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How Corporations Can Avoid Disclosing Unlimited Political Contributions: Collude!

February 17, 2010 - by Donny Shaw

TPM reports on an emerging strategy for corporations that want to use the recent Citizens United v. FEC Supreme Court ruling to funnel unlimited amounts of cash to congressional candidates without having to reveal their identity and expose themselves to public backlash. The goal is to keep as low a profile as possible, and one way to do so is for corporations to form coalitions with other corporations that have the same policy interests and then contribute money to Congress collectively. That way, no corporation can be singled out.

Here’s an excerpt from the K&L Gates website, a D.C. lobbying firm, on how their corporate clients can take advantage of Citizens United:

Since the entity or entities financing independent expenditures must be disclosed, a corporation leading the way against a particular candidate risks alienating a significant block of its potential customer or shareholder base. Moreover, upon the first major corporate-funded public communications airing, media coverage is likely to focus on the corporation’s involvement in the campaign rather than the content of any advocacy.

Therefore, most corporations will probably proceed cautiously. If such independent expenditures are made, groups of corporations within an industry may form coalitions or use existing trade associations to support candidates favorable to policy positions that affect the group as a whole. While corporations that contribute to these expenditures might still be disclosed, this indirect approach can provide sufficient cover such that no single contributing entity receives the bulk of public scrutiny.

The idea of competitors in an industry working together in this way for their mutual benefit sounds a lot like anti-competitive collusion to me. That, of course, is covered under federal antitrust laws when it comes to thinks like price-fixing and bid-rigging. But there is a bill in Congress, the “Ending Corporate Collusion Act” that would make the kinds of industry-specific political coalitions K&L Gates is recommending applicable to antitrust laws and, therefore, illegal.

As I reported here, the bill was submitted by Rep. Alan Grayson [D, FL-8] to “stave off the threat of ‘corpocracy’ arising from” the Citizens United decision, and it already has the powerful Judiciary Committee Chairman Rep. John Conyers [D, MI-14] as a co-sponsor.

If corporations end up taking K&L Gates’ advice for how they can give unlimited money to Congress while remaining relatively anonymous, I think this bill will start gaining more attention.

UPDATE: Sunlight Foundation has recommended a disclosure rule fix for K&L Gate’s strategy to avoid public recognition:

Any organization making an independent expenditure must identify the name and address of any entity that has provided aggregate contributions to that organization over $200, any portion of which was used to fund the independent expenditure.

Good idea, though it’s not law yet.

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