WASHINGTON -- It used to be against the law for executives to spend funds from their massive corporate treasuries to directly influence elections. But two years ago this week, the Supreme Court declared such restrictions unconstitutional -- and short of a constitutional amendment, it's hard to get around that.
The Court never said corporations should be able to spend all that money in secret, however.
So on Thursday, a coalition of campaign reform and corporate transparency advocates called attention to their petition to persuade the Securities and Exchange Commission to require that corporations publicly disclose their political contributions.
"We need to know who's influencing American elections," said Sen. Robert Menendez (D-N.J.), one of several backers of the petition, during a conference call with reporters. "We need to know who those corporate interests are and we need to know where they are from, so we can openly determine what they want."
Of the SEC, Menendez said, "It's the least they can do."
In reaching its January 2010 decision in Citizens United v. Federal Election Commission, the Court "imagined and assumed" there were already robust reporting requirements for political spending, said Robert Jackson, a Columbia Law School professor and a chief author of the SEC petition. "We were dismayed to see the Supreme Court make that assumption because it's not the case," he said.
Tim Smith, senior vice president at Walden Asset Management, a socially responsible investment company, said members of the Corporate Reform Coalition -- which include institutional investors managing $800 billion in assets, public officials, legal scholars and good government groups -- "all share the fear that the U.S. democratic process is in danger of being bought and sold."
The coalition's goal is to "seek new checks and balances" in the wake of the Citizens United ruling, Smith said.
Immediately after that ruling, the widespread assumption was that companies would spend their money directly and therefore openly. But instead, corporations quickly found ways to make massive contributions behind a cloak of secrecy, funneling their spending through nonprofit groups that don't have to publicly disclose their donors.
Overtly political nonprofits are supposed to operate under section 527 of the U.S. tax code, which explicitly requires them to publicly identify their donors. But the really big bucks are increasingly flowing through groups formed under section 501(c)(4) -- ostensibly for "social welfare" groups -- and section 501(c)(6) -- for business associations.
Among the biggest political spenders in this election cycle, the Karl Rove-associated group Crossroads GPS has applied for 501(c)(4) status, and the U.S. Chamber of Commerce is organized under 501(c)(6).
The SEC already has many disclosure requirements, crafted to assure that shareholders have the data they need to make fully informed investment decisions. "The SEC's disclosure rules have evolved over time in response to investor demands in many ways," Jackson said.
The Corporate Reform Coalition argues that perhaps the most serious disclosure problem today is that the public isn't getting information on corporate political spending conducted through intermediaries.
"Almost nothing is known about this kind of spending," noted Jackson. Particularly when it comes to intermediaries that don't have to disclose their donors, "we know nothing," he said. "We know how much the Chamber of Commerce spends, for example, but we don't know where it comes from -- and this is a very considerable source of political spending."
The coalition includes two state treasurers, who serve as fiduciaries to large public investments.
"It's important as a shareholder to be aware of any conflict of interest or waste that might come from corporate political spending," said Janet Cowell, the North Carolina treasurer.
"Today, corporations have the ability to spend heavily on political causes," said Ted Wheeler, the Oregon treasurer. "However, corporations also have the ability to obscure that spending from their shareholders." Wheeler added that the coalition isn't trying to limit the spending by corporations: "They just oughta tell their owners about it," he said.
And Adam Kanzer, a top manager at Domini Social Investments, raised the possibility that secret political donations are encouraging corruption, conflicts of interest and self-dealing, while distorting the market, to boot. Shareholders, he said, may be unwittingly over-investing in companies that spend a lot of money secretly currying favor with government officials and thus "are winning because the government is going easy on them" -- not because they are the soundest.
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Dan Froomkin is senior Washington correspondent for The Huffington Post. You can send him an email, bookmark his page, subscribe to his RSS feed, follow him on Twitter or on Facebook, become a fan and get email alerts when he writes.