Happy Holidays and a Happy New Year to all of our readers!
NO LOBBYIST LEFT BEHIND: KEEPING CURRENT WHEN THE RULES ARE ALWAYS CHANGING
The first half of 2009 is an ideal time to train employees on the rules applying to lobbying, gifts to public officials, and political fundraising. Why? Because a wave of new rules and guidelines are on the way.
Around New Year’s, the Congressional ethics committees plan to issue new guidance for Lobbying Disclosure Act filers. Shortly thereafter, the FEC promises to produce new rules that apply to lobbyists who raise cash for campaigns and political parties. State legislatures will scramble to enact laws in response to recent pay-to-play scandals by banning campaign contributions from state contractors and key employees. And the Supreme Court is poised to whack away (yet again) at the McCain- Feingold rules that restrict television and radio advertising in the run-up to an election.
It’s also a good time to refresh your understanding about Congressional gift rules that under The Honest Leadership and Open Government Act of 2007 are a source of liability not just for Members of Congress, but also for organizations that employ federal lobbyists. Who should receive training? Lobbyists, compliance professionals, PAC administrators, and employees who authorize meals and other “gifts” for public officials, oversee officeholder site visits, and approve use of company facilities for volunteer fundraising.
An effective and ongoing compliance program is essential in the current environment, where the potential risks to companies and their executives include hefty fines, random government audits, and jail time. Training key employees sensitizes them to their obligations and risks, heading off problems before they ripen into problematic audits or investigations. Indeed, the mere fact that a company provides periodic training may convince prosecutors to let the matter go with just a warning or seek lesser sanctions.
Opportunities will abound in the new year for influencing public policy and promoting your agenda. Don’t let violations of lobbying, gift, and campaign finance laws undermine your efforts.
PAY-TO-PLAY LAWS GET A PUSH FROM AN UNLIKELY SOURCE
Readers of Political GPS are aware from earlier posts that an increasing number of states and municipalities are enacting so-called “pay-to-play” laws that prohibit existing and prospective public contractors from contributing to candidates and officeholders. Companies that violate these laws can face stiff fines, lose existing contracts and be banned from future contracts. In what may have been a prophetic stance, Illinois Governor Rod Blagojevich refused this past fall to sign a bill targeting contractors who make campaign contributions in hopes of luring work from the state. Of course, no one anticipated that the Governor would be so enamored of pay-to-play politics that he would allegedly try to trade away the President-elect’s Senate seat for political contributions, appointments, and payoffs.
Governor Blagojevich’s arrest last week is prompting many to call for more states to enact pay-to-play laws and other campaign finance reform measures. In the New Year, we anticipate that more states and municipalities will move to address pay-to-play concerns. Twenty-three states now have pay-to-play laws at the state or local level, and many other states are considering such measures. For example, Coloradans approved a new ban on contractor contributions to state candidates on Election Day, and the City of Pittsburgh is developing a new Internet database of city contracts and campaign contributions from contractors to city candidates.
What isn’t yet known is whether the Blagojevich scandal will prompt the new President to call for federal “pay-to-play” legislation or regulations. Jack Abramoff’s lobbying abuses led to last year’s lobbying reform law – the Honest Leadership and Open Government Act of 2007 – a law the new President championed in the Senate. Might Gov. Blagojevich’s alleged conduct similarly be the impetus for new federal legislation that restricts the ability of senior managers of government contractors to make political contributions? We wouldn’t be a bit surprised.
Two recent cases from California are a reminder that violating campaign finance laws can have serious consequences, particularly when the conduct involves laundering political contributions. These cases also underscore the importance of providing appropriate training and adopting policies that inform company employees about the risks of reimbursing others for their contributions.
A federal judge in Los Angeles sentenced Gladwin Gill, the owner of a hospice, to one year in prison and imposed a $200,000 fine, stemming from campaign contributions made from 2003 to 2005. Mr. Gill arranged for friends and employees to contribute to various federal candidates, which he then reimbursed with corporate funds. The evidence in the case suggested that Mr. Gill, who previously served time for real estate investment fraud, knew that the contributions were illegal.
In a similar state case, the California Fair Political Practices Commission approved a penalty of $150,000 against an auto dealer, Mark Leggio, who admitted reimbursing friends for contributions they made at his urging over a four year period. Mr. Leggio is still facing criminal charges, which could result in a sentence of up to six years in prison.
If you have any questions or would like more information, please feel free to contact Larry (LNorton@wcsr.com, (202) 857-4429) or Jim (JKahl@wcsr.com, (202) 857-4417).