Breaking the law

Introduction

Take, for example, Jorge Rodriguez-Marquez, former president of Bacardi-Martini U.S.A., the domestic subsidiary of Bermuda-based liquor giant Bacardi Ltd. Between 1998 and 2002, Rodriguez-Marquez lobbied the U.S. government to intervene on behalf of his Miami company—now known as Bacardi U.S.A. Inc.—in its longstanding trademark dispute with a Cuban-French joint venture over rights to the popular rum label “Havana Club.”

Among those doing Bacardi’s bidding was then-Sen. Connie Mack III, Republican of Florida, who, in 1998, quietly inserted into a huge government spending bill a measure designed to block U.S. courts from recognizing trademarks expropriated by Cuba (and who followed his Senate career by lobbying for Bacardi). This 11th-hour legislative ploy proved to be so controversial that it rankled both lawmakers and American corporations, which feared retaliation by the Cuban government. The European Union lodged a successful complaint against the United States with the World Trade Organization, and in 2004 the U.S. Patent and Trademark Office ruled against Bacardi.

But if Rodriguez-Marquez’s lobbying had repercussions on and beyond Capitol Hill, the American public was entirely unaware. That’s because the Bacardi-Martini official didn’t file a single form about his activities until 57 months—that’s almost five years—after he started lobbying, despite the fact that the law requires disclosure forms to be filed with the Senate and House of Representatives every six months.

Rodriguez-Marquez has plenty of company: A Center for Public Integrity analysis of all lobbying forms filed with the Senate Office of Public Records since 1998—some 183,000 in all—reveals that 36,000 of them (more than 19 percent) were late, 8,800 by more than three months. (Nearly 14,000 individual lobbyists registered to lobby last year alone.) The Center also found that more than 3,000 of those filings were submitted at least six months late, while more than 1,700 of them were overdue by at least one year.

While some lobbyists filed late, others chose to simply dispense with some mandatory forms. In fact, 49 of the top 50 lobbying firms (in terms of revenue) failed to file one or more required forms during the last six years. Similarly, 1,200 of the 6,400 companies registered to lobby—20 percent in all—failed to file one or more forms that the federal disclosure law requires.

The Center study also found:

• Nearly 14,000 documents that should have been filed periodically with the Senate Office of Public Records are missing;
• nearly 300 individuals and entities lobbied for one or more clients without registering;
• more than 2,000 initial registrations were filed after the allowable 45-day time frame;
• 210 of the top 250 lobbying firms (84 percent) failed to file one or more required forms; and
• more than 2,000 cases where lobbyists never filed the required termination documents.

The list of late-filers includes such established lobbying institutions as Van Scoyoc Associates. While the government affairs firm ranks sixth in revenue, with nearly $90 million since 1998, it had 498 forms posted online three months or more after they were due. Patton Boggs, the third-largest firm with more than $145 million in revenue, had 496 filings posted after this 90-day window. A review of these forms indicate that some were late, while others seem to have been filed in a timely manner.

It’s likely that even more filings were late, as the Senate’s database tracks only the day the information is entered into the computer. To account for delays in processing, the Center counted all forms entered within 90 days of the deadline as “on time.” The Center relied primarily on Senate filings because the House does not make its records available in electronic form.

Lax compliance yields few indictments

Rodriguez-Marquez apparently paid no penalty for his noncompliance. Nor, it seems, have thousands of others who ply the lobbying trade in the cloak rooms and corridors of the nation’s Capitol.

A search of the Transactional Records Access Clearinghouse database, which tracks federal enforcement, staffing and spending, revealed just nine civil referrals from Congress since Jan. 1, 1996. It is unknown whether any of those are related to the Lobbying Disclosure Act, which took effect then.

Campaign-finance analysts cite a variety of reasons for lobbyists’ noncompliance and the government’s reluctance to prosecute. For example, they say lobbyists are in many cases ignorant of the law’s requirements. Reasons hindering government action include a lack of funding and interest by prosecutors, who put theses sorts of alleged violations low on their list of priorities.

While many disclosure forms are typically filed with such independent agencies as the Federal Election Commission and the Office of Government Ethics, lobbying disclosure forms are filed with the House and the Senate. Campaign finance reform advocates say this creates the potential for conflicts of interest, since so many members of Congress and their staffers migrate from Capitol Hill to K Street. It also puts Congress in charge of monitoring its former colleagues and employees, and conceivably could endanger the prospects of a lobbying career for anyone taking punitive actions against those not complying with the rules.

In fact, in 1993 the chairman of the Federal Election Commission wrote the House Judiciary Subcommittee to ask that his agency be put in charge of all lobbying disclosure. “All these functional activities are requirements of regulating campaign finance and we already have developed the type of staff expertise, procedures, physical plant and information technology necessary,” FEC Chairman Scott Thomas wrote in addressing pending legislation. Two years later, when the Lobbying Disclosure Act was enacted, Congress decided to keep lobbying disclosure within its purview.

But the House and Senate offices with responsibility for lobbying disclosure have far fewer resources to enforce the relevant laws. The FEC, which has authority to enforce campaign finance laws, has 391 employees and an annual budget of $52 million. By comparison, the Senate Office of Public Records employs 11 people, and the House employs fewer than 35. Those offices are responsible for several other areas of disclosure and provide additional services to their respective chambers, in addition to monitoring compliance with lobbying laws. That’s despite the fact that lobbyists routinely take in double the amount from their clients that campaign contributors donate to federal political campaigns.

Both the House and the Senate do contact lobbyists whose paperwork appears to be delinquent, sometimes with negligible results. For example, on May 4, 1999, Steve Pringle, legislative director of the Texas Farm Bureau, penned a mea culpa after being contacted by the House and Senate offices for noncompliance.

“Please accept my apology for the tardy Lobby Report,” Pringle wrote to the House. “We have experienced some recent personnel changes which resulted in this oversight. We appreciate your bringing the matter to our attention, and hope to remedy this situation in the future.” But five years later, Pringle was apologizing again, this time to the Senate: “Please accept my apology for the tardy Lobby Reports. As you can tell, we have submitted reports to the House, but inadvertently did not provide you a copy. We appreciate your bringing this matter to our attention, and hope to remedy this situation in the future.”

A law without teeth

Part of the enforcement problem may be rooted in the Lobbying Disclosure Act itself. The act, which was passed in 1995, makes clear that the two offices tasked with supervising the law have neither auditing power nor investigative authority—both are fundamental to enforcement.

“They don’t have audit power; all they can do is to mark the report in as filed,” Elizabeth Bartz, president of State and Federal Communications Inc., which compiles information about lobbying and ethics laws, told the Center in an interview. “The [Lobbying Disclosure Act] is a great piece of legislation, but it needs teeth, and it doesn’t have any.”

Under the Lobbying Disclosure Act, a lobbyist who knowingly fails to comply with any provision of the law may be subjected to a civil fine of not more than $50,000, “depending on the extent and gravity of the violation.”

Under the law, the House and Senate office must refer such alleged non-compliers to the U.S. Attorney for the District of Columbia, the principal prosecutor for federal criminal and civil offenses committed in Washington, D.C. It wasn’t clear whether Jeff Trandahl, the House clerk, recommended action against the Texas Farm Bureau. The congressional offices and the U.S. Attorney’s office could not divulge such information for privacy reasons. Calls to Pringle seeking comment were not returned.

Indeed, the House and Senate offices even refused to disclose the number of referrals they made to the U.S. Attorney’s office. But the Center learned from press reports and interviews with former officials at the U.S. Attorney’s office that, in 2002 and 2004, these two congressional offices made an undetermined number of referrals—described by one such official as “stacks”—for investigation and possible prosecution.

Mark Nagle, a former civil division chief at the U.S. Attorney’s office in Washington, D.C., told the Center that he initiated action against non-compliers, several of whom settled the cases by agreeing to pay fines. The Center requested information on fines collected and the number of lobbyists penalized for noncompliance, but the House, Senate and U.S. attorney’s office all refused to cooperate.

Interviews with former officials at the U.S. Attorney’s office revealed why pursuing non-compliers of the lobbying disclosure is such a low priority.

“There is an astonishing lack of legislative guidance,” said Nagle, referring to the 1995 law’s ambiguousness on the enforcement matters.

Roscoe Howard, U.S. Attorney for the District of Columbia from 2001 to 2004, faulted the law for its lack of enforcement powers. “The law doesn’t come with a mandate,” he said. “The statute is very unusual: only the U.S. Attorney in the District of Columbia has the authority to prosecute, and the authority is only civil, only monetary.”

Howard said there are “absolutely no resources” for enforcement. Both Howard and Nagle left government last fall to become partners at the Washington law and lobby firm Sheppard, Mullin, Richter & Hampton LLP.

With more than 350 prosecutors, the U.S. Attorney’s office in the District of Columbia is the largest in the country. But because of the area’s dozens of federal offices, it’s also one of the busiest. “We cannot take every case that is a technical violation of [the lobbying law] because of limited resources,” Howard said.

Among the large number of technical violations this office overlooked were some possibly committed by former senator Connie Mack, who upon leaving Capitol Hill was hired as a lobbyist for Bacardi U.S.A.—the benefactor of his last-minute legislative handiwork on the 1999 omnibus spending bill. Whether Mack is still lobbying on behalf of the giant liquor company is uncertain, as his most recent disclosure report is missing from the Senate Office of Public Records. Of the other two reports that Mack’s former firm, Shaw Pittman LLP, has filed since first working for Bacardi in late 2003, one was filed more than five months late. In March, Mack and Shaw Pittman’s entire government relations group moved to another firm.