The Biggest Spending Corporations Disclose Less about Political Activity

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Republican presidential candidate Rick Perry.

Updated: An earlier version of this story cited a report saying that Pfizer does not donate to 527s, but the company donates to the Republican and Democratic Governors Associations, which are 527s.

This week, Michele Bachmann charged that “crony capitalism” can explain Texas Gov. Rick Perry’s support of a mandate for the HPV vaccine in Texas, a policy that was later overturned by the Texas legislature.

Perry’s ties to Merck at the time were more involved than just that single campaign contribution. Perry’s biggest single backer in his 2010 reelection bid was the Republican Governor’s Association, which received $377,500 from Merck, points out the Center for Responsive Polticis Sheila Krumholz. There were also personal ties – Perry’s former Chief of Staff Mike Toomey was also lobbying for Merck when Perry signed the executive order in 2009.

These kinds of political relationships between corporations and candidates can only become campaign attack fodder, of course, if the public knows about them. Following that money has become more difficult in the aftermath of the Supreme Court’s Citizen’s United decision that allowed unlimited spending by corporations and unions. The midterm elections in 2010 saw a four-fold increase in outside spending compared to 2006, according to a report by the watchdog group Public Citizen, and nearly half of that spending was done by groups that did not disclose their donors.

“There's a lot of covert money that's out there, and the only way we can get to that is if the company tells us what they're doing,” said Donald Schepers, the director of Baruch's Center for Corporate Integrity, which developed a new index of corporate political transparency.  

The survey, released Thursday, ranked S&P 100 companies and how much they reveal to the public and shareholders about their political activity and policies. Google, Haliburton, Wal-Mart, and Morgan Stanley rank among the most opaque. Goldman Sachs, Pfizer, and Xerox reveal the most about their activities.

More than a fifth of the companies in the index disclose little or nothing, and the most activity political players are among them.

“On average, the companies that are contributing the most are actually disclosing less,” said Naomi Gardberg, the other researcher who compiled the index.

An exception, Gardberg said, is Pfizer, the pharmaceutical company that the Center for Responsive Politics calls “the biggest players in what is widely considered the most influential industry in Washington.”

Pfizer’s website lists reports reports of its political activity going back to 2001, and everything from contributions to federal political action committees and candidates, to governors and legislators, and even city council members.

That kind of rigorous political lobbying is an important corporate function, said Senior Corporate Counsel Barbara Bonfiglio, but so is revealing those activities to its shareholders.

“We are a highly regulated industry and it's important for us to be engaged for shareholders, said Bonfiglio, who is also the secretary of Pfizer’s PAC “Shareholder engagement is critical to Pfizer. We believe that is an important fact for a reputation and also for shareholder risk.”

Pfizer also does not make the kind of direct independent expenditures allowed by the Citizens United ruling. 

Overall, the Baruch index found that pharmaceutical companies disclosed the most information about their political activities. Mining, manufacturing and utility corporations revealed the least. But the Baruch listing has one shortcoming: while Pfizer is relatively transparent, some of its biggest recipients are political middlemen like the Republican and Democratic Governors Associations, which makes it difficult to track where Pfizer's money eventually ends up.

As campaign fundraising ramps up the 2012 campaign, there’s no consensus on whether requiring more disclosure should come from corporate boardrooms or Washington.

Efforts to require more spending disclosure have stalled in Congress, and there are new calls for the Securities and Exchange Commission to do it. A paper out this month from Harvard Law School and Public Citizen argues that more disclosure could actually be good for business. “Preliminary data suggest that such a requirement might benefit corporate valuations or, at the least, pose no threat of a detrimental effect,” the researchers noted.

Conservative groups want to see corporate campaign disclosure treated as a business decision, not a political one — to a point. 

“I think it should be up to shareholders to decide, not the federal government,” said Hans von Spakovsky, a legal fellow with the Heritage Foundation. He was a a Commissioner at the Federal Election Commission during the Bush administration, and he said that's the agency that should handle any new corporate disclosure requirements. “The SEC doesn’t know a damn thing about elections, politics or how campaigns are run.”