'Pay-to-Play' Corruption: Chevron, Campaign Contributions and Government Contracts

This Monday, Aug. 20, 2012 photo shows a Chevron sign in Miami. Chevron says, Friday, Feb. 1, 2013, net income rose 41 percen
This Monday, Aug. 20, 2012 photo shows a Chevron sign in Miami. Chevron says, Friday, Feb. 1, 2013, net income rose 41 percent in the fourth quarter as the company produced more oil and gas, improved performance of its refinery business and realized a gain from swapping assets in an Australian natural gas field. (AP Photo/Alan Diaz)

At the height of the 2012 elections, Chevron Corp. gave an unprecedented $2.5 million campaign contribution to the Congressional Leadership Fund (CLF), a super PAC intimately tied to House Speaker John Boehner (R-Ohio) and the congressional campaign committee of the Republican Party. The problem: Chevron Corp. is a government contractor and is prohibited by law from making contributions to federal candidates, parties and committees, including to the new phenomenon of "independent-expenditure-only" super PACs.

Because of a long and seedy record of companies attempting to buy lucrative government contracts through campaign contributions to those who issue the contracts -- or, just as bad, because of government officials extorting money from companies wishing to do business with the government -- federal contractors have been banned from making campaign contributions since 1940. Despite the recent U.S. Supreme Court's Citizens United v. Federal Election Commission (FEC) decision, which allows unlimited corporate expenditures in elections, there is a special provision in campaign finance law for federal contractors, which Citizens United did not affect. Federal law reads unequivocally that contractors shall not make "any such contribution to any political party, committee or candidate for public office or to any person for any political purpose or use."

These laws have been upheld by the courts over and over, starting with the 1995 Blount v. Securities and Exchange Commission (SEC) decision and more recently in the 2010 Green Party of Connecticut v. Garfield decision and the Wagner v. FEC decision last year.

Even CLF, along with nearly all other super PACs, recognizes this law against campaign contributions from federal contractors. The warning on the website of CLF is typical: "Contributions from foreign nationals, Federal government contractors, national banks, or corporations organized by act of Congress are prohibited."

"Pay-to-play" corruption -- the exchange of campaign contributions for government contracts -- is a problem that has swept federal, state and local governments across the nation. To get a picture of how damaging pay-to-play corruption can become, just take a look around.

Sting operations have recorded the all-too-common practice of trading contracts for campaign contributions. Just a few examples include former Govs. Rod Blagojevich in Illinois (now sitting in prison), George Ryan in Illinois (once rumored to be in the running for a Nobel Peace Prize) and John Rowland in Connecticut (sentenced to one year and one day). Just as tellingly, the link between campaign contributors and those who were awarded government contracts under the local administrations of former Mayors Jeremy Harris in Honolulu and John Street in Philadelphia have led to corruption investigations and convictions. The SEC has documented numerous cases of individual investment managers orchestrating campaign contributions in exchange for lucrative contracts to manage hedge funds or pension funds. This is why more than a dozen states and the SEC have passed their own pay-to-play rules banning campaign contributions from government contractors.

In the 2012 elections, a small handful of contractors chose to ignore the pay-to-play law, but none did so with as much bravado as Chevron. Chevron chipped in 22 percent of CLF's entire campaign budget, financing negative attack ads against 14 Democratic House candidates.

Unlike regular PACs that tend to make contributions to a multitude of candidates, frequently even crossing party lines, well over half of super PACs support only a single candidate or party -- essentially serving as a surrogate for a campaign with no limits. Candidates are subject to contribution limits, super PACs are not. The weight of laundering $2.5 million to a lawmaker through his or her so-called "independent" super PAC can carry a lot of sway over whether that lawmaker may intervene to help award a government contract.

Chevron probably was expecting a very different outcome in the 2012 elections. Or perhaps Chevron was expecting the laws on the books not to be enforced. Either way, Chevron established itself as a big money player in politics -- a player willing to spend heavily in elections to further its interests. Lawmakers and officials responsible for awarding government contracts undoubtedly have taken notice.

Public Citizen has asked the FEC to investigate the Chevron campaign contribution and enforce the law to prevent further pay-to-play abuses. If the FEC is not willing to act, lawmakers will be on their own come the next election. The potential for scandal is just another large campaign contribution away.

Since this post was written, Chevron has responded in the media that it does not believe it violated the law because it contributed through a corporation (Chevron Corporation) different from Chevron USA, which has most of the government contracts. Even if that is true, it appears based on SpendingUSA.gov that Chevron Corporation itself had government contracts in 2012, and a contribution would be illegal if any of those was either in force or being negotiated when the contribution was made.