March 29 (Bloomberg) -- Some secret donors who gave money to groups that paid for millions of dollars in attack ads during the 2010 midterm elections are becoming public.
Chevron Corp., an oil and gas company; Merck & Co., a drug maker; and the American Petroleum Institute are among the entities that have disclosed through corporate filings or Internal Revenue Service reports their donations to politically active groups that are growing in influence.
The non-party organizations that don’t disclose their donors increased their spending to $133 million in 2010, compared with $875,000 during the previous off-year elections in 2006, according to the Center for Responsive Politics, and favored Republicans by a ratio of 10-to-1.
“If the disclosure comes so much later, after the ads have been paid for and the candidates have been elected, not knowing who was influencing that spending leaves voters in the dark,” said Bill Allison, editorial director of the Sunlight Foundation, a Washington-based watchdog group that follows campaign money. “You don’t know what the agendas of the groups are and you don’t know the money behind these ads.”
Representatives of all three entities said they gave money to pay for advocacy of their industry in Washington, not for political purposes.
“Our goal is simple,” said Eric Wohlschlegel, a spokesman for the Washington-based petroleum institute. “We give to groups to engage them and their members in the energy debate, and the importance of developing vast oil and natural gas resources.”
Still, none said they would stop giving or impose restrictions on their future contributions. Some lawmakers say the groups these corporations and trade associations supported exist only to engage in political activity.
“It’s clear these organizations are spending a lot of money on political campaigns, not social welfare activities,” said Representative Peter Welch, a Vermont Democrat.
Such distinctions can be lost when money moves between organizations and ends in one that pledges to keep its contributors’ names secret.
Take the case of Merck, the second-largest U.S. drug maker. It gave $7 million in 2010 to the Pharmaceutical Research and Manufacturers of America, the drug industry’s trade association, according to a disclosure on the company’s website. PhRMA donated $4.5 million the same year to the American Action Network, a Washington-based group that doesn’t disclose its donors. The PhRMA donation was the largest contribution the drug makers’ group made in at least three years, according to IRS records.
Follow the Money
American Action Network, whose chairman is former Republican Senator Norm Coleman of Minnesota, spent more than $19 million on ads in the midterm elections to help elect Republicans, Federal Election Commission records show.
One advertisement targeting Democratic Representative Dina Titus of Nevada accused her of supporting funding Viagra for rapists in the health-care legislation that was signed into law by President Barack Obama and is now before the U.S. Supreme Court. Titus, a House member, never voted on the issue; rather, the Senate had considered an amendment seeking to restrict spending on the erectile dysfunction drug. “What is going in Washington?” the ad said. Titus lost her re-election bid.
In addition to its check to the American Action Network, PhRMA also gave $3.4 million to a Democratic-leaning outside group, Citizens for Strength and Security, according to disclosures made to the IRS.
“We give support to a wide variety of organizations, all of whom share our mission of increasing access to innovative medicines that help improve the lives of Americans,” said Matt Bennett, a PhRMA spokesman.
Some companies took steps to ensure that their contributions weren’t used for political activity.
Prudential Financial Inc. contributed $2.1 million to U.S. Chamber of Commerce and an affiliate that advocates for restrictions on lawsuits, according to a disclosure on the company’s website. The chamber spent $30 million in 2010 -- more than any other outside group -- and most of it was aimed at helping to elect Republicans, FEC records show.
“The money that we give them was largely an endowment to help them with operating expenses,” said Bob DeFillippo, a spokesman for Newark, New Jersey-based Prudential, the second-biggest U.S. life insurer.
Target Corp., which gave to the chamber, said on its website that it instructs groups it supports not to use their money “to influence the outcome of specific elections.”
U.S. Chamber Contributors
Chevron contributed $500,000 to the chamber. A spokesman for San Ramon, California-based Chevron, Brent Tippen, said the company donates “to various trade associations like API to provide representation for our industry and to the U.S. Chamber of Commerce to provide representation on general business issues.”
Merck also donated $725,000 to the chamber.
“Merck has long-standing relationships” with groups “that align with our mission to help the world to be well through our innovative medicines and vaccines,” said Kelley Dougherty, a spokeswoman for the Whitehouse Station, New Jersey-based company. She said Merck doesn’t monitor how those groups spend the money nor does it place conditions on its giving.
Prudential, Chevron, Merck and Minneapolis-based Target are among companies voluntarily revealing their contributions to trade associations and other nonprofit groups, according to the Washington-based Center for Political Accountability.
Oil and Gas
Bryan Goettel, the chamber’s spokesman, declined to talk about the company contributions and how they related to the political ads aired during the 2010 campaign. “We don’t discuss anything related to our members,” Goettel said.
The American Petroleum Institute, which advocates for the oil and gas industry, gave $25,500 to Americans for Prosperity, IRS disclosures show. Americans for Prosperity, based in Arlington, Virginia, spent more than $1.2 million in 2010 to help elect Republicans to Congress, according to FEC records.
The petroleum institute also gave $25,000 to the Alexandria, Virginia-based 60 Plus Association, which favors privatizing Social Security and spent more than $7 million in 2010 in support of Republicans, IRS and FEC records show.
Among the petroleum institute’s other beneficiaries in 2010 were the AFL-CIO and the Southern Christian Leadership Conference, an organization that advocates for civil rights and was once led by Martin Luther King Jr.
Wohlschlegel said the group didn’t give money to support pro-Republican campaign efforts. “We have supported a number of groups in a bipartisan way for some time,” Wohlschlegel said.
Spending This Year
Such spending is continuing this year.
When Obama proposed cutting federal spending on prescription drugs last September, American Action Network announced a $1.6 million ad campaign against the proposal. The chamber already has spent $5.5 million on broadcast TV ads in support of Senate Republicans running in 2012, according to New York-based Kantar Media’s CMAG.
Americans for Prosperity, partially funded by energy executives Charles and David Koch, spent $7 million on anti-Obama ads, according to CMAG, and 60 Plus announced this month that it would spend $3.5 million on TV and online ads against Obama’s health-care law.
Welch and Representative Ted Deutch, a Florida Democrat, joined by 30 of their Democratic colleagues, asked the IRS yesterday to investigate whether nonprofits are “improperly engaged in political campaign activity.” Most of the groups are incorporated under Section 501(c)(4) of the tax code, meaning they can’t make political activity their primary focus.
Money for Ads
“What are you using this money for?” asked Deutch in an interview following a press conference with Welch yesterday. “If you’re not using the money to run ads, what are you using the money for and where is the money to run ads coming from?”
The nonprofits’ spending in 2010 exploded after the U.S. Supreme Court, in its Citizens United decision, removed restrictions on corporate and union spending on campaigns. Republicans won 63 House seats and a majority, and picked up six seats in the Senate.
Democrats in the House and Senate have introduced legislation to require nonprofit groups funding political ads to reveal the sources of their larger donations. Senate Republicans blocked similar legislation in 2010.
“This is going to be an issue as this year progresses,” said Bill de Blasio, the New York City public advocate who oversees pension investments and established a group of public officials pushing for greater corporate disclosure. “More Americans are going to be repulsed by the galloping flow of money and are going to start holding companies responsible.”
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