Weekly Lobbying Articles
February 24, 2017
The Times Tribune
February 19, 2017
Report highlights gift-giving loopholes
A new report outlining the natural gas industry’s influence at the state Capitol sheds light on the basic problems with Pennsylvania’s lobbying disclosure and public ethics laws.
First off, the author of this report, Rep. Greg Vitali, D-166, Havertown, is a vocal environmentalist. He chose to do the report “Marcellus Money and the Pennsylvania Legislature” because that’s where his legislative interests are. But Vitali acknowledged that the same problems with the two laws could surface if other lobbying interests came under similar scrutiny.
Reporting requirements
The gas industry has lobbied on bills concerning a state severance tax on gas production, regulation of shallow well drilling and royalty payments. Concerning the report, Vitali said the companies and lawmakers mentioned in it are in compliance with the reporting requirements of both laws. The problem stems from the way the laws are written, he added.
According to Marcellus Money, the natural gas industry reported spending nearly $70,000 in 2015 for gifts, hospitality, transportation and lodging in their lobbying disclosure reports filed with the Department of State. Vitali focused on 42 natural gas industry political action committees.
Yet, only five of the 253 state lawmakers reported receiving anything from the industry in these categories in 2015 on their annual statements of financial interest filed with the state Ethics Commission. Reps. Mark Mustio, R-44, Moon Twp; Ryan Warner, R-52, Mount Braddock; Brian Ellis, R-11, Lyndora; Stan Saylor, R-94, Red Lion; and Bill Kortz, D- 38, Dravosburg; reported a total of $8,554 in industry gifts spread among them.
In 2016, the natural gas industry reported spending $79,743 in the same categories. The statements of financial interest for 2016 are due in May.
Under the radar
Gov. Tom Wolf issued a ban on state employees under his jurisdiction accepting any gifts when he took office in 2015. The industry gives gifts to public officials who aren’t lawmakers.
So did roughly $62,000 of natural gas industry gifts in 2015 go into a black hole?
Yes, in a fashion as far as the law is concerned.
The ethics law allows public officials to accept gifts up to $250 in value and gifts for food, lodging and transportation to reach a $650 total without having to report them.
Lobbyists have to identify individuals who received gifts worth $250 or more in one year and individuals and families receiving payments or reimbursement for lodging, transportation and hospitality that exceed $650 in one year under the lobbyist disclosure law.
These thresholds allow gift-giving to go on under the radar, said Vitali.
“The problem with the current law is that the thresholds are just too high,” he added.
‘Public information’
Named by the report as a top recipient of natural gas campaign contributions in 2016, Senate President Pro Tempore Joseph Scarnati, R-25, Jefferson County, said campaign contributions do not drive his policy decisions. He said the prospect of creating industry jobs in rural areas is important to him.
“Lobbying and campaign donation information that Rep. Vitali compiled is not something he uncovered — it is readily reported public information,” said Scarnati.
The ethics law dates back to 1978 and the lobbyist disclosure law to 2006.
The Washington Times
February 21, 2017
Union official files complaint against lobbyist over status
A union official has filed a formal complaint challenging whether a lobbyist for a national conservative organization was registered properly for the first half of the legislative session.
Ken Sagar, president of the Iowa Federation of Labor, AFL-CIO, filed the complaint Tuesday in the Iowa House of Representatives againstDrew Kleinof Americans for Prosperity.
The complaint allegesKleinviolated legislative rules by lobbying for bills without registering formally as a lobbyist. Online records showKleinfiled a 2017 lobbyist registration on Tuesday.
Kleinsays he registered prior to the start of the legislative session and the issue is a misunderstanding. Sagar is seeking a review from the House Ethics Committee.
Kleinsupported passage of a law that eliminates most collective bargaining rights for public sector workers in Iowa.
The Charlotte Observer
February 22, 2017
Wells Fargo’s board raises eyebrows with hiring of powerful lobbying firm
Wells Fargo’s board has turned to a powerful lobbying firm as the bank grapples with government scrutiny of itssales scandal, in what experts call an unusual move for the board of a public company.
The San Francisco-based bank’s independent directors have hired Brownstein Hyatt Farber Schreck, one of Washington’s top lobbying shops whose client roster has included giants like Anheuser-Busch, McDonald’s and FedEx.
The independent directors, who aren’t employees of the bank, hired the firm during the last three months of 2016, according to federal lobbying disclosures. A spokesperson for the board, which is conducting its own investigation of the scandal, said it hired the lobbying firm to assist it in responding to inquiries from state and federal officials.
It’s common for large companies to use lobbyists as they seek to influence lawmakers. What’s unusual is for a board to hire its own lobbyists as the company faces ongoing government probes. That raises questions, experts say, because the role of a board is to provide independent oversight of a company on behalf of its shareholders.
“I’ve never heard of a board hiring a lobbying firm for a board,” said Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware. “Certainly outside counsel is appropriate and a good response. But a lobbying firm seems to be a bit outside of the sphere.”
“I find it very unusual and a bit concerning,” said Elson, who also owns Wells Fargo shares. “Why does a board representing the shareholders need to hire lobbyists?”
Craig Holman, government affairs lobbyist for Public Citizen, a Washington-based consumer advocacy group, also criticized the board’s move: “They’re trying to protect themselves. They did not accept that they were at fault. So they hired a lobbying firm to protect their own interests.”
Wells Fargo’s directors paid $150,000 for lobbying on “issues related to congressional investigations of Wells Fargo & Company,” according to the short description on disclosures.
Asked about the lobbying, a spokesperson for Wells Fargo’s 15 independent directors pointed to questions state and federal officials have asked the board after authorities in September fined Wells $185 million over the sales scandal. Authorities said bank employees racing to meet high-pressure sales goals may have opened millions of accounts that customers never authorized.
Congress has been conducting its own probe of the sales practices and has sent questions to Wells Fargo CEO Tim Sloan and board chairman Stephen Sanger, who is part of acommittee of independent directorsinvestigating the scandal. Sloan is the only non-independent director, since he works for the company. On Tuesday, the bank announced it hadfired four executivesin its community banking unit based on findings from the board investigation.
“Inquiries at the state and federal level have asked specific questions about the independent directors’ investigation, and the board believed it appropriate to retain their own advisers relative to responding to these and other questions,” the spokesperson for the independent directors said in a statement.
The spokesperson wouldn’t answer any further Observer questions. Wells Fargo and Brownstein Hyatt wouldn’t comment.
Ongoing scrutiny
The hiring of Colorado-based Brownstein Hyatt comes as Wells’ board remains under lawmakers’ scrutiny in the wake of a scandal that drew ire from both Republican and Democratic lawmakers during congressional hearings last year.
One letterthis month signed by Massachusetts Sen. Elizabeth Warren and five other Democrats raised concerns about Wells Fargo’s practice of notifying branches ahead of internal inspections. The bank later announced it would end the practice, which was first reported by The Wall Street Journal.
In their letter, the members of the Senate Banking Committee said the advance notices raised “yet another red flag indicating that top management and the board of directors of Wells Fargo knew or should have known about the extensive fraud occurring throughout the bank.”
Holman, of Public Citizen, said he’s never seen a company’s board hire its own lobbyists. Wells’ lobbying suggests board members, who are supposed to oversee what the company is doing, might be seeking to avoid being held liable for the scandal, he said.
“The board itself was not held accountable,” Holman said, noting the bank fired 5,300 employees for secretly opening deposit and credit card accounts. Wells Fargo CEO John Stumpf and community banking head Carrie Tolstedt also left the bank amid the fallout.
Holman called the board’s hiring of a lobbying firm “a troubling move, particularly for the company and shareholders.”
An Observer search of lobbying activity onOpensecrets.orgfound no examples of board lobbying by more than a dozen firms that have faced large scandals in recent history – from Enron and Arthur Andersen to, more recently, JPMorgan Chase & Co., Volkswagen and drug company Mylan.
Michael Useem, professor of management at the University of Pennsylvania’s Wharton School, said that while hiring a lobbying firm “definitely is unusual” for a board, it reflects higher board accountability expected nowadays by investors and others.
If the Wells Fargo scandal had occurred 20 years ago, its board probably would not have faced congressional investigation, Useem said. Today, he said, boards can expect to be scrutinized when a crisis erupts on their watch.
“Outside parties, Congress in this case, state houses also, have recognized that boards are more engaged, more strategic and more responsible,” Useem said.
‘That does raise a red flag’
The lobbying revelations are concerning some shareholders who were already troubled by the scandal.
“That does raise a red flag,” said Tim Brennan, treasurer for the Boston-based Unitarian Universalist Association, which holds Wells shares. “Are they in there trying to persuade the congressional investigators to back off?”
“I think it is appropriate and maybe a good thing for them to be hiring counsel separate from management,” he said. “(But) why are they classified as ‘lobbyists’?”
Beyond lobbying, Wells Fargo’s board has taken other steps in response to the crisis. In December, it announceda change to its bylawsto formally require its chairman and CEO roles to be held by separate people.
No board member has stepped down over the scandal aside from Stumpf, who had been chairman. Last year, it was announced board member Elaine Chao would be leaving, but that was to serve as transportation secretary for the Trump administration.
On Monday, Wells Fargo announced two new board members: Karen Peetz, retired president of The Bank of New York Mellon Corp., and Ronald Sargent, retired CEO of Staples.
Wells Fargo shareholders will get to vote on whether board members serve another year during the company’s annual meeting in April, the first since the bank was fined over the scandal.
Brennan declined to say how his organization might vote on board members, but he said he doesn’t place blame for the scandal itself “at the feet of the board.”
“This issue was pretty far down in the operations of the organization,” Brennan said. He said the board was supposed to make sure the bank’s management was being held accountable to Wells’ ethics policies, among other things.
“I think the board’s job is oversight of top management,” he said. “My understanding is they actually did drop the ball as far as holding the top management accountable.”
Patch.com
February 22, 2017
Lobbyist Fined For Hosting LA City Officials At Lavish Party
The Los Angeles City Ethics Commission Tuesday approved a reduced fine of $11,380.83 for a lobbyist who invited city officials to a lavish birthday party that cost him more than $51,000.
An Ethics Commission investigation found John Ek violated the city's Governmental Ethics Ordinance when he invited 37 city officials, including the members of the Los Angeles City Council and Mayor Eric Garcetti, to his 50th birthday party, which constituted a gift.
Ek has been a registered lobbyist at City Hall since 1995. Lobbyists are not allowed to offer or give gifts of value to elected officials and are also prohibited from giving gifts to unelected officials if the lobbyist seeks to influence one or more decisions in their agencies.
A report on the investigation said Ek admitted he violated the ethics ordinance by throwing the party at Perch restaurant in downtown Los Angeles on May 20, 2015. Ek paid for all costs, which included food, an open bar and entertainment.
According to the report, the value of the gift improperly offered to each city official was $205.06. All city officials who attended the party reimbursed Ek for the full value of the gift after being contacted by commission staff, but the report did not identify them by name.
The fine is half of what Ek had faced, and he agreed to pay the reduced amount before the hearing as part of a negotiation with investigators.
Sergio Perez, the commission's director of enforcement, said the fine was reduced because Ek cooperated with the investigation.
Several of the five commissioners expressed hesitation at reducing the fine, but ultimately voted unanimously to approve it.
"He was in the business of being a lobbyist, so I don't know how that mistake could have been made. I do have a concern about a negotiation that ends up with just 50 percent," Commissioner Andrea Sheridan Ordin said.
Perez explained there are several reasons for his office to offer reduced fines during a negotiation, and one is that a negotiated settlement achieves the commission's goals of enforcing ethics laws faster than a contested hearing.
Commission President Jessica Levinson also pointed out that faster hearings save taxpayers money, and said a 50 percent reduction is typically offered when a subject is cooperative because it "incentivizes that kind of behavior."
The Los Angeles Times reported that City Council members Nury Martinez and Mitchell Englander attended the party. A spokeswoman for Englander said he later reimbursed Ek, and a spokesman for Martinez said she reimbursed him without being notified by the commission staff because she knew attending the event amount to a gift.
Perez told the commission that because all of the officials who attended the party reimbursed Ek within the appropriate amount of time, there was no violation of ethics laws on their part.
Ek did not speak at the hearing, and neither did any of his representatives, Robert Alaniz, a spokesperson for Ek, issued a statement to City News Service afterward.
"Mr. Ek is pleased that this matter involving invitations to his 50th birthday party has been resolved. Following the party, Mr. Ek was advised by Ethics Commission staff that inviting city officials to his birthday party was considered offering a gift, and was prohibited due to Mr. Ek's occupation as a registered lobbyist," the statement said.
"Mr. Ek, who has no prior enforcement history with the Ethics Commission, has never seen this interpretation in his 25-plus years as a city lobbyist. Nevertheless, he cooperated fully with Ethics Commission staff and settled this matter to put the issue to rest."
Citrus County ChronicleFebruary 22, 2017
Some lawmakers are on the payroll of lobbying firms
THE ISSUE:State lawmakers working for lobbyists.
OUR OPINION:Even if it’s currently legal, it certainly doesn’t pass the smell test.
Joe Negron, current president of the Florida Senate, has the right idea. He recently resigned his position with a large statewide law firm that lobbies the Legislature “out of an abundance of caution to avoid even the possible appearance” of a conflict between his ethical obligation to constituents and his professional employment. He’ll still practice law, but privately.
Ethics is again a big topic in the state legislature. Speaker of the House Richard Corcoran jump-started things when he proposed bold ethics reforms for his chamber in a post-election speech. Notably, though, his proposals do not address the issue of state lawmakers working for firms that lobby the Legislature.
The phrase “lawmakers as lobbyists” was generally understood to mean the revolving door that gives former elected officials a new home in lobbying firms whose clients benefit from their insider knowledge. However, in recent years the spotlight has been on lawmakers whose current employers lobby the Legislature. In 2012, at least 11 sitting legislators derived some of their income from firms that lobby the Legislature. In 2017 that figure has dropped to six, according to recent reports. (It was seven until Negron’s move.)