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Report: Federal Contractors Should Disclose Their Secret Political Contributions

WASHINGTON, D.C. – An executive order requiring contractors to disclose their political contributions would strike a blow against the dark money that infests our elections and offer a tangible step toward addressing the perception and reality of corruption in our system, Public Citizen said in a report issued today.

A disclosure requirement should not be necessary because federal contractors are prohibited by law from making political expenditures. But the U.S. Supreme Court’s 2010 Citizens United decision enabled contractors both to contribute money to electioneering groups and to keep their gifts a secret.

“The public has a right to know who is spending money to influence our elections. Period. Full stop,” said Lisa Gilbert, executive vice president of Public Citizen. “But the public has an even greater right to know the details of federal contractors’ political spending because contractors are seeking the public’s money.”

A disclosure requirement would plug holes in disclosure created by Citizens United while imposing only minimal administrative burdens on contractors, according to the report, “The Case for Requiring Disclosure of Contractors’ Political Expenditures.” According to the report:

  • More than half of Fortune 100 companies received at least $1 million in federal contracting revenue in fiscal year 2020 and, therefore, likely would be covered by an executive order.
  • Twelve of the 15 largest federal contractors that are members of the S&P 500 already voluntarily disclose some information regarding their contributions to dark money groups, although only five fully disclose these activities. Providing more specific reporting would not be onerous.

Public Citizen’s review found that contracting malfeasance has factored into many of the most famous public corruption scandals of the past half century, including Watergate and those involving former U.S. Rep. Duke Cunningham, former Illinois Gov. Rod Blagojevich, and disgraced lobbyist Jack Abramoff.

Furthermore, case studies support the commonsense conclusion that businesses with questionable intentions are drawn to dark money groups. For example:

  • The Ohio utility FirstEnergy spent about $60 million in dark money last decade in pursuit of a $1.3 billion bailout from the Ohio legislature. Details of the firm’s spending only emerged because the FBI was listening in on phone calls involving FirstEnergy, state legislators and lobbyists. A U.S. attorney later called FirstEnergy’s dark money campaign, for which it agreed to pay a $230 million penalty, “likely the largest bribery, money-laundering scheme ever perpetrated against the people of the state of Ohio.”
  • A political operative running a dark money group in New Jersey collected contributions from law firms in 2016, then spent the money to influence elections involving a school board for which the law firms worked as contractors. The school board approved more than $100,000 in payments to the law firms shortly after the contributions were made. These details only emerged this year, after the political operative admitted to hiring assailants to murder an associate who worked for his consulting firm.

Although contractors remain prohibited from making direct contributions to federal candidates, isolated disclosures suggest that gifts to dark money groups could be functionally about the same as giving to a candidate or party.

In 2020, Southern Company gave $1 million to a nonprofit group operated by the former chief of staff to U.S. Senate Minority Leader Mitch McConnell (R-Ky.). The nonprofit group transferred $85 million to a super PAC with a stated mission of electing Republicans to the U.S. Senate, which is McConnell’s primary job.

“It would be nice if we could learn about contributions to dark money groups without having to rely on FBI wiretaps, murder investigations or occasional voluntary disclosure reports,” said Taylor Lincoln, a research director at Public Citizen and author of the report. “The question is, if all contributions were disclosed, how many more suspicious cases would be discovered?”