Oh Canada! Corporations from North of the Border Have Already Spent $15M Lobbying US in 2014

Photo by Alex Indigo, via Flickr Creative CommonsAs the mid-term elections in the United States continue to heat up, a new report released Wednesday shows that Canadian corporations have registered at least $15.3 million USD in spending on direct lobbying of the U.S. federal government in the first nine months of 2014.

That includes $2.87 million by Canadian National Railway Company in the face of increasing regulatory attention to the rail transport industry on both sides of the border, said the report — Are Canadian corporations spending to influence the U.S. political process?

Written by The Shareholder Association for Research and Education (SHARE), the 13-page report noted that the TransCanada Corporation, well aware that the controversial Keystone pipeline project is up for approval at the federal level, spent $1.07 million on political lobbying from January to September.

The author of the report, Kevin Thomas, SHARE’s Director of Shareholder Engagement, said in a telephone interview that Canadian companies are clearly involved in political spending in the U.S.

The problem is there’s no real requirement for disclosure on either side of the border that can quantify the extent of that spending,” Thomas said.

There needs to be transparency and proper oversight when it comes to companies trying to get involved in the political process, he added.

Investor interest here [in Canada] is not necessarily being well served by lobbying.”

Other Canadian companies involved in U.S. lobbying include Blackberry ($2.59 million), Manulife Financial ($1.67 million), Bombardier Inc. ($1.39 million) and Barrick Gold Corporation ($1.26 million).

As in Canada, corporations and unions are barred from contributing directly to U.S. federal political candidates,” the report said. “However, they have multiple means of contributing funds to political activity that do not run afoul of this limit, and due to incomplete disclosure regimes, much of that spending is not transparent.”   

The report notes corporate contributions to political campaigns in the U.S. occur through direct contributions by a corporation’s Political Action Committee (PAC), contributions to so-called Super PACs, and indirect contributions to non-profit organizations and trade associations.

PACs pool money donated by members and contribute funds to political campaigns, the report said, while Super PACs can raise and spend unlimited sums on campaigns but cannot contribute directly to candidates or coordinate their spending activity with a candidate’s campaign.

Non-profit organizations can spend unlimited amounts on political advertising, and while their own spending must be disclosed, their source of funds can remain secret.

This has given rise to widespread concerns about ‘dark money’ in U.S. elections,” the report said. “So far this year, dark money has already accounted for over $100 million in spending, and some observers expect it to top $200 million by the time the election is held.”

The veil was lifted on one of these non-profit organizations this fall when a technical glitch exposed a list of the Republican Governors’ Association (RGA) contributors. The organization offered perks for corporations that donate, including “intimate gatherings” with governors and other VIPs, the report details.

TransCanada Corporation ($50,000) was also listed among the contributors, the report said.  “Other known donors to the RGA are Barrick Gold, who gave $25,000 in 2012 and Encana, which gave $50,000 in 2013.”

Another non-profit organization with significant corporate support is the American Legislative Exchange Council (ALEC), a group that drafts and promotes legislation.

ALEC came under intense scrutiny for advocating the adoption of ‘stand your ground’ laws (legalizing the use of lethal force by civilians if they believe they face an imminent threat of serious bodily harm) across the U.S. even after the tragic Trayvon Martin shooting in Florida in 2012.”

ALEC has also advocated the expansion of “right-to-work” laws, and has been accused of climate-change denial, the report added.

A number of U.S. companies including Google and Facebook took a reputational hit when they were found to be supporting the organization. Although its membership is still largely secret, TransCanada has recently been shown to sponsor ALEC’s activities.”

The report said the lack of effective disclosure regulations in the U.S. and in Canada means Canadian investors have no idea to what extent their companies have been contributing to U.S. political campaigns, or why.  

What we do know is that although foreign corporations are banned from directly contributing to a candidate’s campaign, their U.S. subsidiaries are allowed to form a Political Action Committee and solicit contributions from their managers or shareholders.”

In many cases, as the report outlines, amounts disclosed at both the federal and state level by Canadian corporations are likely financially immaterial to shareholders. “The problem is that they may represent only a small part of what the company spends to influence political outcomes in the U.S.”

Too much is still hidden from view.”

The report added there is also a real need for disclosure of corporate associations with particular political positions so that investors can decide whether the company’s political activity is consistent with their own long-term interests, and whether the company is vulnerable to reputational risks as a result of that spending.

The report notes that the Vancouver-based SHARE is engaged in a three-year project looking at how Canadian corporations’ influence on public policy debates and decision-making affects the interests of long-horizon investors.

Institutional investors in the United States have been raising concerns about disclosure of corporate political spending for years,” the report said.

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