By John Harrington
Op-ed: Special to the Napa Valley Register
Large publicly traded corporations are poised to dominate our political system by flooding campaigns and politicians with money to buy special favors in Washington. At the very least, shareholders, as the legal owners of corporations, stakeholders and the investing public, should know how much corporate management is spending to elect politicians to represent them in Congress and as President of the United States.
The 2010 Supreme Court 5-4 decision to allow unlimited corporate political spending opened the floodgate in that year’s election cycle with corporations spending $75 million on political ads in the fall elections, hiding the identity of donors by laundering the money through the Chamber of Commerce and Business Roundtable. Four times as much money has been spent by corporations in political campaigns in 2010 compared to 2006, even though 62 percent of the American public opposes the Citizen’s United ruling.
In addition, there were 12,967 registered lobbyists in Washington, D.C. in 2010, spending $3.51 billion. From 1998 to 2011 the securities industry alone spent over $848 million on lobbying and almost $15 million to elect Barack Obama; not a bad investment considering taxpayers bailed out financial institutions with $1.2 trillion.
On Aug. 3, 2011, the Committee on Disclosure of Corporate Political Spending, comprised of a group of prominent law professors specializing in the areas of corporate and securities law submitted a petition to the Securities and Exchange Commission (SEC) requesting that it propose a rule requiring public disclosure of corporate political spending to provide shareholders and the investing public full transparency. In November 2011, my investment advisory firm joined many other institutional investors, representing about $700 billion in assets in support of the petition.
In addition, I have joined other investment advisers, mutual and pension funds in introducing shareholder resolutions to companies requesting voluntary disclosure of corporate political contributions. I introduced resolutions at WellPoint (Anthem) and Sunrise Senior Living. A total of 88 such proposals were introduced by shareowners in 2011, up from only 53 in 2010, while 55 have been introduced so far this year. A total of 100 corporations have voluntarily agreed to publicly disclose and oversee political spending.
The Committee for Economic Development, a nonpartisan organization of more than 200 business executives and university presidents, has announced a campaign to encourage corporations not to spend money on political campaigns, and if they do, to disclose such contributions to shareholders. Howard Schultz, Chairman and CEO of Starbucks, is simply calling on all corporations to boycott all political campaign contributions.
I believe that without disclosure of where shareholders’ money is being spent directors are violating their fiduciary duty. How can corporations serve the interests of their stakeholders, including shareholders, if they refuse to identify political recipients?
Full corporate campaign and lobbying expense disclosure is only the first step. Our democracy is in danger of being bought by the highest bidder. In the long-term, however, we must find a way to eliminate all corporate and special interest money from dominating our political system. We have too much to lose while corporations have too much to gain.