Campaign Contributions

The Corporate Crime PAC

Election day is upon us, but more than five million American citizens will not be able to go to the polls because they have been convicted of a felony and thus stripped of their voting rights. Yet there is another group of felons and other malefactors whose participation in the electoral process has been enhanced rather than curtailed: corporate criminals.

Corporations vote with their dollars, and thanks to the Supreme Court’s Citizens United ruling, they have more influence in elections than ever before. That includes corporations that have been convicted of crimes or regulatory violations, settled similar charges without admitting guilt or otherwise run afoul of the law.

Here are some of the leading corporate criminals that are active participants in the electoral process. The figures on their political spending are no doubt understated, given the various ways that companies can now invest in elections and keep it secret.

BP

Leaving aside this year’s disaster in the Gulf of Mexico, for which BP has not yet faced court action, in 2007 the British oil giant and some of its subsidiaries paid $370 million in fines and restitution for environmental criminal violations stemming from a fatal fire at a Texas refinery in 2005 and leaks of crude oil from its pipelines in Alaska. BP Products North America and British Petroleum Exploration (Alaska) Inc. were put on probation for three years.

In the current electoral cycle, according to the Open Secrets website, BP’s political action committee has spent more than $300,000.

Goldman Sachs

In July, Goldman Sachs paid $550 million to settle federal charges that it misled investors in connection with subprime mortgage securities.

In the current electoral cycle, the Goldman Sachs PAC has spent more than $850,000.

GlaxoSmithKline

British drug giant GlaxoSmithKline and a subsidiary together recently agreed to pay $750 million to settle criminal and civil charges relating to the knowing sale of contaminated and ineffective products.

In the current electoral cycle, the GlaxoSmithKline PAC has spent more than $1.5 million.

Hewlett-Packard

In August, Hewlett-Packard paid $55 million to settle charges that it paid kickbacks to win U.S. government business.

In the current electoral cycle, the Hewlett-Packard PAC has spent more than $350,000.

American Airlines

Also in August, the Federal Aviation Administration charged American Airlines with multiple maintenance violations and proposed a record fine of $24.2 million.

In the current electoral cycle, the American Airlines PAC has spent more than $550,000.

Dell

In July the computer maker Dell agreed to pay more than $100 million in penalties to settle charges of failing to disclose material information to investors and using fraudulent accounting methods.

In the current electoral cycle, the Dell PAC has spent more than $160,000.

Citigroup

In July, Citigroup paid $75 million to settle federal charges that it misled its own investors about the company’s exposure to risky subprime mortgage assets.

In the current electoral cycle, the Citigroup PAC has spent more than $390,000.

Lockheed Martin

We can’t forget about the big military contractors. Lockheed Martin, the largest of that fraternity, has 51 listings in the Project On Government Oversight’s Federal Contractor Misconduct Database, with total fines and settlements of some $577 million.

In the current electoral cycle, the Lockheed Martin PAC has spent more than $2.9 million.

I could go on and on. The political system in awash with direct contributions from corporations that have broken a wide range of laws and in many cases are using their campaign offerings to unduly influence federal policy so they can go on doing what they do – and perhaps face fewer prosecutions and enforcement actions in the future if their desired candidates are elected.

Corporations are persons, the Supreme Court tells us, and have Constitutional rights. Actually, corporations now have more rights than natural persons. They can break the law repeatedly and buy their way out of serious punishment.

The country would be a lot better off if individual ex-offenders got back their voting rights and corporate criminals were barred from spending lavishly to buy political influence.

A Corporate Full-Body Scan

The one redeeming feature of the abominable Supreme Court ruling on corporate electoral expenditures is the majority’s retention of the rules on disclaimers and disclosure. While opening the floodgates to unlimited business political spending, the Court at least recognizes that the public has a right to know when a corporation is responsible for a particular message and a right to information on a corporation’s overall spending.

Writing for the majority, Justice Kennedy states: “The First Amendment protects political speech; and disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.”

There’s no question that steps must be taken to mitigate the Citizens United ruling, whether through changes in corporation law, shareholder pressure, enhanced public financing of elections, or even a Constitutional amendment.

Yet while these efforts progress, it is also worth taking advantage of the Court’s affirmation of the principle of transparency and push for even greater disclosure than what we have now. Groups such as the Sunlight Foundation are already moving in this direction.

The effort could begin with pressing the Federal Election Commission to tighten the existing reporting rules on what are known as “electioneering communications” and to enforce them more diligently. But that’s not enough.

In the wake of Citizens United, we’ve got to demand more information on the many ways corporations exercise undue influence not only on elections but also on legislation, policymaking and public discourse in general. Now that Big Business is a much bigger threat to popular democracy, we have to subject corporations to intensive full-body scans to find all their hidden weapons of persuasion. The following are some of the areas to consider.

Lobbying. In his State of the Union Address, President Obama said that lobbyists should be required to disclose every contact with the executive branch or Congress. That’s fine, but why stop there? Many corporations do their lobbying indirectly, through trade associations which disclose little about their sources of funding. How about rules that require those associations to disclose the fees paid by each of their members and require publicly traded companies to disclose exactly how much they pay to belong to each of their various associations?

Front Groups. Corporations also indirectly seek to influence legislation and public opinion by bankrolling purportedly independent non-profit advocacy groups. Such front groups—such as those taking money from fossil-fuel energy producers to deny the reality of the climate crisis—do not have to publicly disclose their contributor lists. Why not require publicly traded companies, at least, to reveal all of their payments to such organizations?

Union-Busting. Encouragement of collective bargaining is still, in theory, official federal policy. Yet many companies violate the principle—and the rights of their workers—by using corporate funds to undermine union organizing campaigns. The existing rules on the disclosure of expenditures on anti-union “consultants” are too narrow and not vigorously enforced. That should change.

These are only a few of the ways that undue political influence and other forms of anti-social corporate behavior could be addressed through better disclosure. Yet, as we’ve seen, transparency by itself does not counteract corporate power unless something is done with the information.

This came to mind in reading the last portion of the Citizens United ruling. Not all five Justices in the majority went along with the idea of maintaining the disclaimer and disclosure rules. Parting with Kennedy, Roberts, Scalia and Alito, Justice Thomas argued not only that corporate independent expenditures should be unrestricted, but also that they should be allowed to take place under a veil of secrecy.

He bases his argument not on legal precedent, but rather on dubious anecdotal evidence that some supporters of California’s anti-gay-marriage Proposition 8 were subjected to threats of violence after their names appeared on public donor lists. Thomas thus suggests that corporations should be able to make their political expenditures anonymously to avoid retaliation.

While I am in no way advocating violence, I think activists need to use the information that becomes public as the result of expanded disclosure to make corporations pay a price for any attempts to buy our political system. If we can get them to worry about (non-violent) retaliation to the point that they limit their expenditures, then we will have gone a long way toward neutralizing the pernicious effects of the Citizens United ruling.

Haiti: Corporate Charity or Reparations?

After the New Orleans region was struck by Hurricane Katrina in 2005, Wal-Mart scored a public relations coup by delivering emergency supplies quickly while government agencies stumbled. Ignoring the fact that the company’s vast distribution network made the feat relatively easy, awestruck journalists hailed the giant retailer as a “savior” for many of the storm’s victims.

The Behemoth of Bentonville has apparently not been performing any major logistics miracles for the people of Haiti in the wake of the recent devastating earthquake. The company is working mainly through the Red Cross, initially providing $500,000 in cash and food kits worth $100,000.

Although the company’s outlays have apparently increased a bit since its January 13 press release, the amount is still in the neighborhood of $1 million. To put that number in perspective, in 2008 Wal-Mart had profits of $22 billion, which works out to some $2.5 million an hour—every day of the year.

It is hard to be impressed at a commitment of 30 minutes worth of profits to help deal with a disaster of the magnitude facing Haiti. But this is not just an abstract issue of generosity.

Over the years, Wal-Mart has earned huge sums from the impoverished nation. Haiti is one of the low-wage countries where garment contractors have produced the goods that, despite Wal-Mart’s vaunted low prices, can be profitability sold in its network of Supercenters. It’s been going on for many years. A 1996 report on Haiti by the National Labor Committee noted that Wal-Mart was a major customer of sweatshops paying garment workers as little as 12 cents an hour.

In this time of dire need, Wal-Mart should feel pressure to make a commitment to the Haitian people of a magnitude comparable to the wealth it has extracted from the country over the years.

The question of the obligation of a company such as Wal-Mart to a situation such as Haiti is particularly relevant in light of the outrageous ruling by the Supreme Court in the Citizens United case. Thanks to the High Court’s corporate shills, Wal-Mart executives are probably already fantasizing about the unlimited slush funds they will have to sway elections and pressure incumbents to do their bidding.

Now is a good time to launch a movement to push corporations to do something with their money other than buying the political system. The outpouring of support for Haiti could be the springboard for a campaign that demands that Wal-Mart—and other major corporations that have benefited from the country’s cheap labor—provide not a bit of charity but rather a substantial amount in the form of reparations.

Perhaps the way to start is to call for disclosure of an estimate of how much value Wal-Mart has extracted from the Haitian people. Rather than letting the company brag about its pittance of a voluntary contribution, it would be much more satisfying to see it have to negotiate an amount that would make a real difference for the country.

Will Corporate Cash be Allowed to Overwhelm Elections?

nast moneybag2 If the United States were a country truly committed to democracy, we would now be having a national discussion on limiting the role of big money in politics. After all, we are still recovering from a financial crisis brought on by an orgy of deregulation instigated by Wall Street interests that spent lavishly to influence members of Congress from both major parties and then had to be bailed out by taxpayers. Major auto companies such as General Motors, which for years successfully lobbied to weaken fuel-economy standards, also had to be bailed out when they could no longer sell gas-guzzling SUVs.

Instead, the role of corporate money is stronger than ever. Rather than having the decency of withdrawing from the policy arena, bailed-out companies have continued to lobby for weaker regulation. At the same time, the insurance industry has thrown a monkey wrench into long-overdue healthcare reform by making hefty contributions to conservative Democrats. The energy industry used its resources to weaken the climate bill.

And now the U.S. Supreme Court may be preparing to open the floodgates completely. In June the high court took the unusual step of announcing it would hold a special hearing this September on a case involving a rightwing advocacy group, Citizens United, which ran afoul of the McCain-Feingold campaign finance law in connection with its distribution of a film attacking Hillary Rodham Clinton during the last presidential campaign. Instead of ruling narrowly on the case, which involves some of the technicalities of McCain-Feingold, the Court signaled that it wanted to reconsider the entire question of corporate political spending. Direct corporate contributions to federal campaign were first banned in 1907, and independent campaign expenditures by business corporations were prohibited in 1947.

There is little doubt that this unusual move was promoted by conservative justices such as Scalia and Thomas who think that any restrictions on corporate electoral spending are violations of the First Amendment. And it is no surprise that pro-business groups are generally praising the Court for taking on the issue, conveniently discarding their usual disdain for judicial activism.

Meanwhile, progressive watchdog groups such as Public Citizen are sounding the alarm, warning that eliminating limits on corporate spending would allow large companies to use their resources to buy elections with impunity.

The cynical way of looking at this is that Big Business already manages to dominate the electoral system through its political action committees and lobbying expenditures, so uncontrolled spending would not make much difference. The danger, however, is that eliminating the restrictions would allow capital to completely overwhelm the electoral system. And it would be a huge boon for the destructive principle of corporate personhood, the basis on which business interests exercise such outsized influence over American life.

What makes this issue trickier is that the cases in question deal not only with political expenditures by business corporations but also ones made by labor unions and non-profit corporations. Unfortunately, there is a long legal tradition of treating democratic organizations such as unions as equivalent to business corporations, which are undemocratic entities that should have no constitutional rights.

That is not going to change anytime soon. Meanwhile, we can only hope that reason prevails and the Supreme Court does not turn the electoral system into a total financial free-for-all.

McCains: Is this Bass for You?

John McCain and his wife Cindy must be thinking a lot about beer these days. Earlier this week, while speaking to the National Federation of Independent Business, the presumptive Republican nominee had a slip of the tongue and said “I will veto every beer” (when he meant to say “bill”). This came amid intense rumors, which turned out to be true, that Belgian-Brazilian brewing giant InBev intended to make a takeover bid for iconic American beer company Anheuser-Busch (A-B). InBev sells scores of beer brands such as Bass, Beck’s and Stella Artois.

For McCain this is not just an abstract issue of globalization. His wife Cindy McCain controls Hensley & Co., one of the largest A-B distributorships in the United States, and together with her children holds some $1 million in A-B stock.

The mayor of St. Louis, where A-B is based, is opposing a foreign takeover of the beer giant, and concern about the deal has been expressed by Missouri’s two U.S. Senators—one a Democrat and the other a Republican. There are even signs of a grassroots and netroots movement to keep A-B out of foreign hands.

At this point, it’s difficult for me to get too worked up about the prospect of a takeover. InBev is claiming it won’t downsize A-B, and the Teamsters union, which represents more than 8,000 of the company’s workers, would hopefully be in a position to enforce that commitment. Moreover, the beer industry has been embroiled in an international consolidation wave for years. The second most prominent U.S. brand, Miller, was swallowed by South Africa Breweries back in 2002. The merged company, SABMiller, is in the process of combining its U.S. operations with those of Molson Coors, itself the merger of another famous U.S. brand with a Canadian brewer. A-B has struggled precisely because it has not played the merger game.

Observers are wondering where John McCain will position himself on the issue—or whether he will sidestep it entirely. His wife, who insists her finances are completely separate from his, could benefit from the deal by selling her shares at a handsome premium. On the other hand, distributorships such as hers may not want to give up the comfortable relationship they have with A-B.

No matter what, the deal will focus new attention on Cindy McCain’s business dealings. At least some of this will presumably mention the controversial history of her late father, who left her the business. According to a 2000 article by John Dougherty and Amy Silverman in SF Weekly, James Hensley received a wholesale liquor license in the mid-1950s, despite the fact that he and his brother Eugene were convicted of violating federal liquor laws in 1948. Like many other beer distributorships, Hensley & Co. was a frequent contributor to political candidates, including John McCain.

So how does the Christian Right feel about the prospect of having a beer dealer—and daughter of a reputed bootlegger—as First Lady and of having a President whose political career was launched by the proceeds of that business?

Firm Headed by Major Republican Contributors Accused of Supplying Substandard Plane Parts

The Project On Government Oversight (POGO) and CBS News just revealed that Pentagon investigators have accused a California company of supplying substandard components for military and civilian aircraft for nearly a decade, charging that the firm committed fraud and bribery and exhibited “brazen disregard for the safety of soldiers and civilians as well as for the sanctity of laws, rules and regulations.” The company is privately held Airtech International Inc., which also goes by the name of Airtech Advanced Materials Group.

POGO and CBS obtained a September 2006 memo in which the allegations were made by a special agent of the U.S. Army’s Criminal Investigation Unit, who argued that Airtech should be debarred from doing business with the federal government. The investigator charged that Airtech, which makes light-weight composite materials, “knowingly supplied nonconforming products to DOD [Department of Defense] prime contractors.”

Airtech has not been debarred or formally charged in the matter. A company spokesperson told CBS “we are aware of no current ongoing investigation,” but CBS reports that a document dated earlier this month indicates that an “active investigation” is still being conducted by the Army. CBS also says the House Transportation Committee is looking into the matter.

One fact not mentioned by either POGO or CBS is that the two top executives of Airtech—CEO William Dahlgren and his son Jeffrey Dahlgren, who serves as President—have together made a total of $308,700 in federal campaign contributions since the early 1990s—all of it to the Republican Party or Republican candidates, according to the Open Secrets database. Among those candidates: John McCain, who received $1,000 from William Dahlgren in February 2007, and George W. Bush, who got $2,000 from William Dahlgren in May 2000. Most of the Dahlgren money—more than $250,000—went to the Republican National Committee.

Apart from seeking contracts, the Dahlgrens may also have been investing in politics to gain influence in regulatory matters. According to the inspections database of the Occupational Safety & Health Administration, Airtech was cited for a serious violation in September 2006. OSHA proposed a fine of $5,060 (which is on the high side for the agency) but later settled with the company for $2,700.

Another model corporate citizen supporting the Republicans.

The Democratic Convention: Brought to You By Your Friends in Corporate America

Barack Obama and Hillary Clinton may be bashing big business (up to a point), but a number of major corporations are positioning themselves to win favors from a possible Democratic administration next year by signing up as sponsors of the party’s convention. Last week, Kevin Vaughan of the Rocky Mountain News reported that the August gathering in Denver has already lined up 56 corporate supporters.

Vaughan notes that these companies appear to be motivated by something other than civic responsibility: “Almost all of them have the same thing in common: They either have business with the federal government or they lobby on pending issues.”

Massie Ritsch of the Center for Responsive Politics told Vaughan: “Corporations aren’t allowed to contribute directly to political parties or candidates’ campaigns, but they can subsidize the gatherings that show off a party’s candidate to American voters and get the candidate officially nominated…Money from these corporate donors helps the party, it helps the candidate, and to call it anything other than a campaign contribution is to make a distinction without a difference.” Also on the list of sponsors is the Service Employees International Union.

The Center’s Capital Eye blog later reported that companies on the sponsorship list are also associated with actual campaign contributions—through their political action committees and individual giving by employees and their families. In this way, the Center says, 38 of the sponsoring companies have provided about $971,000 to Sen. Clinton and 48 have provided about $1.3 million to Sen. Obama.

Vaughan does a good job of cataloging the issues on which the corporate sponsors would likely seek help from the Democrats if they control the White House as well as Congress. For example, AT&T’s concern about liability in connection with its involvement in national security wiretapping; Merck’s opposition to low-cost drug importation; and Visa’s worries about new restrictions on credit card companies.

Other sponsors include leading weapons producer Lockheed Martin, the giant for-profit medical insurer UnitedHealth Group, and utility firm Southern Co., one of the largest producers of greenhouse gas emissions. Another of the sponsors, Molson Coors, may be a significant liability for the Democrats even during the convention. Jonathan Coors, nephew of company vice chairman Pete Coors, is leading an effort to put an anti-union right-to-work initiative on the ballot in Colorado.

Isn’t it wonderful that the Democrats display such diversity among those helping to make its historic convention possible.

Hillary Clinton is Ahead in the Wal-Mart Election

It hasn’t been a great week for Wal-Mart, what with having to back down from its demand that the family of brain-damaged former employee Debbie Shank reimburse the company’s health plan for her medical treatment.

Yet in an interview with the Financial Times published Thursday, Wal-Mart CEO Lee Scott indicated that in a wider sense the company is doing well:

Mr Scott expressed satisfaction that in spite of the union campaign, Wal-Mart’s record had not become an issue in the Democratic primaries. Hillary Clinton served on Wal-Mart’s board from 1986 to 1992 when her husband was governor of Arkansas, the retailer’s home state.

It’s easy to forget it was once thought that this presidential race would focus on the impact of Wal-Mart on the economy and the labor market. In January 2007 a columnist for U.S. News wrote: “The ginormous retailer is sure to be a frequent target for Democrats during the 2008 presidential election.” Barack Obama made an issue of Clinton’s tenure on the Wal-Mart board during a debate in January but has not had much to say about the company since John Edwards left the race. Clinton, far from attacking Wal-Mart, has had to contend with investigations, such as one done by ABC News in late January, showing that during her time as a director she remained silent about the company’s assaults on union organizing drives. Clinton responded by saying her views had changed and that she is now a strong supporter of unions.

Despite this professed change of heart about the Wal-Mart philosophy of labor relations, it appears that Clinton is the favorite presidential candidate among those working at the company. A search of individual campaign contribution data on the Open Secrets website shows that Wal-Mart executives and other employees have contributed far more to Clinton— $22,000—during the current election cycle than to John McCain or Obama, each of whom has received $3,700. (Note that only those contributing $200 or more have to list an employer. The totals were derived by searching both “Wal-Mart” and “Walmart” in the employer field.)

The Wal-Mart contributions are a minuscule portion of the more than $160 million Clinton has raised, but it is notable that among those giving their individual maximums to the New York Senator are two of Wal-Mart’s executive vice presidents—Thomas Hyde and PR guru Leslie Dach. Either they know something we don’t about Clinton’s current views, or this, like the company’s previous hard line in the Debbie Shank case, is an example of how Wal-Mart executives are often thick-headed about what is really in the company’s best interests.