops and — for those with mobility issues — door-to-door service.

Most Read