Center for Political Accountability

Tell a friend Thursday, February 26, 2009

CPA, Zicklin Center for Business Ethics Research urge Supreme Court to uphold political disclosure

Amicus brief highlights value of disclosure of corporate political spending, importance for corporate governance

Washington, DC - The Center for Political Accountability and the Zicklin Center for Business Ethics Research at the University of Pennsylvania's Wharton School called on the U.S. Supreme Court to leave in place long-standing limits on corporate political activity and more recent requirements that companies and trade associations disclose their spending on electioneering communications.

In an amicus brief filed in the Citizens United case, the CPA and the Zicklin Center warned that "dismantl[ing] [Bipartisan Campaign Reform Act] provisions, including its disclosure requirements," would remove"... all restraints on corporate political influence.�

The case poses a major challenge to effective federal regulation of corporate political activity. If successful, the CPA and the Zicklin Center noted, appellants would leave the public, shareholders and company directors in the dark when it comes to corporate political activity. Millions of dollars of corporate money will be spent through third party groups and public accountability will disappear. As the brief pointed out, at stake is "more than a century of legislative efforts to check the danger of corruption from corporate political spending.... Disclosure is indispensable to corporate compliance with campaign finance law and sound corporate governance practices."

The question before the Court is whether corporate financing of broadcast advertising that was harshly critical of Sen. Hillary Clinton was permissible and would have to be disclosed if undertaken in the days immediately leading up to last year's Presidential Primaries. Citizens United, the appellant, sought to be freed of any restraint on its proposed advertising.

The appeal has become a test case of the continued viability of BCRA's disclosure requirements. BCRA requires any person who spends more than $10,000 to produce or air ads that reference a federal candidate in the period leading up to an election to disclose to the Federal Election Commission the names and addresses of those contributing more than $1,000 for the ad. Another provision requires that, if an ad is not authorized by a candidate or political committee, the broadcast must state who is responsible for its content, and provide the name and address of the group behind the ad.

In its brief, the CPA and the Pickling Center said that disclosure is critical to an effective corporate compliance program. Disclosure also promotes "good corporate governance, strengthens a corporation's ability to monitor the use of its funds and supervise employees and agents for compliance with its internal policies" and "brings transparency to corporate political activity that would otherwise remain shielded from view, to the detriment of the voting public, shareholders, and corporations themselves."

"Corporations," it concludes, "are coming to understand that members of the public demand greater transparency from companies that receive their investment and consumer dollars. Disclosure requirements cast light on the risks that secret political spending pose to our economy and our democracy, before they can become scandals that further erode the public trust."

CPA executive director Bruce Freed said the Citizens United case "raises issues that go to the heart of the Center's effort to promote responsible corporate political activity." "Disclosure is central to assuring the company participation in the political process will be ethical and legal," he said. "This is good for companies, shareholders and the public."

"Without disclosure," Karl Sandstrom, the Center's counsel, said. "Accountability is lost."

Wharton Prof. William S. Laufer, director of the Zicklin Center, said, "Transparency and disclosure are the linchpins of responsible corporate political activity. The Zicklin Center is proud to join the CPA in raising concerns about the effects of eliminating corporate political disclosure."

Established in 1997, the Zicklin Center sponsors and disseminates leading research on business ethics and corporate social responsibility. It supports research that considers the ethical challenges that arise in complex business transactions. For more information, visit www.zicklincenter.org.

A non-partisan, non-profit organization, the CPA was founded in late 2003 and is dedicated to ensuring transparency and accountability of corporate political spending for the benefit of shareholders, the public, and the political process. For more information, visit http://www.politicalaccountability.net/.

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Press Contacts:

Bruce F. Freed, CPA Executive Director, 301-233-3621

Karl Sandstrom, Perkins Coie LLP, 202-434-1639

Prof. William S. Laufer, Director, Zicklin Center for Business Ethics Research, The

Wharton School, University of Pennsylvania, 215-898-1166