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Is your portfolio politically slanted?

Some 34 of the nation's top corporations have agreed to disclose their political spending.

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You have asked for voluntary disclosure from the US Chamber of Commerce. Why?

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The Chamber of Commerce is really the premier business trade association in the United States. They really have been the most active politically.... Companies in other trade associations have routed their money through the chamber. The chamber just announced ... that it planned to spend more than $60 million on the 2008 elections.

So even if all corporations disclosed their spending, we still wouldn't know where money routed through trade associations was going.

It's a black box. And it's a black box that runs into the hundreds of millions of dollars.

While most people seem to agree that transparency is a good thing, some say it's not enough, because violations happen despite disclosure.

Accountability goes hand in hand with disclosure because accountability means that top management and directors really look at what the company is doing, what the impact is on the company, how it may affect risk, how it may affect shareholder value.

How does it affect shareholder value?

You could have political spending by a company that would basically aid and abet various regulatory abuses. When you had the collapse of quite a few companies at the turn of the last century – your Enrons, your WorldComs, your Global Crossings – political money was very important there because companies were using that either to buy lax regulation or no regulation.... Then you have the problem of reputation.

Is there an incident that stands out?

You have the case of Merck that gave money to a candidate named Samac Richardson. This was in Mississippi in 2004. He was running for the state supreme court.... Samac Richardson was a strong supporter of tort reform, which many companies want. But Samac Richardson was also running a campaign that was against gay rights, against abortion, and getting involved in controversial social issues that many companies shy away from. So that was very embarrassing for many companies.

Why don't companies keep a closer eye on their political spending?

Companies up to now have viewed their political spending as immaterial when compared with other expenditures that they make.... But what we are finding is that companies are now beginning to recognize that there are very material consequences for expenditures that they had in the past viewed as immaterial. And as we press directors to start paying closer attention to corporate political spending, as questions are raised in our reports and by the media and by other groups about companies' political spending, that's beginning to change and companies are beginning to realize they have to pay attention to this.

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