Political GPS: OVER 1000 COMMITTEES MISS FEC BUNDLING RULES DEADLINE - DOES REPORTING REALLY MATTER?

Over 1,080 federal political committees known to be controlled by lobbyists failed to file an amended statement of organization by March 29, according to CQ Today Online (subscription required). New FEC rules require these filings to help candidates and others track “bundled” contributions received from lobbyist-controlled PACs. These non-filers reportedly took in over $100 million in receipts during the 2008 cycle, and made $75 million in contributions.

In a companion story, CQ reported that many leadership PACs, which were required by March 29 to disclose the Members with which they are associated, also failed to file amended reports. One FEC Commissioner has suggested that the poor compliance record by leadership PACs is because the filing deadline “may have fallen off people’s radar screen.”

It certainly doesn’t sound like Members of Congress have much to worry about, and perhaps the late-filing PACs don’t either.

Indeed, there are times when missing a filing deadline draws only a stern warning or a small fine. But last week also offered fresh reminders that in other circumstances a casual approach to disclosure of political activity can land an organization and its executives in hot water. For instance:

• Maryland prosecutors last week filed criminal charges against 77 state political committee chairmen and treasurers for failing to file timely campaign finance reports. Each count of failing to file campaign finance reports carries a maximum penalty of one year in jail and/or a $25,000 fine.
• The Government Accountability Office (GAO) just released its second report analyzing compliance with 2007 amendments to the Lobbying Disclosure Act that impose stricter reporting obligations on federal lobbyists. The GAO noted that the U.S. Attorney’s Office for the District of Columbia is finalizing a new system to track and report on its enforcement of lobbying violations, and is devoting an additional staff member to lobbying compliance. The GAO also referred two committees to Congress for failing to cooperate fully with its statutorily-mandated audit. GAO’s frustration with these two committees is evident in the report’s detailed description of their recalcitrance.
• A new “pay-to-play” law in Illinois requires state contractors and bidders to file registration statements that list affiliates and certain high-level employees, along with their spouses and children. Under the Illinois law, all are barred from contributing to certain state officeholders and candidates. A false report can expose a company and its executives to perjury charges.
• Politico reported recently that a growing number of companies are increasing scrutiny of their political operations and more carefully vetting the beneficiaries of their political spending. The on-line publication notes, for instance, that a number of companies have been caught up in a federal investigation involving alleged ties between their contributions and millions of dollars in Congressional earmarks. Also, many companies are yielding to shareholder pressure to disclose political spending that the company is not required to report in public filings, such as corporate donations in state elections and ballot contests, and donations to trade associations.

So, do disclosure obligations matter? Apparently not, if you’re a Congressional leadership PAC and missed the initial filing deadline under the new FEC bundling rules. But for less fortunate organizations, inattention to disclosure can lead to battles with prosecutors and shareholders, or news stories linking contributions to troublesome allegations surrounding a recipient officeholder.

It’s been years since many organizations have reexamined their oversight of political spending or their procedures for preparing publicly-available reports. Active political committees should conduct a legal compliance audit after each election cycle to avoid the kinds of problems and unwelcome attention discussed above. At the very least, the events of the past week show that reporting obligations and their consequences are well worth putting on your “radar screen.”

If you have any questions, comments or would like to schedule a consultation, please feel free to contact Larry (LNorton@wcsr.com, (202) 857-4429), or Jim (JKahl@wcsr.com, (202) 857-4417).