Spotlight on Corporate Political Spending
Published, Spring 2006
Last year Walden increased its focus on company political spending.
While political action committee (PAC) contributions by
company employees are publicly disclosed and scrutinized, corporate
“soft money” donations to political committees or front organizations
and corporate political spending through trade associations are
still obscured. This spending is beginning to cause headaches for companies
when it is brought to light.
Consider the following: Over the past two years, PepsiCo, Union
Pacific, Bellsouth, and Pfizer were hit with reports that some of their
soft money had ended up going to groups and candidates with positions
that directly conflicted with their publicly stated policies. These
included the Traditional Values Coalition, Kansans for Life, the
Christian Coalition’s Kansas affiliate, and legislative candidates in
Texas, all of which opposed same-sex partner and other benefits that
the companies provided for their employees.
In October 2005, companies that had contributed to events at the
2000 Republican presidential convention got a jolt when the
Associated Press revealed that their money was diverted to purposes
they knew nothing about. These included gifts to a charity associated
with an elected official, payments to a consulting firm that employed
the official’s wife, hefty donations to the campaign of another politician’s
son, and laundered contributions to other political committees.
The problem, however, does not revolve around a single party. It is pervasive
within our political system.
Embarrassing disclosures can bring legal risks and harm a company’s
reputation. Often, problems result from a simple lack of internal
controls and the absence of management and board oversight. Because
current law doesn’t require companies to fully report or account for
their political spending, companies may fail to put in place procedures
that would guard against acts of overzealous employees.
Walden has joined a broad coalition of investors—trade unions,
foundations, religious investors, social investment managers and mutual
funds—working with the Center for Political Accountability to urge
companies to adopt full disclosure of political contributions and to
encourage board oversight. A number of companies have stepped up
their disclosure and oversight, some of them discovering in the process
that the review provides control over decentralized practices that had
resulted in contributions that top management knew little about.
Quiet behind-the-scenes conversations and publicly sponsored shareholder
resolutions (more than 50 were filed for the 2006 proxy season)
have intensified the focus on corporate political giving.
—T. Smith, with the assistance of Bruce Freed,
Center for Political Accountability
For more information, visit the Center for Political Accountability website