WASHINGTON -- This spring, shareholders in more than 100 companies will introduce resolutions calling for greater disclosure of corporations' political and lobbying activity. Six major companies -- Dean Foods, Eastman Chemical, H&R Block, Marathon Oil, U.S. Steel and Valero Energy -- have already reached agreement with New York state Comptroller Thomas DiNapoli, who oversees the third largest pension fund in the nation, to adopt political spending disclosure policies in exchange for the comptroller's office withdrawing its resolutions.
But don't consider that a sign that corporate America is learning to live with transparency. Over the past two years, three of the usual suspects -- the U.S. Chamber of Commerce, the Business Roundtable and the National Association of Manufacturers -- have joined together to try to discredit the purpose of disclosure policies and the advocates calling for them.
Aided by the editorial page of The Wall Street Journal, the three big business groups have sought to undercut activist investors and pro-disclosure groups through public campaigns and private meetings with corporate executives.
Chamber President Tom Donohue put their argument succinctly at a December conference. "They say it's about transparency, that's a laugh. ... The ultimate goal is to ban all corporate political speech and lobbying spending,” he said.
The anti-disclosure campaign has particularly targeted the nonprofit Center for Political Accountability. The center publishes the annual CPA-Zicklin Index of Corporate Political Accountability and Disclosure, which ranks major corporations on their political spending and disclosure policies. Judging from their efforts to discredit it, the business lobby groups see a major threat in such a public evaluation of their members' support for transparency.
In April 2013, the three groups sent their first joint letter to executives at Fortune 500 companies warning them about shareholders presenting disclosure resolutions. “The activists’ goal is to limit or remove altogether the business voice from the political and policymaking processes,” the missive stated.
Another letter was sent in October 2013 with a more detailed warning: “Some unions, environmentalists, public pension fund managers and other political activists, coordinating with the Center for Political Accountability ('CPA'), have engaged in a campaign with two goals: convince corporate America that 1) investors desire disclosure of 'political and public policy expenditures' and 2) most corporations themselves are agreeing to greater disclosure of these expenditures.”
Since then, the Chamber of Commerce has retained the services of former Securities and Exchange Commissioners Paul Atkins and Kathleen Casey, now with Patomak Global Partners, to further spread the word about the allegedly nefarious motives of those seeking corporate political disclosure. In 2014, the Patomak consultants presented the Chamber’s case to a committee of the Securities Industry and Financial Markets Association and at the annual meetings of the National Investor Relations Institute and the National Association of Corporate Directors.
They wielded arguments from the Center for Competitive Politics, a nonprofit opposed to campaign finance regulation and disclosure requirements, and now repeated in the pages of The Wall Street Journal. A PowerPoint presentation made to the SIFMA committee -- and obtained by The Huffington Post -- took aim at the Center for Political Accountability and its index. It argued that the index is manipulated, that even receipt of a high score would not deter future shareholder resolutions and that the center is a stealth puppet of liberals to end corporate political engagement.
The Chamber of Commerce did not return requests for comment.
Bruce Freed, president of the Center for Political Accountability, disputed the criticism of his group and its index. “There’s one word for that: baloney,” he said. The center has adjusted its rating system a few times, he acknowledged, but only at the suggestion of the companies it's in contact with.
Freed said the real story is that more and more companies are adopting disclosure and oversight resolutions. “The fact that companies now recognize disclosure and accountability as a good government practice and as a good risk management approach -- it crimps [the Chamber of Commerce’s] style,” he said.
In addition to the six companies that reached agreements with the New York state comptroller, whose office works with the Center for Political Accountability, another six, including MeadWestvaco and Thermo Fisher Scientific, will adopt new disclosure rules this year. The center will also expand the index to cover the entire S&P 500 for the first time.
Freed said he sees the concerted criticism as a reflection of his group's success in convincing businesses to be more accountable to their shareholders. “We’ve always viewed [the attacks] as proving we’re successful,” he said.
While investors and the Center for Political Accountability have been pushing for greater disclosure for at least a decade, their efforts gained more urgency following the Supreme Court’s 2010 Citizens United decision. That ruling opened the door for corporations to spend unlimited sums on political campaigns so long as they remained legally independent from the candidates they backed.
The Chamber of Commerce had submitted a brief in the Citizens United case in support of lifting certain previous restrictions on corporate spending. The business lobby has been active in elections since 1998, but dramatically stepped up its efforts following the Supreme Court's ruling. Since then, the Chamber has spent over $100 million on federal elections, almost all in favor of the Republican Party.
Disclosure requirements could undermine the Chamber’s political efforts if companies decided they didn’t want to be seen backing one political party over the other. Their donations to the Chamber might come with limitations -- to be used only to pay for the lobby's other operations and not political purposes.
In December, the Chamber hosted a conference aimed at promoting the political speech rights of corporations and fighting disclosure and campaign finance reforms. The gathering, at which Donohue spoke out, also featured Atkins of Patomak Global Partners, Sen. John Cornyn (R-Texas), lawyers from the Center for Competitive Politics and others.
“The real concern is that corporations are going to acquiesce in some form or fashion to what these activists want,” James Copeland, director of the Manhattan Institute’s Center for Legal Policy, told the attendees.
Atkins warned that such disclosure is “not good for the bottom line.” Corporate lobbying, according to Atkins, is like calling plays in football. “If all that were broadcast far and wide, that would not be very good for the performance of the football team on the field," he said. "The same is true with respect to corporations.”
In fact, business lobbyists constitute an overwhelmingly powerful force in Washington. Corporations spend $2.6 billion per year on lobbying the federal government, more than the $2 billion it costs to fund Congress, according to New America Foundation scholar Lee Drutman, the author of a new book titled The Business of America Is Lobbying.
Perhaps the corporations and the Chamber so willing to praise the Citizens United decision need to read it more closely -- especially what it says about the much maligned idea of disclosure.
Writing for the majority, Justice Anthony Kennedy stated rather clearly:
With the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters. Shareholders can determine whether their corporation’s political speech advances the corporation’s interest in making profits, and citizens can see whether elected officials are "'in the pocket' of so-called moneyed interests."