Looks like no one can win.
Unwilling Advocates
Bruce F. Freed writes a column on business and politics and does commentary for Public Radio International’s Marketplace.
"Are some of America's biggest investors being burned in the political arena by the very companies they're investing in? The answer appears to be yes, if they're the public employees, teachers and union members who own a hefty chunk of Corporate America through their pension funds.
America's investor class is 100 million strong. This is 70 percent of the electorate. Yet one-third of the investor class—34 million union members, teachers and public employees who invest through pension funds—often own shares in companies that back political groups and candidates that work against their interests.
Indeed, public employee and teacher pension plans own from 3 percent to 4.5 percent of the stock of Fortune 500 companies. That's a sizeable holding in companies with several hundred million to a billion plus shares outstanding. These firms include Eli Lilly, the pharmaceutical company; natural gas provider El Paso Corp.; SBC Communications, the nation's second-largest telecom firm; transportation giant Union Pacific; retailer Sears Roebuck; and BellSouth, a former Baby Bell.
In 2001-2002, these companies collectively gave more than $7 million in soft money to party and political committees. Because companies aren't required to report donations, many shareholders are in the dark about how their money is being used politically. This creates the real potential for shareholder combustion as they learn about the ultimate destination of corporate political gifts.
A review of these companies' contributions in 2001-02 shows why. The six companies listed above gave to House Majority Leader Tom DeLay's (R-Texas) Americans for a Republican Majority, Senate Majority Whip Don Nickles' (R-Okla.) Republican Majority Fund, and Sen. Sam Brownback's (R-Kan.) Restore America PAC. The combined amounts were $270,000 from SBC; $111,000 from El Paso; $80,000 from Union Pacific; $75,000 from Sears; $65,000 from BellSouth and $50,000 from Eli Lilly, according to disclosure statements filed by recipient groups with the Internal Revenue Service.
Those political committees served as conduits for contributions to seven groups. The organizations were Texans for a Republican Majority, which helped bankroll the ultra-conservative takeover of the Texas House of Representatives; the Traditional Values Coalition, one of the major church lobbies and a key backer of conservative judicial nominations; Coalition for America's Families, a prominent pro-education voucher group; and Americans for Tax Reform, conservative Grover Norquist's anti-tax and anti-government platform. Others recipients were Club for Growth, which contributes to anti-tax and anti-government candidates; the Christian Coalition's Kansas affiliate, the pro-family, conservative Christian organization; and a group leading the push for a right-to-work statute in Oklahoma. In most cases, the positions espoused by these groups and the candidates they backed were hostile to the interests of some of the companies' major shareholders.
The Bi-Partisan Campaign Reform Act aggravates the problem. By prohibiting soft money contributions to political parties, the law makes more corporate money available for political committees. Historically, business gives to the center and the right. As recent history shows, some of the committees on the right are strongly ideological and fund extremist groups and candidates.
University of Delaware corporate governance expert Charles Elson said corporate political donations for ill-defined purposes raise troubling questions.
"Can [companies] use shareholder funds to promote particular causes," he asked. "If the cause is in the company's best interest, and the ultimate objective of the shareholder is to make money from their investment, then it can be justified." However, Elson added, "The further away you get from direct corporate benefits, when is the corporation supporting causes that not all the shareholders may agree with?"
This was also an issue with corporate charitable contributions, he said. "That's why the further away you get from the corporate purpose, the more problematic from a governance standpoint these things become."
At many companies, there is a notable absence of transparency and accountability in their political giving. It is clear these companies have done little to publicly state the business rationale for their political contributions. Their behavior suggests that they feel there's little risk they will be publicly associated with the Christian Right, or anti-public education or anti-union groups and candidates.
Investor-owners need to know how companies are using their money. Companies, for their part, can avoid taking heat from angry investors by practicing transparency and accountability in their political giving. That's the only way shareholders can be assured that company political contribution decisions are in the firm's and the shareholders' best interest. It's good corporate governance. It's also good fireproofing. "
From Tompaine.com
Unwilling Advocates
Bruce F. Freed writes a column on business and politics and does commentary for Public Radio International’s Marketplace.
"Are some of America's biggest investors being burned in the political arena by the very companies they're investing in? The answer appears to be yes, if they're the public employees, teachers and union members who own a hefty chunk of Corporate America through their pension funds.
America's investor class is 100 million strong. This is 70 percent of the electorate. Yet one-third of the investor class—34 million union members, teachers and public employees who invest through pension funds—often own shares in companies that back political groups and candidates that work against their interests.
Indeed, public employee and teacher pension plans own from 3 percent to 4.5 percent of the stock of Fortune 500 companies. That's a sizeable holding in companies with several hundred million to a billion plus shares outstanding. These firms include Eli Lilly, the pharmaceutical company; natural gas provider El Paso Corp.; SBC Communications, the nation's second-largest telecom firm; transportation giant Union Pacific; retailer Sears Roebuck; and BellSouth, a former Baby Bell.
In 2001-2002, these companies collectively gave more than $7 million in soft money to party and political committees. Because companies aren't required to report donations, many shareholders are in the dark about how their money is being used politically. This creates the real potential for shareholder combustion as they learn about the ultimate destination of corporate political gifts.
A review of these companies' contributions in 2001-02 shows why. The six companies listed above gave to House Majority Leader Tom DeLay's (R-Texas) Americans for a Republican Majority, Senate Majority Whip Don Nickles' (R-Okla.) Republican Majority Fund, and Sen. Sam Brownback's (R-Kan.) Restore America PAC. The combined amounts were $270,000 from SBC; $111,000 from El Paso; $80,000 from Union Pacific; $75,000 from Sears; $65,000 from BellSouth and $50,000 from Eli Lilly, according to disclosure statements filed by recipient groups with the Internal Revenue Service.
Those political committees served as conduits for contributions to seven groups. The organizations were Texans for a Republican Majority, which helped bankroll the ultra-conservative takeover of the Texas House of Representatives; the Traditional Values Coalition, one of the major church lobbies and a key backer of conservative judicial nominations; Coalition for America's Families, a prominent pro-education voucher group; and Americans for Tax Reform, conservative Grover Norquist's anti-tax and anti-government platform. Others recipients were Club for Growth, which contributes to anti-tax and anti-government candidates; the Christian Coalition's Kansas affiliate, the pro-family, conservative Christian organization; and a group leading the push for a right-to-work statute in Oklahoma. In most cases, the positions espoused by these groups and the candidates they backed were hostile to the interests of some of the companies' major shareholders.
The Bi-Partisan Campaign Reform Act aggravates the problem. By prohibiting soft money contributions to political parties, the law makes more corporate money available for political committees. Historically, business gives to the center and the right. As recent history shows, some of the committees on the right are strongly ideological and fund extremist groups and candidates.
University of Delaware corporate governance expert Charles Elson said corporate political donations for ill-defined purposes raise troubling questions.
"Can [companies] use shareholder funds to promote particular causes," he asked. "If the cause is in the company's best interest, and the ultimate objective of the shareholder is to make money from their investment, then it can be justified." However, Elson added, "The further away you get from direct corporate benefits, when is the corporation supporting causes that not all the shareholders may agree with?"
This was also an issue with corporate charitable contributions, he said. "That's why the further away you get from the corporate purpose, the more problematic from a governance standpoint these things become."
At many companies, there is a notable absence of transparency and accountability in their political giving. It is clear these companies have done little to publicly state the business rationale for their political contributions. Their behavior suggests that they feel there's little risk they will be publicly associated with the Christian Right, or anti-public education or anti-union groups and candidates.
Investor-owners need to know how companies are using their money. Companies, for their part, can avoid taking heat from angry investors by practicing transparency and accountability in their political giving. That's the only way shareholders can be assured that company political contribution decisions are in the firm's and the shareholders' best interest. It's good corporate governance. It's also good fireproofing. "
From Tompaine.com