Oracle has started offering its executives legal “assistance” on the preparation and filing of their personal political campaign contributions following a recommendation by the software company’s compensation committee.
The new policy, which Oracle said would cost less than $1,000 per executive each year, represents one example of how corporate America is rethinking its policies on political donations and lobbying after a spate of scandals in Washington.
Oracle employees have donated $159,530 in the current election cycle, according to data compiled by the Center for Responsive Politics, which tracks political donations. The company declined to comment on the reason for the new policy, but in a recent regulatory filing it said the board’s
compensation committee believed “there is benefit” in ensuring executives comply with reporting requirements.
While many companies, from Amgen to Bank of America, already have compliance policies in place to handle political donations, legal experts in Washington say corporate requests for advice on political giving and lobbying have markedly increased in recent months, partly because companies realise that deficiencies in their compliance programmes represent a potential liability in a town that is tightly regulated by rules governing how companies may interact with elected officials.
Kenneth Gross, a partner at Skadden Arps in Washington who specialises in advising corporate clients on campaign finance rules, says that, given increased scrutiny of companies’ activities in Washington by regulators, prosecutors, and the press, it is no longer good enough for executives to simply believe they know what the rules are.
“People are confused about where you draw the line between a political contribution, illegal gratuity [involving entertainment of public officials] and a bribe,” Mr Gross says. “Companies ask us to draw the line, and then we take three steps back from that line, to the point where I’m not even close enough to the foul line to get chalk on my shoes.”
He and other experts cite Altria, the tobacco group, as one company that has developed a good model for its compliance programme, including the use of elaborate role-playing exercises for senior executives that address some of the ambiguities of what is, and is not, permissible when it comes to dealing with current or former public officials.
While Mr Gross says he believes companies are generally sensitive to rules involving their political action committees, or PACs – highly-regulated funds companies set up to donate to candidates or causes – compliance sometimes falls short when it comes to fund- raisers for candidates that are organised by executives and corporate lobbying disclosures.
If, for example, a chief executive seeks to raise $100,000 (£52,500) for a candidate, he or she can only seek the help of a company secretary if the activity is limited to other corporate employees.
“If the CEO goes to the country club to fundraise, you can’t use your own secretary,” Mr Gross says, citing a record fine brought by the Federal Election Commission against Freddie Mac.
The federal home mortgage company was forced to pay a $3.8m penalty in April because it used corporate resources to facilitate 85 fundraisers.
In another example, involving lobbying, Mr Gross says companies do not always realise that the resources spent by a company lobbying public officials – even by employees who are not technically lobbyists – must be recorded in disclosure forms.
“Let’s say you are an engineer accompanying your in-house counsel to [discuss pollution standards with a member of Congress]. Just because you are wearing a plastic pocket protector doesn’t mean you aren’t lobbying. His time and expenses has to be included in lobbying forms,” he says.
Another expert, Jan Baran of Wiley Rein & Fielding, says that while companies most frequently make administrative errors in connection to their political giving, there has also been a recent uptick in the number of instances where corporate officials are found siphoning funds for themselves.
In one case this month, Lockheed Martin’s political action committee agreed to pay $27,000 to the Federal Election Commission after it emerged the the committee’s former treasurer had allegedly embezzled tens of thousands of dollars from the committee.
Keith Darcy, executive director of the Ethics and Compliance Officers Association, says that while companies have in recent years devoted much attention to compliance with Sarbanes-Oxley corporate governance legislation, that the scandal surrounding Jack Abramoff, the former Republican super lobbyist who has pleaded guilty to corruption charges, has forced members of his organisation to pay closer attention to the complexities of lobbying and campaign finance rules.