Revelations show why more campaign disclosure is a must
November 1, 2013
Just in case anyone doubts the need for a lot more transparency in political fundraising, a remarkable settlement just obtained by California's campaign finance watchdog and accompanying demands for disgorgement of previously undisclosed donations should erase all doubt.
The extraordinary thing about the settlement and the commission orders wasn't the $1 million in fines assessed on two political committees, even though that's an all-time record. Eclipsing the big fines were the volume of donor cash and the sheer hypocrisy revealed when one political committee inadvertently revealed its major contributors.
This case was all about two 2012 ballot propositions and the money spent for and against them by two Arizona political nonprofits tightly linked to the Kansas-based billionaire industrialist brothers David and Charles Koch, well known for funding ultra-conservative causes and the Tea Party.
There was no hypocrisy when their committees, the innocuously-named Center to Protect Patient Rights and Americans for Responsible Leadership, funneled more than $28 million of other people's cash into campaigns. The cash was used against Proposition 30, Gov. Jerry Brown's initiative temporarily raising some state taxes, and for Proposition 32, a failed attempt to limit unions' political power. Still, the two committees now must pay a combined $1 million for not disclosing donors before last year's votes.
Eclipsing the big fines were the volume of donor cash and the sheer hypocrisy revealed when one political committee inadvertently revealed its major contributors.
Then there's Los Angeles developer and philanthropist Eli Broad, the B in the giant development firm KB Homes.
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Broad during the campaign publicly supported Brown's tax increases.
"Those of us that are wealthy like myself should pay more," he said.
But he apparently contributed $500,000 to the campaign against the proposition. Oh, this hasn't been formally disclosed or acknowledged. But redacted records obtained and then released by the state Fair Political Practices Commission show someone with the first name Eli, last name blacked out, with a 12th-floor office in a Wilshire Boulevard building at a five-digit address in Los Angeles made the contribution. Broad's foundation has an office on the 12th floor at 10090 Wilshire.
There was also Charles Schwab, principal of the eponymous San Francisco-based investment and brokerage firm, identified in a similar way. Nominally apolitical, Schwab apparently kicked $6.4 million into the two campaigns.
It's not exactly a fine, but the FPPC is also demanding that a California group called the Small Business Action Committee, which used $11 million from those secret donations and others on the campaigns, hand that amount over to the state by Nov. 30.
"The money is all gone, all spent on the campaign. We don't have that amount, and it's unlikely we could get it by the deadline," says Joel Fox, head of the small-business group and founder of the Fox & Hounds daily political blog, also nominally non-partisan. Because this case is unprecedented, it's unclear what might befall Fox, a former head of the Howard Jarvis Taxpayers Association, and his enterprises if he doesn't pay.
"We did report everything we knew (about donors) at the time," he wrote in an email. "We think this is a misapplication of the disgorgement law and are going to fight it."
In all, 132 wealthy donors kicked significant cash into these two campaigns. Brown turned their secretiveness against them, making convenient bogeymen of the Kochs and others presumed at the time to be hidden donors (no one guessed Broad or Schwab were among them).
But Brown, the ultimate savvy political veteran, was uniquely equipped to turn big donations against the causes of those donors. Not many future initiative backers and opponents will be so skilled. So full disclosure is a must for the public to know who's behind what.
Had voters passed a 1990s-era initiative demanding that all TV commercials and newspaper ads for or against ballot propositions identify their leading donors in type matching the largest anywhere else in the ads, there would have been no secret about all this. It would have been clear that billionaires were spending tens of millions to protect their interests, regardless of what they might have said at the same time.
That is the kind of information California voters need, and it's up to the Legislature to demand it, even if that requires lawmakers to offend some of their own donors.
Thomas Elias is author of the current book "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government's Campaign to Squelch It," now available in an updated third edition. His email address is email@example.com.