Most Americans embrace the idea of accountability in governance, and it is difficult to believe any taxpayer would not want to know exactly where and why their tax dollars are being spent, as well as what politicians stand to gain when they allocate funds. In the corporate world, shareholders and investors with any business or common sense would demand, and deserve, an accounting of where the corporation spends its money, and what stockholders can expect in return, because every expense reduces investors share of company profits. Over the past six months, there have been increasing calls for publicly traded corporations to start disclosing to shareholders where, and how much, of company assets are spent on political campaigns, and because of the secretive nature of corporate campaign spending, corporations, Republicans, and America’s largest trade associations are gearing up for a major battle to keep secret campaign donations secret.
In what could be a major blow to the unspeakably horrendous Citizens United decision, it appears it well may be the Securities and Exchange Commission (SEC) that deals a body blow to secretive campaign donations that has polluted the electoral process in America. An alliance of shareholder activists and pension funds have swamped the SEC with calls to initiate a disclosure rule requiring publicly traded companies to report to shareholders all of their political donations. The prospective rule has united major business groups to oppose the SEC’s rule-making ability, and their Republican lackeys are already taking steps to halt any SEC action with legislation making it illegal for the SEC to issue regulations holding companies under their jurisdiction accountable to their shareholders. Three weeks ago, the U.S. Chamber of Commerce, National Association of Manufacturers, and the Business Roundtable sent a letter to CEOs of Fortune 200 companies martialing support to oppose the SEC and wage war against shareholder and investor resolutions and proposals demanding to know where corporations are sending their investments.
The coming battle will test the S.E.C.’s chairwoman, Mary Jo White, who faces fierce opposition from Charles and David Koch’s organization, Americans for Prosperity, as well as Republicans and U.S. Chamber of Commerce on behalf of corporate leaders. It is another sign that America’s shadow government, corporate America, will not tolerate their dominion being challenged or their coup d’état thwarted by a government regulatory agency, and House Republicans made the pre-emptive strike introducing legislation prior to the SEC issuing a new ruling. The proposal is the result of a petition with over a half a million commenters calling for corporate accountability to their shareholders who argue they have a right to evaluate CEO oversight over a company’s resources, but Republicans, the Chamber of Commerce, and Koch brothers will not allow it.
The law professor who assisted writing the petition said, “Shareholders have been demanding this information for some time. It’s a basic precept of American securities law that shareholders should be given the information they need to evaluate their companies,” and it is not out of the SEC’s purview because they already issued regulations requiring executive compensation disclosures to shareholders. One of the shadow government’s prime activists, the U.S. Chamber of Commerce, claims the SEC is impotent to impose rules and regulations, and claim that such a disclosure rule violates a corporation’s 1st amendment freedom of speech rights and damages shareholder values regardless it is shareholders demanding to know where their money is being spent. A spokeswoman for the Chamber of Commerce said, “The Chamber believes that the funds expended by publicly traded companies for political and trade association engagement are immaterial to the company’s bottom line,” and added that the shareholders’ “apparent goal is to silence the business community by creating an atmosphere of intimidation under the cover of investor protection.”
Republicans claim the shareholders’ petition was an open invitation to regulatory overreach, and head of the House government oversight committee, Darrell Issa, demanded copies of all correspondence between the SEC and shareholders supporting the proposed disclosure rule as well as how many hours SEC staff worked on the proposal. Another Republican who chairs the subcommittee overseeing the SEC said he co-sponsored legislation banning new disclosure rules after hearing complaints from the Chamber of Commerce and corporate leaders and stated, “The role of the S.E.C. is investor protection, not to engage in a political foray,” and ignores the simple fact that shareholders demanding accountability for their investment expenditures is a request for protection from the SEC. The proposed rule will have no effect whatsoever on privately held companies which make up the lion’s share of contributions to Republican PACs that already accept and spend unlimited amounts of money on Republican campaigns.
As it is now, hardly any public corporations spend directly on political campaigns, a practice permitted under the Supreme Court’s Citizens United decision, but corporations are still banned from giving money directly to federal candidates. However, they do give freely to trade groups and tax-exempt organizations such as the Chamber of Commerce and Karl Rove’s group, Crossroads Grassroots Policy Strategies, that spends on advertising campaigns on business’s behalf. The groups are tax-exempt because they claim their spending is educational in nature and therefore exempt from any disclosure requirements that normally apply to candidates, super-PACs, and the Republican Party.
The S.E.C. officials hinted they could propose the new disclosure rule by the end of this month, and with Republicans already proposing legislation banning them making rules that will transform the world of secret campaign spending, it is likely a major war is on the horizon. The opposing sides read like a David and Goliath story with individual investors and pension funds going up against America’s powerful shadow government of the Koch brothers, U.S. Chamber of Commerce, Fortune 200 companies, and Republicans in the employ of corporate America. The very idea that CEOs and large companies will be held accountable to their shareholders is about as likely as Republicans being held accountable for crashing the economy and killing jobs, but shareholders and investors are undeterred and demand an accounting from companies they trust with their investments.
Any new disclosure rules will not spell an end to the insane Citizens United ruling, but it will inform shareholders and pension funds where their hard-earned investments are being spent and especially if donations are going to candidates vowing to block financial reform laws protecting their investments. Shareholders are already agitated they have been shut out of knowing where their money is being spent, but they should be incensed that Republicans, the Koch brothers, and U.S. Chamber of Commerce claim they are protecting shareholders while they fight to conceal where CEOs spend shareholders’ money. Although Citizens United will remain a potent weapon against democracy for Kochs and big business, an SEC disclosure rule will signal to publicly traded companies that they will be accountable to their shareholders, and inform the Kochs and Chamber of Commerce that their Citizens United project is not invulnerable. It also is a sign that when it comes to their money, Americans are beginning to demand accountability and that prospect alone should frighten Republicans because today it is accountability to shareholders, and with an SEC ruling, Americans may demand Republican accountability to taxpayers.