Many Top Firms Say No to Political Contributions

By RALPH VARTABEDIAN

Sept. 22, 1997 12 AM PT

TIMES STAFF WRITER

WASHINGTON —

When politicians ask for money, a big chunk of corporate America has a quick and emphatic answer: no.

Although the public widely assumes that every major corporation lavishly supports politicians in exchange for shadowy favors, many companies refuse to “spread anything green on the floor,” as one executive put it.

The views of these non-givers represent something of an unheralded corporate counterculture, challenging the deeply entrenched philosophy that only through large campaign donations can business elect sympathetic politicians and ensure access to Washington’s power brokers.

A Times survey of the 544 biggest U.S. corporations found that 26% made no political contributions and did not operate employee political action committees during the 1995-96 election cycle. Included in this category are such familiar names as IBM, Campbell Soup and Gillette.

The contributions of an additional 21% of corporations were essentially insignificant, meaning that nearly half of large firms refused to play the Washington big-money game.

And although corporate America as a whole is slowly growing more politically involved, some big firms are pulling out. Last year, for example, Alcoa, the nation’s largest aluminum manufacturer, decided to end all political contributions and shut down its political action committee.

“The question we asked ourselves was, do we really want to be part of a system and perpetuate a system in which the only way you can get representation is to buy it,” said Alcoa chief executive Paul O’Neill, himself a former top White House budget official. “Once we got the question right, the answer was easy: No, we don’t want to be any part of it.”

A number of other corporations are taking tentative steps in Alcoa’s direction, particularly with respect to soft money--the unlimited contributions that companies may make to political party organizations. General Motors, Monsanto and Allied-Signal recently ended all soft-money contributions, and Lockheed Martin, a major contributor to the 1996 elections, suspended them while Congress examines whether the practice has been abused.

Reasons Vary for Not Donating

The vast majority of all corporate executives say they resent incessant solicitations by politicians, but the non-givers have their own set of reasons for avoiding the political money game altogether.

Some refuse to contribute out of protest. Others fear offending their customers by associating their products with a political party. Still others are simply stingy with their shareholders’ money.

What do the non-givers lose by staying on the sidelines? Nothing, they usually claim. They say they can achieve just what the biggest corporate political spenders are looking for: access to Washington’s corridors of power on issues of critical importance and that they will not be the targets of punitive legislation. And what’s more, they can achieve it free.

In fact, political contributions are increasingly risky, non-givers say, because they fuel the public perception that corporations are buying government officials and elected leaders. Even if the corporate intent is benign, according to this view, political involvement deflects management attention away from the real ingredients of corporate success: product quality, market savvy, efficiency and customer satisfaction.

Seagate Technology, the 175th-largest corporation on the Fortune 500 list and one of the fastest-growing over the past 20 years, has an ethics policy that forbids not only contributing to political candidates but also joining industry trade groups and lobbying in Washington.

“The fact that we’re not involved with politics was a big part of any success we’ve had,” said Al Shugart, Seagate’s chief executive. Shugart said that political influence rightly belongs with individuals, such as his employees, and that involvement with candidates would only bring his high-technology firm into closer contact with lawyers.

Some companies believe that supporting either political party or its candidates could taint the reputation of their products and potentially drive customers away.

Campbell Soup Co., among the most successful consumer products with sales to 98% of American households, rejects all political solicitations because it fears associating its soup with either the Republican or Democratic parties.

“Why open that door when you don’t need to?” asked Campbell spokesman Kevin Lowery. “We don’t see the potential payoff. We do not have a Washington office. There are very few companies that have the esteem that our name is able to generate. For us to get involved in the political process, we could alienate our customers.

When asked for money, yet other companies say they have nothing to spare for politicians. Contributions ultimately come from the pockets of shareholders or customers, who have no voice in how corporations allocate their money for political purposes.

“There is not a lot of cream to draw on to do anything but serve our customers,” said Nancy Callahan, a spokeswoman for Solectron Corp., a California producer of printed circuit boards and other electronic components. “We are not a company with fancy buildings. You are not going to see a lot of artwork or large offices here.”

For many young and growing companies, political contributions are like cigarettes for teenagers: It’s easier not to get involved at all than to get started and then try to stop.

“Several years ago, we started expanding rapidly and reviewed the issue,” said Al Bell, general counsel of Consolidated Stores Corp., a fast-growing Ohio-based retail chain that operates KayBee Toys. “We realized if we were going to get into making political contributions, it would be endless. We decided we would be better off if we simply avoided it altogether.”

Bell added: “We don’t believe political contributions could have any bearing on our success.”

Pharmaceutical companies are generally big political givers, but not Bindley Western Industries of Indianapolis. The company does not operate a political action committee or make soft-money donations, though some employees and executives make modest contributions to particular candidates.

“We have basically stayed away from that,” said William Bindley, the firm’s chief executive. “As a corporation and as a company, we have not tried to tie any success we have had to how we may support various political candidates.”

At Arrow Electronics Inc., a New York-based electronics wholesaler, executives say they have more important things to worry about than political contributions. “We have never done it, and I have never heard anyone discuss it,” said vice president Thomas Thorson.

Suspicions About Systems Confirmed

Corporate executives say their worst suspicions about the nation’s political system are being confirmed by the mounting controversy over foreign contributions to candidates and political parties during last year’s election campaign.

“It’s very difficult for all of my people--21,000 of them--to get anything but a bad feeling about how these contributions are used, especially foreign contributions for favors for foreign people,” said Allen Born, chief executive of the Georgia-based aluminum maker, Alumax Corp.

“This turns people off, and they’re not going to come back around and say, ‘Gee, we should have a PAC so we can support some of that too.’ I mean, it’s common sense. It’s amazing that politicians don’t realize that we out here, outside the Beltway, are pretty smart folks. And the people that work for me are very intelligent. They’re not going to spend their money on something that they can see no value for.

“As soon as there’s reform, I’m sure they’ll look at it in a different way. It’s not that they don’t want to support a candidate; they don’t want to support the system.”

Commerce Secretary Bill Daley acknowledged that in his conversations with executives across the country he hears frequent complaints about political fund-raising.

“I think there is a universal negative feeling about campaign financing right now, as far as the tremendous cost and the fact that it’s never-ending,” Daley said in an interview. “There are pretty strong feelings about soft money.”

PACs Nonexistent at Many Firms

The Times survey of the largest 544 companies in the nation found that 239 did not have a political action committee and 261 made no soft-money contributions to political parties in the 1995-96 election cycle. Of the 544 firms, 140 made neither PAC contributions nor soft-money contributions.

Corporations are allowed under federal law to operate and pay administrative expenses for political action committees that bundle contributions from individual managers into payments of up to $5,000 per candidate. In addition, corporations can write unlimited checks --so called soft money--to political parties.

Another 113 companies made contributions over the two-year period of $50,000 or less, a level that a wide range of experts said was below the level at which influence could be sought.

In some cases, entire industries have reduced their spending. The cosmetics and beauty industry slashed its contributions 37% between 1992 and 1996. Cost cutters also include the cleaning supply industry, office equipment producers and building supply manufacturers.

The trend, however, is in the opposite direction. The ranks of non-givers shrank from 178 to 140 between the 1992 and 1996 presidential election cycles.

The Times survey also showed that the vast majority of non-givers tend to be companies low on the Fortune 500 and Forbes 500 ranks of major corporations, the lists the Times survey used for its study. Just eight of the largest 100 corporations are non-givers.

Among the most prominent is IBM, the nation’s sixth-largest corporation. The New York computer giant has had a policy of making no political contributions ever since Thomas Watson Sr. founded the company and insisted that his employees follow a long list of moral practices and a strict dress code.

Although the company declines to discuss its policy, it has consistently made clear that it has the economic clout to get access in Washington without the need for contributions.

Do smaller non-givers, those lacking IBM’s high profile, face retribution by politicians and bureaucrats? In general, non-givers say they get all the access to which they are entitled, given their role as big players in the nation’s economy.

“It would be hard for somebody to say, ‘I am not going to take your call even though you have thousands of employees in my district,’ ” said O’Neill, the Alcoa chief. “I see no harm, no angry response. It is easier to say we don’t have a political action committee than to say we give money to somebody else.”

“We’ve never found a lack of access, to tell you the truth,” said Born of Alumax. “If we need to go see a senator or a congressman where we have an operation in his state, they certainly know who you are and the number of voters who work for you. So you don’t have to spread anything green on the floor. I don’t think you have to buy influence.”

The College Retirement Equities Fund, one of the Fortune 500’s major financial corporations, has made no political contribution in its 80-year history but still finds no difficulty getting access in Congress, said spokeswoman Claire Sheahan.

“We have a tradition of taking an academic approach in analyzing issues,” she said. “We have made some valuable contributions to the debates on public policy issues. We take seriously our leadership role in these debates that affect not only our industry but the economic issues of the day.”

As a result of its high profile, the company often finds politicians knocking on its door. “We just say no,” Sheahan said.

Donations Not Sole Measure of Influence

Herbert Alexander, a political finance expert at USC, says contributions are just one aspect of the influence that a major corporation can exert in Washington.

“You can often get a lot of influence by merit of the weight you have in the economy and the effect your decisions have,” Alexander said. “Studies show that votes involve a stronger correlation between party loyalty, constituent interest and personal principle than contributions.”

Some non-givers, however, believe they pay a price for staying above the fray. Although Seagate Technology attributes much of its success to its overall ethics policy, which forbids political contributions, Shugart says the company forfeits political access.

“You’d think that a company as big as we are, I ought to be able to call the secretary of Labor or somebody in [the department] and say, ‘Hey, I’ve got a problem,’ and be able to communicate my problem to somebody,” Shugart said. “I’ve tried before with letters. I don’t even get my letters answered. I’ve written Cabinet secretaries, I’ve written Vice President Gore. I don’t get any answers.

“There are only 32 United States companies that have more employees worldwide than we do,” he added. “We happen to be the largest employer in Thailand, the largest employer in Malaysia, the largest employer in Singapore. When our country does something that hurts the people in any one of those three countries, it hurts me. It hurts the company. Nobody ever checks with me. We account for 4% of the gross national product of Thailand. The [U.S.] ambassador to Thailand, I think I met him once.”

Still, Shugart says he would not change the company’s policy. He recently made the tough decision not to get involved in a local referendum to improve the very street where Seagate has its headquarters in Scotts Valley.

A number of non-givers declined to discuss their policies, apparently not wanting to draw attention. Western Digital, an Orange County-based electronics manufacturer that makes no contributions, spent two weeks weighing whether to grant an interview before declining. Ingram Micro and Bergen Brunswig, other California non-givers, also declined requests for interviews.

In many cases, competitors in the same industry take opposite approaches. American Standard, the home and automobile equipment manufacturer, gave $90,000, while Masco Corp., which competes in some of the same household equipment markets, gave nothing.

Was Masco hurt? Over the past five years, Masco sales have grown 12.2% while American Standard sales have grown 11.2%. Wall Street investors have bid up Masco shares more than 21 times the firm’s expected future profits, while American Stardard shares sell for less than 18 times.

To be sure, many non-givers are members of industry trade associations that have potent lobbies and make their own political contributions. Corporations can also spray money all over Washington without appearing to make actual contributions.

For example, IBM jumps at opportunities to support the favorite charities of key members of Congress, critics say, and its executives and other employees contributed $97,000 directly to candidates in 1996 elections.

Likewise, although no Hollywood studio shows up as a major political contributor, top entertainment executives rank among the biggest individual donors to candidates and to parties. They include Southern Californians Lew Wasserman, Gail Zappa, David Geffen, Don Henley, Steven Speilberg and Haim Saban.

The senior executives who find politics so distasteful have no shortage of recipes to improve its flavor. Some of them are quite extreme.

One CEO suggested that all political contributions should be anonymous, perhaps funneled through a central clearinghouse to ensure that politicians could not trace them. Then all Americans would be free to describe themselves to members of Congress as big contributors.

Another executive would force television networks, newspapers and magazines--which piously criticize politicians for accepting contributions even through they themselves benefit from political advertising revenues-- to run ads for free as a public service.

Proponents of the current political fund-raising system take a dim view of these non-givers and their odd ideas.

“They are letting other people carry the freight,” said Steven Stockmeyer, senior legislative consultant to the National Assn. of Business Political Action Committees.

“I can’t understand the practical, down-to-Earth policy that says it isn’t in a business’s interest to participate in some way,” Stockmeyer said. “What you have is a lot of competing interests who attempt to motivate and educate people. That is one of the finest parts of America.”

O’Neill, Alcoa’s chief, has quite a different view of the system.

“Campaign fund-raising is one of the most distasteful things I know of,” O’Neill said. “Can you imagine spending 80% of your time hustling people for money? It is contrary to the idea of a congressman or congresswoman thinking great thoughts. The question is whether the process corrupts the structure of democracy.”

* Tomorrow: How the convenience store industry used its clout to beat back federal regulation.

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The Non-Givers

Twenty of the best-known American companies that made no corporate contributions in 1995 or 1996, with their rank.

6 IBM

51 Costco

100 Kimberly-Clark

151 Toys “R” Us

156 Apple Computer

158 Gillette

174 Colgate-Palmolive

200 Dell Computer