WASHINGTON, DC – The Federal Election Commission (FEC) was wrong to use the legal distinction between Chevron USA Inc. and Chevron Corporation to dismiss a complaint that Chevron violated the federal pay-to-play law when it made a $2.5 million super PAC contribution, Public Citizen said today. The organization called on the FEC to revisit its policy of drawing artificial distinctions between affiliates within the same wholly owned corporate family.
The complaint – filed March 5, 2013, by Public Citizen, Friends of the Earth U.S., Greenpeace and Oil Change International – charged that Chevron’s $2.5 million contribution during the 2012 election to the Congressional Leadership Fund, a registered super PAC reportedly tied to House Speaker John Boehner (R-Ohio) and the National Republican Congressional Committee, may have violated a federal law prohibiting government contractors from making “any … contribution to any political party, committee or candidate for public office or to any person for any political purpose or use.”
A database of federal contractors indicated that both Chevron USA, Inc., Chevron’s principal operating company, and Chevron Corporation, Chevron’s corporate parent, had federal contracts around the time of the contribution.
“The very soul of a strong pay-to-play law at the federal, state and local levels is to prevent wealthy companies from ‘buying’ – or even appearing to buy – lucrative government contracts by indebting lawmakers through campaign contributions,” said Craig Holman, government affairs lobbyist for Public Citizen. “The same restriction also protects against officials extorting money from companies wishing to do business with the government.”
Chevron argued that the campaign contribution was made by the corporate parent, Chevron Corporation, and that this particular member of Chevron’s corporate family did not hold an active government contract on October 7, 2012, when it made the campaign contribution. Although the federal database of government contractors appeared to show that Chevron Corporation had government contracts around the time of the contribution, Chevron contended that either the database or the contracts themselves were in error, and that the actual contractors were other members of Chevron’s corporate family.
But the FEC’s legal analysis shows how closely related Chevron Corporation is to Chevron USA. It notes, for example: “Chevron (Corporation) holds 100% of the stock of Chevron Investments, Inc., which in turn owns the stock of other companies, including 100% of the stock of Texaco, Inc. Texaco, Inc. owns the stock of other companies, including 100% of Chevron USA Holdings, Inc., which in turn owns 100% of the shares of Chevron USA.” Both Chevron Corporation and Chevron USA also use the same mailing address.
Despite its own findings, the FEC dismissed the complaint using the rationale that when related corporations are “separate and distinct” legal entities, the ban on campaign contributions applies only to the specific corporation that has the contract. The agency stated that Chevron Corporation itself “does not appear to have been a federal contractor during the relevant time period.”
“This distinction without a real difference essentially guts the law,” said Robert Weissman, president of Public Citizen. “Any business can establish legally distinct entities, and then have the parent corporation dole out campaign cash with the hope of winning government contracts, while its subsidiary takes in those contracts. Public officials with influence over government contracts are unlikely to miss the relationship between the source of the contributions and the company seeking the contract.”
Public Citizen urges the FEC to take a closer look at the damage done to the federal pay-to-play law by its policy of drawing artificial distinctions between affiliates within the same wholly owned corporate family, and to revisit this policy in light of the facts.
The FEC’s “Factual and Legal Analysis” underlying its dismissal of the complaint against Chevron is available.
We’re not backing down in the face of Trump’s threats.
As Donald Trump is inaugurated a second time, independent media organizations are faced with urgent mandates: Tell the truth more loudly than ever before. Do that work even as our standard modes of distribution (such as social media platforms) are being manipulated and curtailed by forces of fascist repression and ruthless capitalism. Do that work even as journalism and journalists face targeted attacks, including from the government itself. And do that work in community, never forgetting that we’re not shouting into a faceless void – we’re reaching out to real people amid a life-threatening political climate.
Our task is formidable, and it requires us to ground ourselves in our principles, remind ourselves of our utility, dig in and commit.
As a dizzying number of corporate news organizations – either through need or greed – rush to implement new ways to further monetize their content, and others acquiesce to Trump’s wishes, now is a time for movement media-makers to double down on community-first models.
At Truthout, we are reaffirming our commitments on this front: We won’t run ads or have a paywall because we believe that everyone should have access to information, and that access should exist without barriers and free of distractions from craven corporate interests. We recognize the implications for democracy when information-seekers click a link only to find the article trapped behind a paywall or buried on a page with dozens of invasive ads. The laws of capitalism dictate an unending increase in monetization, and much of the media simply follows those laws. Truthout and many of our peers are dedicating ourselves to following other paths – a commitment which feels vital in a moment when corporations are evermore overtly embedded in government.
Over 80 percent of Truthout‘s funding comes from small individual donations from our community of readers, and the remaining 20 percent comes from a handful of social justice-oriented foundations. Over a third of our total budget is supported by recurring monthly donors, many of whom give because they want to help us keep Truthout barrier-free for everyone.
You can help by giving today. Whether you can make a small monthly donation or a larger gift, Truthout only works with your support.