Are all shareholders equal?

It’s one of the thorniest questions in corporate law. Shareholders as a group own a corporation, but shareholders may have conflicting interests. A majority shareholder may be willing to throw the minority under a bus to obtain control of the company. Some shareholders may have differing views on whether the corporation should operate in Sudan or Libya. And union-controlled pension funds may be more interested in leveraging their holdings to force job creation than in pursuing long-term share value.

These potential conflicts are one reason we (generally) limit shareholders’ direct voting to only a few issues: who will sit on the board of directors, and whether a company may be sold. A board of directors that owes fiduciary duties to all shareholders oversees most questions of corporate policy.

But this approach to corporate governance is under pressure from those who consider it insufficiently democratic, including those who would like to see a shareholder vote concerning all corporate political spending – even where much greater amounts are invested in charitable giving, or politically-charged investment decisions, by company management without shareholder approval.

The Federal Court of Appeals for the District of Columbia recently reminded us that there are real costs to expanding the role of shareholders in corporate governance.

Filed Under: Blog, Corporate Governance, Corporate Governance Press Release/In the News/Blog, External Relations Sub-Pages

Responses to a few ‘reform’ voices

Every so often I run across an item from the so-called campaign finance ‘reform’ community attacking the Center for Competitive Politics for things that are just false or absurd. I’m not talking about the normal sharp disagreements between us and groups like Campaign Legal Center, Democracy 21, and countless other ‘reform’ groups over what the First Amendment means, how campaign finance laws should be interpreted, the role of money in politics and public policy discussions, and similar matters.  

No, I’m referring to flat-out false statements about our positions on issues, or serious distortions and omissions that don’t hold up to even the briefest scrutiny.

I rarely address these things on the blog, because we try to use this space to promote our ideas and vision of a robust and free political system unhindered by government restraints on citizens’ First Amendment political rights. Occasionally I might send a private e-mail to a reporter responding to something, or even a letter to the editor to be published. But I’m usually not interested in getting into exchanges with bloggers who have 3 readers or who are clearly uninterested in facts.

But, with the crash of American society apparently imminent according to some if the debt ceiling isn’t raised next Tuesday (CCP of course takes no position on what should be done or not done on this issue, but much like Y2K, 2012, and the Zombie Apocalypse, we’re not oblivious to such matters either), and with a few recent false statements about CCP floating around out there I thought I might as well take what may be one final opportunity to set the record straight on these items before heading to my own personal undisclosed location to wait things out.

Filed Under: Blog, Disclosure, Disclosure Press Release/In the News/Blog

Rep. Anna Eshoo Writes Letter Supporting Draft Executive Order

One really clever tactic in any debate is appropriating the language used by the opposing side and refashioning it to prop up your own argument. The theory is that the opposition will have a hard time arguing against rhetoric they employ themselves to make their case. So it is in the case of the Draft Executive Order that President Obama began talking about in April but has yet to release. Most familiar with the issue understand that the Order is simply a regulatory way of accomplishing much of the policy inherent in the failed DISLCOSE Act, legislation that sought to compel companies and associations to adhere to strict and burdensome disclosure regulations in order to run a political ad. Now, Rep. Anna Eshoo is leading 60 Democratic House members in a charge to urge the President to formalize the EO:

Eshoo, in a letter to be released Wednesday and signed by more than 60 Democratic House members, wants Obama to ignore Republican opposition and release an executive order drafted in April that requires anyone involved in federal procurements to state how they spread around political donations.

“Sunlight remains the best disinfectant, and there is nothing partisan about finally shining light on this dark corner of our political system,” Eshoo, of Palo Alto, wrote in the letter. “We believe that with public funds come public responsibilities, and anyone benefiting from taxpayer money has the responsibility to be fully transparent.”

Filed Under: Blog

Attacks on political donors demonstrate dangers of excessive disclosure

This morning I read that the group of hackers collectively known as ‘Anonymous’ targeted web sites associated with Koch Industries. The story is in many ways a perfect example of the dangers of the type of excessive disclosure so-called campaign finance ‘reformers’ are demanding, and why it’s so important to protect citizens’ right to privately associate and speak out in politics and on public policy issues.

Launching what is known as ‘distributed denial of service’ (DDoS) attacks, Anonymous apparently  attempted to shut down web sites by overwhelming them with traffic (I’m something of a neo-Luddite myself, so please forgive any technical errors in my description of a DDoS).

From the Smoking Gun web site:

FBI Targets 12 In Koch Industries Online Assault

As part of its multi-front assault on “Anonymous,” the FBI has identified 12 “targets” it alleges participated in coordinated online assaults earlier this year against business web sites operated by Koch Industries, the Kansas-based conglomerate owned by billionaire brothers–and leading Republican benefactors–Charles and David Koch, The Smoking Gun has learned…

For example, Koch Industries records showed that one blogger accessed the firm’s Angel Soft toilet paper web site nearly 16,000 times during one nine-minute period in March. The DDoS attacks, according to the affidavit, also involved the Koch Industries web site (kochind.com) and a web site for Quilted Northern, another of the firm’s toilet paper brands…

The online confederation of hackers and activists targeted the Koch brothers in connection with the pair’s support of Wisconsin Governor Scott Walker, who earlier this year launched a crackdown on public employees unions that included the elimination of collective bargaining rights for state workers. In retaliation, “Anonymous” launched Operation Wisconsin, an effort aimed at exploiting “online loopholes and vulnerabilities into the systems and servers related to” the Koch brothers and Walker…

I’ll set aside here the irony that a group known only as Anonymous is attacking  wealthy libertarian brothers Charles and David Koch, whom ‘reformers’ endlessly complain about because of their supposedly secret and untraceable political and public policy spending.

What has my interest this morning is the concept that enraged activists would target someone’s business because they don’t like the politics of the person who owns the business. This represents yet another front in the ongoing war against citizens’ right to donate to candidates and causes, by having the government create and make accessible to everyone, through intrusive disclosure requirements, a ready-made Enemies List that conveniently identifies where people work and what businesses they own.

Filed Under: Blog, Disclosure, Disclosure Press Release/In the News/Blog, DISCLOSE, Disclose Act

What is the fuss about bundlers?

Contribution “bundlers” have been mentioned numerous times in recent weeks. In a recent editorial, “Candidates should identify their bundlers,” the Washington Post calls for greater disclosure of the people who raise “hundreds of thousands of dollars” and to “whom the candidates are most indebted.”

CCP President Sean Parnell recorded this response, detailing how disclosure impacts the privacy of Americans who choose to participate in politics on behalf of their chosen candidate:

Filed Under: Blog

New ‘reform’ group forms, brings public officials and private money together

Apparently not satisfied with the current constellation of so-called campaign finance ‘reform’ groups out there (I’d start listing them, but I suspect I’d wind up sounding like Private Benjamin Buford “Bubba” Blue listing all the ways shrimp can be prepared), opponents of a free and unfettered First Amendment recently launched a new group called Citizens for Accountability in Political Spending (CAPS). From Ben Smith at Politico:

Fighting Citizens United

The Coalition for Accountability in Political Spending, founded by New York City Public Advocate Bill de Blasio in 2010, is staffing up in advance of a 2012 campaign that is shaping up to be full of anonymous money and outside spending on both sides.

Kate Coyne-McCoy, a former EMILY’s list regional director, will be executive director of the coalition of officials who oppose undisclosed political spending. In addition, the organization announced that their operations would be partially funded by a two-year, $400,000 grant awarded by George Soros’s Open Society Foundations.

“I am eager to put my skills and the relationships I have across the country to work at CAPS,” said Coyne-McCoy . “Fighting for concrete changes in corporate policy and behavior in political spending is essential for improving and protecting our democracy. It is a fight CAPS will win.”

The ‘reform’ side is filled with organizations filling particular niches in the movement to restrict First Amendment political rights, and CAPS is apparently meant to be a group composed of elected officials giving them an organization to speak through. It was formed in late 2010 by Bill de Blasio, New York City’s Public Advocate.

No word yet on whether ‘reform’ groups will denounce CAPS for bringing public officials together with private interests to advance a particular public policy view, as many of them have done with the American Legislative Exchange Council.

Filed Under: Blog

Issue Analysis 6: Do Lower Contribution Limits Produce “Good” Government?

Sarah Lee, Communications Director

The Center for Competitive Politics

703.894.6824

[email protected]

ALEXANDRIA, VA.  — The Center for Competitive Politics (CCP) has released an Issue Analysis report debunking the notion that lowering campaign contribution limits leads to better state governance. The report, entitled Do Lower Contribution Limits Produce “Good” Government?, shows that the alleged association between lower contribution limits and “good government” is presumptive, and that little to no correlation exists between better state governance and lower or stricter limits on campaign giving.

According to CCP founder and former Chairman of the Federal Election Commission Bradley Smith, the results can be used to make decisions on whether reform and strict limits on giving should be addressed. “Once again we see a gap between what advocates of ‘reform’ claim will be the result of strict contribution limits, and reality. If restrictions on First Amendment rights don’t in any noticeable way lead to better government, then we should reconsider whether to impose such limits at all.”

Filed Under: Contribution Limits, Contribution Limits Press Release/In the News/Blog, External Relations Sub-Pages, Press Releases

‘Reformers’ begin to recognize who benefits from contribution limits

There was a fascinating article in Thursday’s Washington Post concerning the scandal that has erupted in the United Kingdom over the practice of hacking into private voicemails by the now-shuttered News of the World.

Fury at Murdoch reflects pent-up anger of intimidated politicians

The phone-hacking scandal that has driven Rupert Murdoch and his empire into retreat and gripped audiences on both sides of the Atlantic is playing out against the backdrop of a combustible political-media culture vastly different from that in the United States…

In Britain, money plays a smaller role in politics than it does in the United States, and politicians have few ways to communicate effectively with the public outside the media filter. Television advertising plays no significant role in campaigns; for the most part, it is not allowed.

An American politician who feels aggrieved by the media can buy television spots to answer them. His British counterparts have no such option. Elected officials must depend on the good graces of newspapers for favorable coverage…

This is something that we have pointed out time and time again, that restricting the ability of candidates (and private citizens either individually or through organizations) to speak to the public necessarily enhances the voices of others who are not restricted, primarily the media.

Surprisingly, and in a very welcome development, writers at two left-leaning media outlets who have in the past generally lined up with the so-called campaign finance ‘reform’ community have recognized the peril of limits on money in politics.

Filed Under: Blog, Money in Politics

Crusade against ALEC continues with pointless report

Earlier this week I noted that self-styled campaign finance and government ‘reform’ group Common Cause had filed a complaint with the IRS demanding that the American Legislative Exchange Council (ALEC) be stripped of its tax-exempt status as a 501(c)3 organization. The complaint is unlikely to get far as it’s based on a frivolous interpretation of laws defining lobbying activity, and is simply the latest effort by Common Cause and their ‘reform’ allies to harass ideological opponents.

What I didn’t mention was that it was becoming evident that the Common Cause complaint was part of a well-coordinated campaign against ALEC by the ‘reform’ community and others who simply oppose ALEC’s ideological agenda, which favors limited government, free markets, and conservative ideas. A few days before the Common Cause complaint, the liberal group Center for Media and Democracy launched a campaign against ALEC called ALEC Exposed.

Among other things, the project apparently involved obtaining and putting online copies of ALEC’s model legislation. As the web site of ALEC Exposed states:

On July 13, 2011, the Center for Media and Democracy unveiled this trove of over 800 “model” bills and resolutions secretly voted on by corporations and politicians through the American Legislative Exchange Council (ALEC). These bills reveal the corporate collaboration reshaping our democracy, state by state…

The Center obtained copies of the bills after one of the thousands of people with access shared them, and a whistleblower provided a copy to the Center…

Please join us in helping to expose ALEC, its corporations and politicians, and how money has corrupted the democratic process.

The term “whistleblower” is kind of interesting, given that it’s usually used to describe someone who reveals illegal activity, and as yet it’s not illegal to discuss and advocate for conservative ideas, or any other political ideas for that matter. Our system of government is in fact based on the idea that we are free to communicate with our elected officials, even if we’re advocating ideas that Common Cause doesn’t much agree with.

The most recent element of the attack on ALEC seems to be a report by another member of the ‘reform’ community, the National Institute on Money in State Politics (NIMSP). One of the more obscure groups in the vast constellation of ‘reform’ groups, NIMSP compiles and makes accessible to the public campaign finance disclosure data from all 50 states.

And so on Wednesday it was NIMSP’s turn to take a whack at ALEC:

Filed Under: Blog

Sean Parnell Explains ALEC controversy in The Daily Caller

Media outlet The Huffington Post continues to sound the hysterical alarm, warning of “shadowy partnership[s]” forming between the American Legislative Exchange Council (ALEC) and corporations like the increasingly unfairly maligned Koch Industries. If the following passage doesn’t encourage retreat to the panic room, not much will:

“In the buildup to the bloodiest war of the 20th century, Benito Mussolini said, “Fascism should rightly be called corporatism, as it is the merger of corporate and government power.” He is one of history’s most reviled characters for good reason.

Now, corporations like Koch Industries are funneling money into the American Legislative Exchange Council (ALEC), a shadowy partnership between Republican legislators and corporate lobbyists. Essentially, ALEC’s purpose is to pass laws that enrich corporate profits and investor returns by starving the government of revenue, rigging elections and busting unions.”

Wow. Thankfully, in an op-ed for The Daily Caller, CCP President Sean Parnell takes a more measured and less histrionic approach to the topic of the perfectly innocuous practice, occurring on both sides of the political spectrum, of building model legislation to influence policy.

Filed Under: Blog