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Firms try to hide tracks over political ads

Washington Post: While a landmark Supreme Court ruling allows corporate giving, image-sensitive companies balance goals, unwanted PR.
/ Source: a href="" linktype="External" resizable="true" status="true" scrollbars="true">The Washington Post</a

All over the country, corporate CEOs and trade groups are asking their lawyers the same question: How can we get our companies involved in this political election season without leaving tracks?

After a landmark Supreme Court ruling this year freed executives to spend unlimited corporate cash on campaigns, some predicted that businesses would flood television airwaves with pro-industry political ads — but that just hasn't happened yet.

Image-sensitive corporations are still trying to make sure that, if they jump into 2010 politicking, they do so as anonymously as possible, according to Republican political operatives and trade group leaders.

Many corporate executives don't want to wade into partisan political campaigns. But other companies have told their advisers and GOP fundraisers that they are interested in helping finance ads to spotlight proposed regulations and lawmakers they don't like.

These companies include firms on Wall Street and in the energy sector opposed to stricter regulations as well as fast-food franchise owners fearful of being forced to unionize their shops.

They just don't want to be singled out — or have their corporate logo attached.

Some fear the rules on corporate election activities could change, leaving their company exposed; a White House-supported bill likely to be voted on by the House after the Memorial Day recess would require calling out by name the corporations that fund campaign ads.

'Newfound freedom'
Republicans, who generally rely more heavily on donations from big-business executives, say that Democrats are trying to silence the political speech of corporations with the bill.

Corporate executives "recognize they have this newfound freedom. They want to exercise it, but not in a way that will antagonize members of Congress or customers or employees," said Stefan Passantino, a campaign finance law expert at McKenna Long & Aldridge. These firms are considering giving advertising money to business coalitions and conservative political groups "that are going to fight their battles for them and not come back to them."

Big corporations are the new whipping boys in the wake of taxpayer-financed bailouts, Republican operatives argue. They say chief executives can't take to the public square to share their unpopular views on legislation without being personally attacked or — worse — dismissed.

"You want to speak your peace without political retribution," said David N. Bossie, president of the conservative group Citizens United, whose fight to air its video critical of Hillary Rodham Clinton led to the Supreme Court's ruling.

Corporations are being urged by fundraisers to use the shared megaphone of the U.S. Chamber of Commerce and American Crossroads, a political action group founded this year by former Bush White House deputy Karl Rove. Together, the two groups and their affiliate, the American Action Network, have pledged to raise $127 million, most of it from business interests, to elect GOP candidates in 2010.

President Obama dispatched his aides to work with Congress to tighten the rules after the Supreme Court ruling in Citizens United v. Federal Election Commission. Obama and Democratic leaders, who rely more heavily on unions for campaign donations, say the public deserves to know which specific corporations are bankrolling an ad that may conceal its goal and twist the facts.

"What we are facing is no less than a potential corporate takeover of our elections," Obama warned last month. "What is at stake is no less than the integrity of our democracy."

Putting a face to the name
The Democrats' Disclose Act proposal, released in early May, would require chief executives to appear for a few seconds in campaign ads they finance, saying they personally endorse the message. Umbrella groups would have to list the top five corporate donors for an ad.

Eugene Scalia, attorney for the Chamber of Commerce, said the requirement that chief executives appear in the ads is aimed directly at the risk-averse corporate manager who doesn't want to irritate customers or shareholders, and doesn't want to be personally vilified either.

"The so-called 'stand-by-your-ad' provisions are attempted to chill, that is discourage, corporations from speaking," Scalia said.

McDonald's President Don Thompson knows about being called out. Late in 2008, he sent a letter to 2,400 restaurant franchise owners urging them to write to their members of Congress to oppose legislation that would make it easier for store workers to unionize.

The company had joined a business coalition running ads against the legislation, too. Soon after the news broke, Service Employees International Union began picketing McDonald's restaurants and highlighted a powerful discrepancy: Thompson took home $13 million in annual salary while opposing union protections for 600,000 McDonald's workers who often earned less than $10 an hour.

Corporate leaders generally shy away from the sensitive subject of political spending.

Goldman Sachs, now recruiting for in-house counsel on political campaign law, declined to discuss its position on the disclosure bill or whether it would fund trade coalitions that engage in campaigns. Spokeswoman Melissa Daly said the company does "not use corporate funds for political advertising."

David French, executive director of the International Franchise Association, which represents 1,300 brands including major restaurants and hotels, said his members join because they want to speak as a group, not as individuals. The group discloses its membership, but singling out a handful of members as chief sponsors for an ad would be cumbersome, inaccurate and potentially dangerous to that brand, he said.

"Unions will adopt tactics — they call them corporate campaigns," French said. "They aim to destroy the company and the brand as a tool to drive them to the negotiating table. I can assure you, if you were a nationally known brand, the threat of that can be quite stifling to your ability to communicate with your constituents."

A strong incentive
One brand facing problems today is BP. The oil spill miles underwater at a BP drilling rig is considered much larger than the mammoth Exxon Valdez disaster and is causing inestimable damage to the ecosystem of the Gulf of Mexico and its coast. BP's responsibility for cleaning up the mess is capped at $75 million, but lawmakers are talking about raising that to $10 billion.

BP has been running an open ad campaign defending its response to the spill. But Nick Nyhart, president of Public Campaign, a progressive group that supports public financing, said BP could easily choose to run anonymous ads fighting the legislation, just by creating a group with a name like "Alliance for a Cleaner Gulf."

"What would stop BP — a foreign-owned corporation — facing the prospects of $10 billion in cleanup liabilities from spending $10 million, or $50 million, or even $100 million or more to elect candidates who oppose this bill or defeat those who support it?" Nyhart said.

Passantino said that the pull of getting into the election is strong but that corporations are conservative institutions, with boards and shareholders to please.

"They've seen the regulation on their horizon — and how it can really affect their bottom line," he said. "But if corporations are forced to put their corporate logo on it, most won't do it."