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Wal-Mart Running Illegal PAC Scheme, Watchdog Groups and Employees Charge in FEC Complaint

Sept. 22, 2014

Public Citizen * Common Cause * OUR Walmart

Wal-Mart Running Illegal PAC Scheme, Watchdog Groups and Employees Charge in FEC Complaint

Company Tries to Leverage Economic Power in Political Sphere

WASHINGTON, D.C. – Wal-Mart is running an illegal scheme to prod employees into contributing to its political action committee, circumventing a federal law that bars companies from putting corporate funds into political campaigns, Public Citizen, Common Cause and two Wal-Mart employees and shareholders charged today.

In a complaint to the Federal Election Commission (FEC), the public interest organizations and employee-shareholders Cynthia Murray and Evelin Cruz detailed a program in which Wal-Mart reportedly solicits managers for contributions to its political action committee (PAC). In exchange, the company reportedly donates twice the amount of those contributions exclusively to its Associates in Critical Need Trust. The trust – fully controlled by Wal-Mart – was started in 2001 by the company to help employees facing financial distress.

The Federal Election Campaign Act (“the Act”) bars companies from making contributions to federal candidates, parties or PACs. Wal-Mart’s reported maneuver illegally skirts this law, the organizations allege.

“Federal law is clear – companies cannot fund their PACs with money from corporate coffers,” said Craig Holman, government affairs lobbyist for Public Citizen. “Wal-Mart is attempting to evade this law by providing a 2-to-1 charitable match from corporate coffers for any campaign contribution to its PAC from company managers. That flouts the law by using substantial corporate money to reward campaign contributors.”

While the FEC has approved some charitable matching schemes, those programs have been limited to a 1-to-1 match or less, with each donor choosing the benefitting charity.

The FEC has never approved a funding scheme like the one the complainants allege. A 200 percent matching rate provides such a powerful incentive that the campaign contributions lose their “voluntary” nature. And the corporate contributions reportedly made exclusively to Wal-Mart’s own charity, along with the campaign contributions to Wal-Mart’s PAC, are self-serving for the company.

“Our democracy is fundamentally challenged when multibillion-dollar corporations like Wal-Mart are able skirt the rules that the rest of us follow,” said Cynthia Murray, who has worked at a Wal-Mart store in Laurel, Md., for 15 years and owns shares in the company. “With the majority of Wal-Mart workers paid less than $25,000, it’s not surprising that Wal-Mart needs to set up a fund to help employees in need. Most of us are in need every day. With more than $16 billion in annual profits, Wal-Mart can afford to pay us more instead of paying expensive lawyers to help them manipulate electoral laws and taxpayers.”

Since the 2000 election cycle, the Wal-Mart PAC has spent more than $13 million in federal elections, according to data from Open Secrets, gaining outsized influence in the democratic process.

“It’s breathtaking. Wal-Mart is running a cynical and likely illegal scheme to get its underpaid workers to help the company leverage its economic power in the political sphere,” said Common Cause President Miles Rapoport.

An analysis of recent political contributions found that, over the last decade and a half, the Wal-Mart PAC has disproportionately funded candidates with poor track records on the issues that matter to most citizens, and particularly to Wal-Mart’s low-income shoppers and workers. The analysis included congressional votes on bills to equalize the pay for men and women doing comparable work, raise the minimum wage and preserve food stamp funding.

Wal-Mart has also deployed its political influence to block an increase in the minimum wage. The Washington Post has reported that Wal-Mart’s lobbying disclosures suggest it started lobbying last year on the minimum wage and Fair Minimum Wage Act, despite public statements that it is “neutral” on the issue.

Read the complaint.