The ‘Transparency’ Agenda
It’s a murky business.
May 13, 2013, Vol. 18, No. 33 • By MICHAEL WARREN
Last September, Ronald Robins Jr., a senior vice president at Abercrombie & Fitch, received a letter urging the company “to join with over a hundred major companies and make political spending disclosure and accountability a corporate practice.” The Ohio-based clothing retailer isn’t particularly political. It doesn’t have a political action committee, nor is it a member of the more politically involved trade groups like the Chamber of Commerce. Any politics they have lean slightly left. In 2012, the company spent a bit more than $5,000 in donations, to Barack Obama, Ohio Democratic senator Sherrod Brown, Ohio Republican congressman Pat Tiberi, and others. The previous year, Abercrombie spent a measly $120,000 on lobbying, less than 0.1 percent of its operating budget that year. What’s more, all that information is public under current disclosure laws.
Nevertheless, the letter informed Robins that companies like his “face increasing pressure” to support political groups and candidates that “threaten corporate reputation, bottom line and shareholder value.” This “secret political spending,” the letter continued, “threatens not only the health of our democracy but also the reputation and integrity of companies.” Half the companies on the S&P 100 stock market index, the letter said, have “recognized the dangers” and have “demonstrated leadership by disclosing the details of and implementing board oversight of their spending.” The signers added that they “hope” Abercrombie will follow the lead of these exemplary companies.
None too subtle, the message was: Disclose, or we can make things very difficult for you.
Hundreds of executives at corporations like Abercrombie received letters like this one last year. They were signed by various people, many with titles like “director of shareholder advocacy” at left-leaning investment funds. But like the letter to Robins, all were signed first by the same man, Bruce F. Freed.
Freed may be the most important figure in American business you’ve never heard of. He isn’t a businessman or CEO, an innovator or entrepreneur or even investor. In fact, he has little business experience beyond a few years owning his own Washington, D.C.-based public affairs consulting firm.
A former journalist and Democratic congressional staffer, Freed (who declined to reveal his age) is the founder and president of the Center for Political Accountability, a nonprofit, “nonpartisan organization . . . formed to address the secrecy that cloaks much of the political activity engaged in by companies and the risks this poses to shareholder value.” Since it began in 2003, CPA has received $1.2 million in seed money from the Open Society Foundations, funded by left-wing billionaire George Soros. In collaboration with other Soros-backed groups like MoveOn.org, Common Cause, and Media Matters for America, as well as the large unions, CPA is leading a coordinated effort to get some of the country’s biggest and most profitable publicly traded corporations to disclose all spending related even tangentially to politics. Freed has the attention of these companies’ executives—and he’s trying to convince (some might say force) them to get out of politics entirely. Take it from Freed himself.
“CPA and our partners are putting pressure on companies to adopt political disclosure, to curb the independence of trade associations, and to change the behavior of companies and trade associations in their political spending,” he told a group of anti-corporate spending activists in 2011. “I think what’s critical to remember is that the CPA strategy is not vulnerable to political obstruction or legal challenge. What we’re finding is that corporate governance offers a route that allows the issue to be addressed almost unimpeded.”
Freed and company are currently pressing their case during corporate America’s “proxy season.” Every spring, companies are required by the Securities and Exchange Commission to inform their shareholders of the issues pending at the annual shareholder meeting. Generally, these are mundane matters of corporate governance, and few shareholders bother to show up, allowing the corporate board to direct their “proxy” votes. Shareholders who do show up have the opportunity to offer their own proposals, and in recent decades, proxy season has been a time for activist shareholders—labor union pension funds, “socially responsible” investment funds, and corporate gadflies—to raise whatever issues they wish.
Recent Blog Posts