Corporate political transparency: it’s optional

Introduction

Basking in the sunny side of the corporate political disclosure spectrum are household names such as AT&T, HP Inc., Capital One Financial Corp., General Electric Co. and Google parent Alphabet Inc.

Comparatively slinking through the shadows? Netflix Inc., Dollar Tree Inc., M&T Bank Corp., Monster Beverage Corp. and billionaire Warren Buffett’s Berkshire Hathaway Inc.

The disparity — detailed in a new report by the Center for Political Accountability and Zicklin Center for Business Ethics Research at the University of Pennsylvania’s Wharton School — underscores the flaccidity of federal laws and regulations governing what public corporations must publicly disclose about their politicking.

As the nation enters the teeth of Election 2020, corporations are again largely allowed to volunteer as much — or little — information as they please about, for example, how much cash they’re pouring into secretive, “dark money” nonprofits that may in turn advocate for the election or defeat of candidates.

Targeted candidates may range from President Donald Trump and his eventual Democratic challenger to state-level politicos locked in relatively low-stakes races that nevertheless interest one corporate entity or another. (Spoiler: state lawmakers sometimes have notable financial ties of their own to corporations.)

Similarly, companies such as Visa Inc. and Coca-Cola Co. are open about the degree to which they’re supporting or funding statewide ballot initiatives, while Twitter Inc. and Wal-Mart Stores Inc. are among the many that are not, the Center for Political Accountability/Zicklin report notes.

Corporations also have ways of hiding the degrees to which they’re funding aggressive influence campaigns aimed at specific political issues.

How are corporations allowed to make political disclosure rules for themselves?

Ask Congress, for one.

The nation’s legislative branch has this decade deadlocked time and again on most political transparency measures before it, particularly ones that build upon existing disclosure requirements. 

That includes several Democrat-driven attempts at passing a “DISCLOSE Act,” aimed at revealing the root sources of political cash. 

But Republicans have generally rejected such attempts on the grounds that they’ll squelch free speech and unfairly burden political actors who, they argue, should have most every right to engage in the political process as they see fit. Voters may suffer from a less robust marketplace of ideas, even if the sellers aren’t necessarily revealing who they are.

Moreover, “companies should have a choice [to disclose] because it is up to the management, subject to shareholder approval, to maximize value to the companies,” said Brad Smith, a former Federal Election Commission chairman and current chairman of the Institute for Free Speech.  

While lawmakers fail to make laws this congressional session, an alphabet soup of government agencies are nominally charged with overseeing slices of the nation’s decentralized political transparency regime. 

They include the FEC, Internal Revenue Service (IRS), Securities and Exchange Commission (SEC), Federal Trade Commission (FTC), Federal Communications Commission (FTC) and Department of Justice (DOJ). 

But the oft-gridlocked FEC hasn’t even been able to enforce federal campaign finance laws since Sept. 1 because it has too few commissioners to conduct high-level business.

The IRS, for its part, has endured a years-long decline in resources, making it evermore difficult for it to police politically active “social welfare” nonprofits and certain trade associations that play politics, often backed by corporate dollars.

The SEC isn’t yet empowered to compel corporations to comprehensively disclose their political spending.

“The process is broken,” said Bruce Freed, the Center for Political Accountability’s president. 

Regardless, corporations will for now continue deciding for themselves what to tell the body politic about key aspects of their political activities and what to keep a corporate secret.

And the public must take on faith even those companies that rank highly on the Center for Political Accountability/Zicklin index — it’s not as if the federal government is doing much to verify they’re as transparent as they appear.