Washington, D.C. -- In the wake of one of the most divisive ballot measure battles in American history, the Center for Political Accountability (CPA) has completed a comprehensive study of how corporate bankrolling of initiatives can distort the democratic process and expose companies and their shareholders to significant risk. It calls for meaningful, knowledgeable oversight of political spending by company directors. The CPA is leading a nationwide shareholder initiative to bring transparency and accountability to corporate political spending. 
 
Taking Initiative: How Corporate Contributions to Ballot Measures Pose a Risk and Why Directors Must Oversee Company Political Spending, shows how politicians and political operatives aggressively solicit corporate funds to pay for increasingly expensive initiative campaigns - campaigns designed to agitate the electorate on the most controversial of issues, such as the anti-gay marriage measure that passed in California on November 4. Taking Initiative exposes the inner working of the initiative industry and reveals how political operatives manipulate the initiative process to benefit a particular candidate.
 
"As California's recent experience shows,the initiative is a particularly insidious problem of campaign finance," said Bruce F. Freed, executive director of the Center for Political Accountability. "The courts and federal election officials have allowed corporate contributions to initiatives to remain virtually unregulated. Corporations can easily hide hefty donations that support aggressive, and often deceptive, political advertising. All of this makes it critical that directors conduct serious oversight of company political spending."
 
To illustrate this point, Taking Initiative takes as a case study California's disastrous special election of 2005, in which a group of four initiatives, supported by California Gov. Arnold Schwarzenegger, went down in defeat. Early on, the special election itself, and the four ballot measures in particular, were deemed political losers by press and polls alike. Yet, corporations gave generously to support them. Little evidence points to director oversight of this corporate political activity, or any concern that it be backed by a solid business rationale. Other case studies in the report - involving initiatives in California and Arizona - show how corporations, including Target, Wal-Mart, Gap Inc. and ExxonMobil, risked their reputations by funding controversial initiative campaigns. 
 
Taking Initiative also demonstrates how corporations' unchecked spending on initiatives presents a problem not only for voters but for corporations and their shareholders. A CPA survey has determined that corporate directors typically exercise scant oversight over their companies' political contributions, allowing managers to lend support to initiatives that may have little bearing on a company's business mission or may even undercut a company's values. 
 
Since its founding in 2003, the CPA has encouraged companies to take careful measure of their political spending and to ensure that their spending is backed by a strong business rationale, overseen by corporate directors and disclosed to shareholders and the public. "When a corporation discloses its spending, it sends a clear message that it carefully considers and oversees its political activity," Freed said. "Freewheeling corporate spending on initiatives is proof that corporations need to better police their own political activities." 
 
Careful political spending will help companies avoid putting shareholder value at risk, as has been the case with too many corporations recently. Freddie Mac, for example, paid $3.8 million, the largest fine ever levied by the Federal Election Commission in 2006, for underwriting illegal fundraisers for Congressional candidates. And the chairman and a top executive of Veco, a multinational oil services company which has since been acquired by CH2M Hill, pleaded guilty in May 2007 to political corruption charges that included using company money to fund employees' individual campaign contributions.
 
Taking Initiative provides a blueprint for corporations that want to establish or strengthen oversight of their political spending. It shows how directors are responsible for this oversight and must enlist senior managers and outside auditors to assure that political expenditures are made to advance the company mission and avoid reputational harm. And it lays out how directors should go about conducting independent and knowledgeable oversight of their company's political spending. 
 
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Press Contact: Bruce Freed, CPA Executive Director
Phone: 301-233-3621, Email: bffreed@politicalaccountability.net

Founded in October 2003, the Center for Political Accountability is a non-profit, non-partisan organization that was created to bring transparency and accountability to corporate political spending. 
 
Website: www.politicalaccountability.net

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