Tight rules preclude reporting charitable donations to Speaker’s pet charity

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With Americans saying that reducing federal corruption is now their second most important campaign issue, it's worth looking at how well a 2007 law designed to curb corruption is holding up. While it seems to have decreased one kind of direct influence peddling–giving to lawmaker-owned charities–the law still left behind plenty of loopholes. A member of Congress can still ask for donations to his favorite charity and that gift, no matter how large, does not have to go on the public record unless it meets very specific conditions, according to campaign finance lawyers.

 

We discovered this in preparing last week's Sunlight Foundation report about which congressional and administration officials were honored most in 2011. These reports were filed under the five-year-old law that bans gifts from lobbyists to lawmakers and requires companies employing lobbyists to disclose on reports to the Senate and House when they give charitable gifts in an official's honor. But it turns out there are still plenty of ways to get in a member's good graces and not tell the public about it.

One example: the annual Boehner-Lieberman-Williams fundraising dinner benefiting the Consortium of Catholic Academies of D.C., which runs four private schools for inner-city youth. Started in 2003 by future House Speaker John Boehner, R-Ohio, and the late Sen. Edward Kennedy, D-Mass., it gives gold sponsors intimate access to Boehner, the most powerful member of the House, Sen. Joe Lieberman, I-Conn., and former D.C. Mayor Anthony Williams. Last year's event brought in over $1.1 million from sponsors, let alone more money that came from smaller donors or non-official sponsors, and the dinner is taking place again this September.

Above is a chart showing the percentage of disclosure by companies sponsoring the event in 2011: 23 percent. To arrive at this figure, we calculated the amount the companies paid by looking at the donors and sponsorship levels listed on the charity's website and subtracting the amount of money that was actually disclosed in lobbying contribution reports. Not all charities post such information publicly, so it would be difficult to calculate a disclosure rate for all events honoring lawmakers.

At the Catholic Academies fundraiser last year, all seven gold sponsors got eight tickets to the event, where they sat at a table with a "VIP," according to the event invitation. The CEO of Hilton Worldwide, which lobbies on many issues–from bills aimed at making it easier for foreigners to get U.S. travel visas to the implementation of the 2010 health care reform law–sat at the same table as Boehner, according to a Hilton spokesperson. Many other gold sponsors, such as the CME Group, a trading conglomerate which grew out of the Chicago Mercantile Exchange and lobbies on the controversial derivatives rules being considered by Congress, declined to say what specific benefits the company's sponsorship brought.

Of the seven gold sponsors, only General Motors and PhRMA, the pharmaceutical industry's trade association, reported the gifts. The others–Goldman Sachs, CME Group, Kaplan, Comcast and Hilton Worldwide–all said that the law does not require disclosure. Kaplan spokesman Mark Harrad pointed to an example in the disclosure guidance that says if an official lends his name to an event as a "co-host" but does not receive an award, disclosure is not needed; that example murkily says "Supplemental facts might require reporting the cost of the event."

The disclosure rules are so limited because the fox is guarding the henhouse. "Congress designed these rules to cover themselves," said Brett Kappel, a campaign finance lawyer at Arent Fox.  When it wrote the 2007 law, Congress was targeting member-owned charities, not legitimate ones such as the one Boehner supports, Kappel said. Because Boehner merely co-founded the fundraising dinner, not the charity itself, lobbyists are evidently in the clear.

Asked why it did report the gift, GM spokesperson Heather Rosenker wrote that the company makes its disclosure decisions based on a review of the relevant laws and guidelines. 

Dinner with the Speaker

Even so, the event got corporate executives close access to the officials. Three Hilton executives–CEO Christopher Nassetta, general counsel Kristen Campbell, and senior VP of government affairs Jonas Niehardt attended the reception and dinner.

They weren't the only ones. Facebook, a bronze sponsor, was represented by Katie Harbath, a long-time Republican political strategist who now works for the social media giant teaching elected officials how to use its platform. She checked into the event on FourSquare

Of the dozens more silver and bronze level sponsors–at $25,000 and $10,000, each–only a handful reported making gifts in honor of Boehner and Lieberman. Those who ponied up the $1.1 million in sponsorships weren't the only corporate officials who got access: The lobbying contribution reports identified another $43,000 from attendees such Citigroup Management Corp, Pepsi and lobbyists from the Duberstein Group. Individual tickets to the event cost $1,000. 

Even if the motives of the lawmaker hosting a charity event may be altruistic, Kappel said, those of the people who give are not–they may believe in the charity but also want face time with members of Congress.

And these companies are supporting a cause near and dear to the speaker's heart. As Boehner and Lieberman have raised money for the private school, they have also revived a controversial congressional program to promote vouchers to poor students to attend such schools. Last year, Boehner spearheaded a $20 million bill to provide Washington students with vouchers over five years, and it became law despite initial opposition from the White House, and from D.C.'s only delegate, Eleanor Holmes-Norton. Norton told the Washington Post that the money would be better used funding public education.

Boehner disagrees. He told the Post, "We’ve cut a lot of money out of the budget over the last month. We’ve got a lot more we’re going to cut. But I think we can afford to do this."

Making the ask

It's unclear if Boehner or Lieberman directly solicited some of these corporations for their donations. CME Group spokesperson Laurie Bischel declined to say if they had. Spokespeople for General Motors and Hilton said none of the officials made such an ask. Spokespeople for the charity, Boehner and Lieberman did not respond to multiple requests to comment about what role the officials take in fundraising. 

Still, according to campaign finance lawyers, even if Boehner had made a phone call to solicit the gift, it would not have to be disclosed. The rules say that reporting the gift is only required if an official solicits the gift to a charity that he controls, not merely supports.