The NewStandard ceased publishing on April 27, 2007.

Business Group Stealthily Funded Political Ads, Watchdogs Allege

by Michelle Chen

Nov. 9, 2006 – Public-interest advocates are accusing the nation’s premier business association of withholding information on money it poured into state-level election campaigns.

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The watchdog group Public Citizen filed a complaint last Tuesday with the Internal Revenue Service charging that the US Chamber of Commerce and an affiliated political group, the Institute for Legal Reform, have violated reporting requirements for political expenditures since 2000. The institute is a Chamber offshoot that campaigns to curtail civil lawsuits.

Meanwhile, another watchdog group, Common Cause Ohio, is suing the Chamber to uncover its electioneering expenditures in the 2004 election cycle.

Both groups accuse the Chamber, and the businesses behind it, of engaging in backdoor funding schemes to advance a business-friendly agenda.

In a press statement, Public Citizen President Joan Claybrook called the Chamber’s political activities a "shell game… meant to conceal its gambit to stack the courts with hand-picked pro-corporate judges."

As a 501c6 non-profit, tax exempt organization, the Chamber of Commerce’s primary activity cannot be focused on influencing elections, and it must disclose in its tax filings the aggregate amount it spends each year to influence election outcomes, which could range from political advertisements to direct campaign contributions.

"The chamber has bought a different bargain by choosing to enter into this [501c6] tax-exempt status," said Public Citizen researcher Taylor Lincoln, since the Chamber follows what Public Citizen calls a bare minimum of disclosure requirements. But even with relatively lax regulations compared to election-driven political action committees, Lincoln said the Chamber continues to cut corners by obscuring financial data.

Public Citizen’s complaint targets the Chamber and the Institute for Legal Reform’s political spending.

At issue are political attack ads from previous election cycles known as "issue ads." These commercials smear one candidate or boost another, but are not counted as direct campaign advocacy because they stop just short of explicitly telling people how to vote. In recent state election cycles, the ads have been run by Chamber-affiliated groups and financed with Chamber funds. Yet the groups’ tax returns, displayed on the Public Citizen website, show no sign of the alleged electioneering efforts from 2000 to 2003.

Public Citizen cited financial documentation from groups affiliated with the Chamber, local media reports and court filings indicating that the Chamber has poured millions into election campaigns in several states, including Michigan, Mississippi and Ohio.

In 2003, the Ohio Elections Commission ruled the Chamber had violated state campaign-finance laws against corporate campaign spending by financing attack ads in a 2000 supreme-court race. The ads targeted Alice Robie Resnick, who had opposed a law limiting civil jury penalties in 1999.

Rachel Weiss with the Institute on Money in State Politics, a non-partisan election research group, said that issue ads can enable special interests to sway political opinion beneath the radar of regulators and voters.

"The danger of those kind of ad campaigns," Weiss told The NewStandard, "is that it’s very hard to distinguish between what kind of groups are running these ads, who is funding the groups – and to actually get down into the nitty-gritty of finding those details can be really difficult for voters, [and] time consuming."

The Chamber has defended its electioneering as an exercise of free-speech rights, even going to court to thwart state regulators. The Chamber admitted financing attack ads during the 2004 Washington state attorney-general race, for instance. But it objected when the state Public Disclosure Board forced the advocacy group running the campaign, the Voters Education Committee, to disclose its financial ties to the Chamber.

In a legal complaint filed earlier this year, the Chamber insisted that close regulation of such activity would "adversely impact… public discussion of important policy matters during the election season."

Public Citizen suspects the Chamber has also violated disclosure laws by failing to disclose grant money that has trickled down to political groups. A 2002 tax filing by the advocacy group American Taxpayers Alliance, obtained by Public Citizen, shows a $2.6 million donation from the Chamber. The Chamber itself did not report the donation in its filings.

In 2004, the Chamber and the Institute for Legal Reform did report some $18 million in combined political expenditures. But Public Citizen claims the real figure is higher. The complaint cited a memo from Chamber President Tom Donahue to board members boasting extensive campaign efforts that year costing as much as $30 million.

The Chamber has not disclosed an official figure on its expenditures in the 2006 election cycle.

The Chamber declined to answer specific questions related to the complaint, but Chamber Vice President of Communications Linda Rozett said in an email that the group had complied with all tax laws. She called Public Citizen’s initiative "a politically-motivated public relations stunt."

Public-interest advocates are meanwhile pursuing the money trail beyond the Chamber. The Chamber draws its revenues from a nebulous roster of corporate affiliates, which the organization does not publicly list.

Taylor said that a more pressing question might be, "Where does the Chamber of Commerce get money?"

Cliff Arnebeck, a lawyer representing the public-interest group Common Cause Ohio, hopes the legal process will provide some answers. In a pending lawsuit, Common Cause is probing $1 million in US Chamber donations funneled into Citizens for a Strong Ohio, the political action committee that ran election attack ads in 2004. Accusing the Chamber of again violating state restrictions on corporate spending,Common Cause seeks to force the Chamber to disclose its own funders in court. Arnebeck said the case could expose individual corporations with a hidden stake in state races.

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The NewStandard ceased publishing on April 27, 2007.


Michelle Chen is a staff journalist.

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