NYC pension hacks and investment activists mau-mau employers

Back in the day when New Journalism was both new and journalism, Tom Wolfe’s influential essay Mau-Mauing the Flak Catchers described how activists manipulated the City of San Francisco’s poverty programs through confrontation and intimidation.

Today, the confrontation involves self-appointed corporate governance advocates, aligned with New York City’s Comptroller. Their goal is to manipulate the governance policies of a broad array of companies. Companies that, by the way, employ people—who then pay taxes and fees that fund federal, state and local governments, and invest in many of the same companies.

New York City Comptroller John C. Liu has demanded that the company Siemens withdraw from the U.S. Chamber of Commerce, and that six other companies provide “transparency” for their corporate “contributions.” Liu claims that his demands are required after Citizens United v. Federal Election Commission opened up politics to corporate campaign spending. Unfortunately, the Comptroller seems to have not read the entire opinion, and he appears unaware that it remains federal law, and the law of many states, that corporate contributions to candidates are prohibited. He also seems ignorant of the law requiring disclosure of expenditures. And, when legal contributions are made to candidates and parties, they are disclosed. Furthermore, when contributions are made to further political expenditures, they are reported as well.

In addition to Siemens, the Comptroller’s bureaucratic army has targeted Charles Schwab, Coventry Health Care, DTE Energy, Regions Financial, Sprint Nextel, and Well Care Health Plan. What do these companies have in common? God only knows—but we do know that they aren’t all big partisan political players. (Charles Schwab, as an individual, is a Republican donor, but gives to other sketchy causes, among them Stanford University).

Other than the fact each is traded on the New York Stock Exchange, they each are… members of the U.S. Chamber. What’s wrong with that? Well, it seems that the activists are mad about the Chamber’s stand on environmental issues—that’s what they say, and who’s to argue that they’re being disingenuous? The Comptroller, for his part, manages the New York City pension fund, which guarantees public employee pensions. Public employees are, among other things, AFSCME members. If you need to be told that the Chamber and AFSCME are on polar sides of many political issues, and back those perspectives with spending, you haven’t been paying attention.

No one has been able to show that the money the Chamber spends was raised for political expenditures. In fact, no evidence exists of special assessments for political ads, which suggests that the Chamber spends money it already has (and would have, regardless) on political communications.

To hear the activists tell the tale, their main concern is about preserving shareholder value. This is hard to square with a very public tub-thumping campaign, which one would understandably see as aimed at the targeted company’s reputation… and potentially injure stock prices. Are these activists so dedicated to their quest that this consequence eludes their appreciation? Unlikely.

More likely, the mau-mau here is as in the Wolfe essay—to intimidate a source of funding into spending their money the way the activists would prefer-and against the spender’s best judgment. That’s not shareholder protection, nor is it good corporate governance. It’s gaming the system to score political points.

cross posted at the Washington Examiner’s Opinion Zone.

The Center for Competitive Politics is now the Institute for Free Speech.