SEC needs to require reporting of political activities

By Laurie Bennett

December 18, 2011 at 9:46am

Public companies don’t currently outline their political spending in proxy statements or annual reports.

In light of the Supreme Court’s Citizens United decision last year, abolishing limits on campaign contributions by corporations and labor unions, such reporting should be required.

Since the Federal Election Commission apparently is unwilling to push for transparency, corporate campaign contributions should probably become the purview of the Securities and Exchange Commission.

In the meantime, shareholders who want information about political activities have to wade through multiple reports for contributions by the company and its officers, directors and investors.

A striking example is Devon Energy Corporation, a public oil and natural gas company that gives lots of money to Republicans.

George Phydias Mitchell
George Phydias Mitchell

In the last election cycle, the company PAC gave $22,500 to Democrats and $271,000 to Republicans, according to the Center for Responsive Politics.

Devon Energy also made a hefty contribution of $250,000 to American Solutions for Winning the Future, a 527 group headed by Newt Gingrich. (iWatch reported that the committee closed down in July.)

Who knows what sort of donations might follow, with Gingrich surging in the campaign for the GOP presidential nod.

When it comes to campaign contributions, corporate decision making is a mysterious process. Yet we suspect that donations totalling more than half a million dollars are not made without a nod from major shareholders and top execs. (They certainly are not put to a vote at the annual meeting.)

One of Devon Energy’s biggest investors is billionaire George Phydias Mitchell, founder of Mitchell Energy & Development, which was acquired by Devon in 2001. A steady contributor to Repubican candidates and committees, Mitchell has stayed under the radar, personally giving relatively small amounts to Republicans.

J. Larry Nichols, the company’s chairman, was a bundler for John McCain in 2008. Nichols has been quite consistent in his donations in recent years, supporting Republicans such as Senate Minority Leader Mitch McConnell, Sen. James Inhofe of Oklahoma and Sen. Roy Blunt of Missouri. He has also backed Democrat David L. Boren, a former senator from Oklahoma who is now president of the University of Oklahoma.

On the company board of directors is Robert A. Mosbacher Jr., another supporter of McCain and an successful Republican candidate for Houston mayor. His father, the late Robert A. Mosbacher, was Commerce secretary under George H.W. Bush and campaign chairman for McCain in 2008.

Company officials and beneficial owners might argue that political donations made on behalf of Devon Energy have advanced the company’s interests. Minority shareholders might rightly ask whether the company is a conduit for individuals’ political agendas.

Either way, federal reporting of such contributions should become an SEC requirement.

In August, a group of law professors petitioned the SEC for just such a rule.

You’ll find comments on the petition here.

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