WASHINGTON – Sen. Bob Menendez (D-N.J.) said the disclosure of corporate political spending would have “obvious value” for America’s democracy.
“It adds transparency – cleans up campaign finance and it keeps the election process fair and free of super-funded outside influences here in the United States or from elsewhere. But even setting aside the benefits to democracy, the case for disclosure is clear and convincing, purely as a matter of corporate governance and investor protection,” Menendez said on a conference call briefing last week that focused on attempts to require the “largest mutual fund companies” to disclose political spending records.
“This information is material to how shareholders decide where to invest their money and how to vote in corporate elections. As it currently stands, corporations can funnel shareholders’ money to organizations that do not have to disclose their political contributions, and investors have no way of knowing whether executives are spending their money on political causes that may be directly adverse to the shareholders’ interests,” he said. “Corporate insiders should not be able to use investor money as a piggybank to advance their personal political agendas without any oversight from shareholders.”
For the last six years, Menendez said he’s been “pushing” the Securities and Exchange Commission to begin working on a rule to require public companies to disclose all of their political spending to shareholders.
“Some corporations have stridently fought this initiative. They’ve sounded the alarm bell and called upon their allies in Congress to fight common sense disclosure,” he said.
Menendez said new SEC Chairman Jay Clayton has not provided any “assurances” that he would take public support for a disclosure rule seriously. Menendez voted against Clayton’s confirmation.
“He wouldn’t commit to holding an innocuous public roundtable on the issue. He wouldn’t comment on whether he believes this disclosure is material to shareholders and I find that to be entirely inadequate when so many investors, both retail and institutional, are demanding this information,” he said. “Investors can’t rely on the shareholders’ proposal process alone to affect corporate change on this issue.”
Menendez, a member of the Senate Finance and Banking Committees, said the nation needs an SEC that will truly “stand up for investors and corporate governance principles and finally require this disclosure.”
“At the end of the day, those that choose not to support such a disclosure are working to silence the voices of hardworking Americans in favor of amplifying the speech and magnifying the influence of corporations in our politics, and that just simply can’t be the case,” he said.
Menendez said the Supreme Court’s Citizens United decision “opened the floodgates” for unlimited, unchecked and “often undisclosed” corporate spending on campaign advertisements, federal and state advocacy efforts and other political communication methods.
“For seven long years companies have had free rein to maximize their influence on our elections and, according to Open Secrets, outside groups spent more than $1 billion in the 2012 federal elections and outstanding $1.4 billion in the 2016 elections with much of it funneled through trade associations and nonprofits with minimal disclosure with no corresponding requirement to disclose how this money is being spend,” he said.
“There’s simply no way to know if corporations are spending money to defund Social Security and Medicare, to dismantle environmental protections or eviscerate Wall Street reform or take down the Consumer Financial Protection Bureau,” he added.
Public Citizen, a nonprofit organization with a mission to “ensure that all citizens are represented in the halls of power,” organized the conference call with Menendez.