(The Center for Political Accountability issued the following news release on September 8.)
WASHINGTON, D.C. — The Center for Political Accountability (CPA) has called on the U.S. Securities and Exchange Commission (SEC) to require public companies disclose their political contribution policies and practices.
This action expands the Center’s campaign to get corporations to disclose soft money contributions made with corporate funds. Until now, the CPA’s focus has been on shareholder resolutions to get companies to end their almost total secrecy in this area.
In a letter to SEC Chairman William Donaldson, the CPA said that SEC action is critical to “protecting shareholder value and creating a level playing field for companies that refrain from using corporate treasuries to achieve a marketplace advantage through political largesse. By adopting an effective rule, the Commission will assure that all companies will have to disclose and justify their political donations to their shareholders.”
A public interest advocacy group, the CPA is spearheading a national effort to bring transparency and accountability to corporate political giving. It is working with institutional investors and other groups to bring about disclosure of company political contributions.
This year, a model shareholder resolution drafted by the CPA and submitted to more than 20 public companies received strong support from shareholders. The resolution urged companies to disclose their contribution policies and political donations, explain the business rationale for those contributions, and identify the corporate officers involved in the decisions. Substantial shareholder support was received at a number of companies, including Altria, BellSouth, Union Pacific, Textron, Verizon, Morgan Stanley, ChevronTexaco, Citigroup, AmSouth, General Electric and Wachovia.
The letter to Donaldson supports the earlier action by 11 of the nation’s leading state and city treasurers and pension trustees citing the need for regulation covering this issue of corporate secrecy. In their August 25 letter, the investment officers told Chairman Donaldson “that shareholders have a right to know how the companies they own are using their money in the political arena. We ask you and your fellow SEC Commissioners to let the sun shine on corporate contributions so that the tens of millions of shareholders in America’s public companies can know how their money is being used in the nation’s political life.”
That letter was signed by California Treasurer Phil Angelides, Oregon Treasurer Randall Edwards, Iowa Treasurer Michael Fitzgerald, Sean Harrigan, a member of the California Public Employees’ Retirement System, New York State Comptroller Alan Hevesi, Maine Treasurer Dale McCormick, Kentucky Treasurer Jonathan Miller, North Carolina Treasurer Richard Moore, Connecticut Treasurer Denise Nappier, Vermont Treasurer Jeb Spaulding, and New York City Comptroller William C. Thompson, Jr.
CPA Co-Directors Bruce Freed and John Richardson said, “We welcome these recognized national public finance authorities to the alliance working for full disclosure of corporate political financing.”
Although the McCain-Feingold campaign finance law bars corporate contributions to political parties at the federal level, it still allows companies to give to independent political committees, popularly known as “527s,” and to candidates and ballot measure and issue ad campaigns at the state and local level where laws permit. Moreover, executives have substantial discretion in where they make political contributions with corporate funds. Boards of directors do not, for the most part, review those contributions.
Requiring company disclosure “will allow shareholders to be not only better informed about how their money is being used but also better able to judge the performance of corporate management,” the CPA letter said. “It will serve as a deterrent for management from making the type of questionable contributions that, in the past, have created legal problems that have negatively affected the shareholder value.”
The CPA letter to Mr. Donaldson can be viewed at http://www.politicalaccountability.net/Donaldson%20Letter.pdf