Business groups assail political transparency

Introduction

Three of the nation’s most prominent trade associations are striking back at a corporate disclosure study that concludes large companies are increasingly more transparent about their politicking.

In a letter dated Oct. 17, obtained by the Center for Public Integrity, the groups slams the CPA-Zicklin Index of Corporate Political Accountability and Disclosure as peddling false information aimed at quieting big business.

They argue that most large companies’ shareholders have not supported proxy resolutions meant to enhance corporate political disclosure and that the CPA-Zicklin Index’s methodology is flawed.

“Corporations do NOT support increased political and lobbying ‘disclosure,'” reads the letter, which is signed by U.S. Chamber of Commerce President and CEO Tom Donohue, Business Roundtable President John Engler and National Association of Manufacturers President and CEO Jay Timmons.

“One powerful ploy that activists are using against publicly traded companies is creating the illusion that most corporations are supportive of increased broad disclosure of spending on so-called political activities,” the association executives continue.

The annual index is produced by the Center for Political Accountability and the University of Pennsylvania Wharton School’s Zicklin Center for Business Ethics Research.

Index publisher Bruce Freed, the president of the Center for Political Accountability, says the group’s accusations are “just plain wrong.”

The three trade associations sent the letter to officials at Fortune 500 companies, U.S. Chamber spokeswoman Blair Latoff Holmes confirmed. Accompanying the letter was a two-page document entitled “5 facts the Center for Political Accountability does not want you to know.”

During the 2012 election cycle, the U.S. Chamber itself spent more than $32 million to advocate for or against federal political candidates, according to Federal Election Commission records.

Donohue, Engler and Timmons further warn letter recipients that “the CPA and their allies will be approaching many of you, using the CPA-Zicklin Index, to try to extract further concessions. Knowing the facts can help your company avoid the disclosure trap.”

In preparation, they suggest corporations:

• “Actively monitor shareholder proxy activities on ‘disclosure.'”
• “Equip your staff with information and the necessary tools to effectively respond to shareholder activist threats.”
• “Engage directly and early with your shareholders to explain the need to resist these anti-business proxy proposals.”​

As nonprofit trade associations organized under Section 501(c)(6) of the Internal Revenue Service code, the three groups are not by law required to reveal their funders.

Nor are corporations legally compelled to publicly disclose any money they give to politically active nonprofit groups, which likewise aren’t required to disclose their donors and have together poured hundreds of millions of dollars into U.S. politics at the state and national levels. Still, some choose to do so anyway.

The trade associations’ letter coincides with an anti-disclosure op-ed piece Monday in the Wall Street Journal by Yale Law School professor Jonathan Macey and the launch of a public relations campaign (including Facebook ads) by the Center for Competitive Politics, a nonprofit group which is largely opposed public disclosure of political contributions.

Freed, of the Center for Political Accountability, chided his naysayers for “missing reality.”

“These folks want secret spending, and you have to ask — why do they want that?” Freed asked. “The truth is companies recognize, in increasing numbers, that disclosure policies are good governance.”

The 2013 CPA-Zicklin Index, released last month, praises several dozen of the nation’s largest corporations for what it considers their high levels of voluntary public disclosure about political activities.

Disclosure of contributions to politically active trade groups and “social welfare” nonprofits, adoption of policies that govern political expenditures and acknowledgement of payments made to influence the outcome of ballot measures earn high marks in the CPA-Zicklin Index’s methodology.

Among the high scorers are companies whose executive serve as board members or executive committee members for the U.S. Chamber and National Association of Manufacturers, including pharmaceutical company Pfizer Inc. (both), railroad operator Norfolk Southern Corp. (both) and United Parcel Service Inc. (U.S. Chamber only).

National Association of Manufacturers board members in the CPA-Zicklin Index’s upper echelon include tobacco giant Altria Group Inc., computer chip maker Intel Corp., tech behemoth Microsoft Corp., aerospace giant Boeing Co., pharmaceutical company Bristol-Myers Squibb Co. and railroad operator CSX Corp.

Some of the companies express pride in their CPA-Zicklin Index ranking.

Pfizer, for one, highlights the CPA-Zicklin Index under the heading “awards and recognition” within the corporate governance section of its website.

The company notes in a document that “at times we may not completely share the views of these various industry and trade groups and/or members, but we are able to voice our concerns, as appropriate, through our colleagues who serve on the boards and committees of these groups.”

Altria also states that it “may not necessarily agree with every position taken by each organization to which we contribute.” It, too, touts its CPA-Zicklin Index ranking, saying, “Our comprehensive approach to disclosure and accountability and our commitment to operating with integrity have resulted in Altria being recognized as a leader in political activities disclosure by many entities, including the Center for Political Accountability-Zicklin Index of Corporate Political Accountability and Disclosure.”

Says Freed: “There’s a real disconnect between these member organizations and their member companies. What the trade groups want and what their members do aren’t always the same thing.”

But plenty of companies provide little if any information about their political activities in corporate filings.

Charles Schwab Corp., T. Rowe Price Corp. and CME Group, as well as billionaire Warren Buffett’s holding company, Berkshire Hathaway, are among companies that didn’t earn a point on the CPA-Zicklin Index’s 70-point scale. Internet giant Yahoo! Inc., Bank of America Corp., Wal-Mart Stores Inc., Priceline.com Inc., Amazon.com Inc. and CBS Corp. also scored near the bottom of its list.

“Our organizations stand ready to help,” the trade groups’ letter told recipients. “If you would like further information on this issue generally or more in-depth background on the specific issues we outlined in this letter, please contact any of us directly.”