Political Giving: Corporate Contributions Buy Access

In this election year, California corporations and their executives will spend millions of dollars to influence the outcome of hundreds of elections--from city councils to the United States Congress.

Under the law, the money can be used to reward friends, discourage enemies, promote corporate views, support the American political system or to achieve virtually any other goal, bar one. It cannot be used to buy a vote.

The process by which corporations and their executives provide assistance, financial and otherwise, and the philosophy behind the giving are seldom discussed outside executive suites. The subject is so sensitive, in fact, that officials at half a dozen companies, including Unocal Corp., Summa Corp. and the E. & J. Gallo Winery, refused to discuss it at all.

However, senior officials at more than a dozen major California corporations, including some of the state’s industrial giants, agreed to tell the story of why they give, how they give and what, if anything, they expect in return for their money.

A campaign contribution “. . . doesn’t buy you a vote,” said Jana Weatherbee, a spokeswoman for General Telephone Co. of California. “It buys you access.”

“Access,” the corporate officials say, means securing an entree to private legislative offices where details of public policy are debated and, in many cases, decided.

The money that corporations and their officers give to political candidates represents “the dues that everybody pays to work in the political process,” said Jackson L. Schultz, senior vice president of Wells Fargo & Co., California’s third-largest bank.

“If you are willing to understand the problems that (politicians) face, they may be more willing to understand the problems that you face,” said George W. Dunn, manager of political affairs for the Los Angeles-based Atlantic Richfield Co., the nation’s 12th-largest industrial corporation.

Variety of Reasons

Other executives said their companies or employees give to be good corporate citizens, to support the American political system or to back candidates who have proved to be friends of business and free enterprise.

“A hell of a lot of other people are going to be supporting candidates who want to set an agenda we don’t like,” said Jack Koehn, vice president for governmental affairs of the San Francisco-based Pacific Gas & Electric Co. “To the extent we have any ability to help shape the future, we owe it to ourselves to try to do so.”

Some executives said they have a responsibility to put their money where their mouth is.

“I think that if we as a corporation make noises about the need for a strong national defense, for instance, . . . it would be wrong for us not to stand up and be counted,” said H. David Crowther, a vice president of Lockheed and chairman of its federal political action committee.

At least one retired politician, who now heads a business development company in Sacramento, had a different perspective.

Fear Is a Motive

“A lot of it, of course, is fear,” said Robert T. Monagan, who served in 1969 and 1970 as the last Republican Speaker of the state Assembly. “If they don’t contribute, (it is) what can be done to them, not for them.”

Whatever the reason, the corporate world contributes in a big way, both in California and across the nation.

In the 18 months that ended June 30, corporate political action committees across the country gave $30.3 million to candidates for the U.S. Senate and House of Representatives, according to a study by the Federal Election Commission. That contrasts with $16.4 million in contributions from labor-sponsored committees.

Last year in California, when no major statewide elections were scheduled, the top 25 corporate contributors gave more than $1.7 million to state officeholders and office seekers, according to a report issued by the state Fair Political Practices Commission.

In addition to making direct contributions, businessmen help candidates in less visible, but equally important, ways. The most significant involves fund raising.

In California, an elite group of high-level corporate officials--presidents, chairmen and chief executive officers--have accumulated personal and professional influence that enables them to generate contributions worth hundreds of thousands of dollars by picking up the telephone or signing a letter. They do not do it often, but when they choose to give their help, it can be of enormous importance.

‘Extremely Important’

“Fund raising is an extremely important part of the process,” said Dunn of Arco. “Fund-raisers, as such, are always more influential than the contributor of the money.”

There are no statistics that document the relative success of corporate fund-raisers. But executives interviewed by The Times said that among the most influential are: Lodwrick M. Cook, 57, chairman and chief executive officer of Arco; Lew Wasserman, 73, chairman and chief executive of MCA Inc., the entertainment conglomerate that owns Universal Studios; and Donald Bren, 54, chairman and owner of the Newport Beach-based Irvine Co.

Busy chief executives usually involve themselves only in soliciting major contributions for major candidates, corporate officials said.

“That’s where you have CEOs going after CEOs,” said Crowther of Lockheed. If, for example, “you’ve got some industry person or perhaps several . . . who are involved with the governor’s campaign, they’re going around twisting the arms of their peers in the system, they wouldn’t come to me. . . . They would go to our chairman. . . . “

Chief executives who have a personal interest in politics can influence the extent to which their corporations become involved in political giving, executives said. But for the most part, nuts-and-bolts decisions about how much a particular congressional or state Assembly candidate will receive are left to others.

Top-Level Jobs

At such companies as Arco, Wells Fargo, PG&E; and Hewlett-Packard, contribution strategy is plotted by a small group of executives, mainly male and mainly Caucasian, who have earned top-level jobs because of their political instincts and expertise. Dunn and Crowther are among them.

They supervise lean but sophisticated operations that carefully track the voting records and public pronouncements of elected officials and their challengers, as well as the potential impact of ballot propositions.

At some companies, the political office establishes and manages what are known as “key contacts.” Usually, the contact is a manager at one of the company plants or sales offices. The political office uses the manager to present the corporate view to area politicians. At election campaign time, the manager hands over a check.

Often working with lobbyists in Sacramento and Washington, the executives who head political offices make recommendations about the candidates or initiatives that should receive large donations, those who should get smaller amounts, and those who should get nothing at all.

Their recommendations are occasionally modified by chief executives or political action committees, but seldom rejected.

Mechanisms Vary

The mechanisms through which contributions are made vary significantly from company to company. And the procedures for giving money to federal candidates differ substantially from those for donating to candidates seeking state office.

A federal law enacted in 1971 bars corporations and labor unions from making direct donations to federal candidates. Instead, the law allows companies or unions to create political action committees, or PACs.

Because of recruiting restrictions, most corporate PACs limit membership to managers. Hourly wage earners usually give to political committees sponsored by labor organizations, corporate executives said.

Each member can voluntarily give the PAC up to $5,000 in a given year. At many large companies, PAC contributions are automatically deducted from a member’s paycheck.

At many companies, the top executives compose the board that decides how the employees’ political action committee will spend its money. However, some political committees, such as the one sponsored by General Telephone Co. of California, elect their directors from among the employee members.

Contribution Limits

Federal PACs are allowed to give a candidate up to $5,000 in a primary election campaign and another $5,000 in a general election, or a total of $10,000 in each election cycle. Individual contributions to a federal candidate are limited to $1,000 in primary campaign and another $1,000 in a general election.

There are no limits, however, on how many corporate executives can make individual contributions to the same candidate. U.S. Sen. Alan Cranston (D-Calif.), who sits on the Senate Banking Committee, collected $34,250 from 42 employees of Drexel Burnham Lambert, the New York investment banking firm.

California has no limits on corporate or individual donations. The state requires only that all gifts to politicians, financial and otherwise, be reported.

As a result, many California corporations directly contribute tens of thousands of dollars to state candidates or initiative campaigns.

Other companies make no direct donations, preferring to give money to trade associations or to sponsor their own state PACs. Many corporations give money in several ways.

Strategy Also Varies

The strategy behind the giving can be equally varied.

Executives at companies as large as American Telephone & Telegraph and as small as Winter’s Original Chocolates of Emerson, N.J., said that, in general, they look for candidates who support the business community and the free enterprise system.

But it would be a mistake to say that the corporate Establishment’s political interests are monolithic, said John C. Flanigan, the Irvine Co.’s vice president for government affairs.

Some companies focus nearly all their attention on local or state concerns, such as sewer bonds or school construction bonds. Others spend most of their political money in Washington, seeking to influence decisions on defense spending, tariffs or trade, executives said.

Occasionally, companies as diverse as Arco, Lockheed and Hewlett-Packard find themselves backing--or opposing--the same issue. This year, for example, the California campaign to defeat Proposition 65, the so-called anti-toxics initiative, drew contributions of $150,000 from the oil company, $50,000 from the aircraft manufacturer and $35,000 from the electronics giant.

Much of the corporate largess winds up in Republican pockets. In the 18 months that ended June 30, corporate PACs giving to federal candidates nationwide directed 58% of their contributions to Republicans and 42% to Democrats.

‘Pro-Business Philosophy’

“We certainly have a Republican orientation, in terms of candidates who we back, just because they tend to have a strong business orientation and pro-business philosophy,” Flanigan said.

However, he added, “that doesn’t mean that we . . . haven’t been supportive of Democrats who share our views on a number of major issues. . . .”

Underscoring the point is the extent to which corporations with a generally Republican outlook contribute to Democratic leaders, such as Willie Brown of San Francisco, Speaker of the state Assembly, and David A. Roberti of Los Angeles, president pro tem of the state Senate. Brown and Roberti, in turn, spread that corporate money around to other Democrats.

In the last two years, Brown has received contributions totaling $16,700 from Arco and $15,000 from the Irvine Co.

Here is how the system works at several major California corporations:

Atlantic Richfield Co. (Arco)

In the shiny black tower that houses Arco headquarters in downtown Los Angeles, the man charged with managing political affairs is the bearded, soft-spoken George Dunn, 37. He was once a political science instructor at Claremont McKenna College.

As the nation’s sixth-largest oil company, Arco is a major player in both national and state politics. It will donate an estimated $200,000 in corporate funds during the current election cycle to California legislative and statewide office seekers, a figure that is likely to make it the largest corporate contributor in California in 1986. The 1,200 or so members of the company’s political action committee, ARCO-PAC, will give another $220,000 to congressmen and U.S. senators.

With roughly 35,000 employees spread through nine divisions from Alaska to Texas, Arco’s political interests are founded in gas and oil, but extend to such other areas as solar energy and ocean transportation.

Unlike some other large corporate-sponsored political committees, ARCO-PAC occasionally contributes to those challenging established incumbents, particularly on the House Interior, Merchant Marine and Fisheries and Energy and Commerce committees.

Happy to Oppose Some

” . . . We may not be able to defeat those people, but we also want them to know we are very happy to contribute against them,” Dunn said.

Occasionally, if both candidates in a race hold similar ideas on issues of interest to Arco, contributions will be made to each and “let the voter decide,” Dunn said. “We’ll do that on very, very few occasions because it opens us up to kind of knee-jerk criticism that we do give to both sides.”

Although Dunn and others make recommendations about political giving, final decisions on both the state and federal level are made by a small group of executives whose names are not disclosed to the public. Members of the PAC are chosen by the presidents of each of the nine operating companies within Arco.

To an extent, the committee system shields individual Arco officials and lobbyists from politicians seeking contributions, Dunn explained. “Nobody gets to say, ‘Yes,’ ” he said.

Federal law prohibits corporations from using any form of pressure or rewards to recruit members for political action committees. At Arco, Dunn said, not only is the membership drive soft-pedaled to prevent employees from feeling coerced to join, but also the membership list itself is kept secret to assure employees that it never can be used in considering promotions.

Lockheed Corp.

At Calabasas-based Lockheed, which last year reported sales of $9.5 billion, the task of managing corporate contributions falls to David Crowther, 56, a graying, impeccably dressed executive who joined the company 26 years ago after a brief career of managing political campaigns.

Lockheed’s main business is the design, development and production of aircraft, spacecraft, missiles and electronic systems. The company last year made 88% of its sales to the federal government, and consequently, Crowther said, directs most of its political contributions to federal candidates.

During the two-year election cycle that ended in November, 1984, Lockheed’s federal PAC was the largest corporate-sponsored contributor to congressional campaigns, with donations totaling $413,692. In the current cycle, Lockheed ranks third (behind AT&T; and United Parcel Service), according to a recent report issued by the Federal Election Commission.

The objectives of Lockheed’s federal committee are simple, Crowther said. The committee gives money to candidates who support programs of benefit to Lockheed employees, believe in a strong program of national defense, and generally support business interests.

‘Couldn’t Care Less’

“We don’t even get involved in the equal rights amendment or abortion or any of these. . . . We couldn’t care less about any of those things. . . . Someone who’s a strong advocate of military airlift, that’s someone who’s going to get our support.”

About 6% of Lockheed’s 40,000 eligible employees contribute together about $240,000 a year to the committee.

Lockheed is less active in California politics. It does not sponsor an employees’ committee that gives to state candidates. In 1985, the corporation made only $23,000 in direct contributions to state candidates. Lockheed does not even maintain a full-time lobbyist in Sacramento. Donations to state candidates and causes are usually based on recommendations from the executives of the Lockheed subsidiaries that operate in California, Crowther said.

Of the company’s limited state contributions, Crowther observed: “If you’re going to play in that game, you’ve got to do so intelligently. You shouldn’t dabble in it. . . . Just throwing money around, casually supporting candidates and being involved in issues, I think is a mistake.”

The Irvine Co.

The Irvine Co. does more than just “dabble” in state politics. In 1985, the privately held company, which owns one-sixth of the land in Orange County, was the largest corporate contributor to California state officeholders and seekers. Its direct donations of more than $182,000 were surpassed only by PACs representing the state’s trial lawyers, doctors and insurance companies.

Looking after the company’s political interests are John C. Flanigan, 41, vice president for corporate affairs, and Michael Stockstill, 37, the corporate affairs director.

Flanigan’s political connections are described by his peers as among the best in California. He came to the company a year ago with a “lifelong interest in politics,” a law degree, and years of experience. In the mid-1970s, for example, Flanigan worked on then-San Diego Mayor Pete Wilson’s first reelection campaign. He later served as executive director of the Coro Foundation, a nonprofit group that sponsors government internships for young men and women.

“I think the Coro Foundation probably did more to change my life and my political career than any other thing that I could have done, because it plugged me into that statewide network,” Flanigan said. “It just gives you a little access that you wouldn’t otherwise have.”

Joined 8 Years Ago

Stockstill, Flanigan’s chief aide, joined the Irvine Co. eight years ago after working in newspapers and television.

Until three years ago, the Irvine Co. aimed nearly all of its political guns at city councils, boards of supervisors and the state Legislature, working to shape public policy on issues involving everything from agriculture and pesticides to rent control, telecommunications and coastal development.

Among other things, the Irvine Co. is the largest grower of avocados and Valencia oranges in the state. It owns 5,000 apartment units, two hotels, several shopping centers, a cable television company, 3,000 yacht slips and land that it leases for use as landfills.

“There is hardly a major piece of legislation that moves through Sacramento that doesn’t someway impact one of our operations,” Flanigan said.

Decisions about state political giving are made by a small group of Irvine executives. The group includes Flanigan and senior vice president Gary Hunt, 38, but not Donald Bren, who purchased 96% of the company’s stock in 1983. Bren, who is himself active in Republican Party circles, leaves decisions about corporate giving to his executives, Hunt and Flanigan said.

Set Master Budget

Every two years, the executives establish a master budget for the coming election cycle, giving particular attention to politicians who have been supportive on company issues and to those who are likely to chair important legislative committees.

That group continues to meet, usually every two weeks, during the legislative session to fine-tune corporate contributions. “It’s a constant positioning process,” Flanigan said.

Three years ago, the company established its first federal political committee, known as ICEPAC--Irvine Company Employee’s Political Action Committee. About 20% of the 250 or so eligible employees contribute regularly. This year, the committee will raise and spend about $40,000. The same executives who make decisions about corporate giving to state candidates for the most part compose the federal committee’s board of directors.

At the federal level, Irvine Co. executives are most interested in courting members of the House and Senate committees that oversee the military, largely because much of the company’s real estate holdings are situated between two of the largest Marine bases in the West--the El Toro Marine Corps Air Station and the U.S. Marine Corps Helicopter Station in Tustin.

Hewlett-Packard Co.

In spite of its rank as the country’s 58th-largest industrial corporation, with 1985 sales of $6.5 billion, Hewlett-Packard of Palo Alto is a newcomer to the world of corporate political giving.

The company-sponsored federal PAC was formed only last year, and the corporation, as a matter of policy, still does not contribute directly to state political candidates.

Robert C. Kirkwood, 47, Hewlett-Packard’s director of government affairs, traced much of the company’s political reticence to the longtime Republican activism of David H. Packard, the corporation’s chairman and co-founder.

“I think it’s made the company both lazy and cautious,” Kirkwood said of Packard’s involvement. “For years, the company essentially didn’t have to do anything, because Dave did it. . . .

Establishing an Identity

“About eight years ago, I began to push to try to establish a separate identity for the company, but that meant we also had to educate a whole bunch of people within the company about the importance of contributions. . . . And the result is we step very gingerly,” Kirkwood said.

Ten years ago, Kirkwood was a San Francisco attorney. “I found myself spending 60% to 70% of my time on community political activities in the city, and I realized it was time to get paid for what I obviously enjoyed doing,” he said. He had met Packard in Republican fund-raising circles and went down to Palo Alto to interview for a job. He has been helping guide Hewlett-Packard’s political activities ever since.

The company makes sophisticated testing and measuring instruments, medical equipment and electronic data-processing products. About half its business involves computers--both scientific and office.

At the federal level, Hewlett-Packard is especially interested in the rules that govern military procurement, Kirkwood said. The federal government buys about 10% of its products and is the company’s largest single customer. One corporate goal is to cut down on the red tape involved when the Air Force, Army and Navy buy electronic equipment. The company also is concerned with international tariffs and trade regulations, including the arcane rules that govern the granting of export licenses.

Giving $38,000 This Year

About 125 of 800 eligible managers give money to the company political committee. An 11-member panel governs PAC contributions to federal candidates. Members are selected from each of the company’s four manufacturing and sales divisions, Hewlett-Packard Laboratories and corporate headquarters. The PAC will donate about $38,000 this year, in the main to office holders who either represent districts in which Hewlett-Packard has facilities, or who have been helpful on trade or tax issues.

While the company makes no direct contributions to state candidates, it will give about $22,000 to state political action committees that do. Among them are United for California and the California Manufacturers Assn., two of California’s most politically influential business organizations. Hewlett-Packard also contributes corporate money to state ballot initiative campaigns.

Even though the corporation does not give to state candidates, Kirkwood said he occasionally asks one of the seven members of the executive committee to buy tickets to a political dinner.

“I wouldn’t suggest (that) to somebody other than an officer of the company. . . ,” Kirkwood said. “I’m not an officer. Every officer knows their place, vis-a-vis me.”

Despite the detailed procedures that corporations have created to hand out contributions, politicians are unlikely to get money unless they ask for it, executives said.

“One of the misnomers of why we give . . . $500 to one (federal candidate) and $2,000 to another is that one candidate may have asked for $500, or two (dinner) tickets of $250 each, and another one would have asked for two tickets of $1,000 each,” Arco’s Dunn said. “The disparity is not always a function of how much we value one over another. It has to do with how much they asked.”

Politicians, it seems, are not shy about asking.

All of the executives interviewed said they are inundated with invitations to fund-raising events--from breakfasts to cocktail parties to formal dinners.

“There’s no question that hundreds of candidates come after us,” said Kirkwood of Hewlett-Packard.

Follow Up on Phone

The invitations inevitably are followed by telephone calls from elected officials, their staff members or professional fund-raisers.

Staff members trying to pin down corporate donations can be even more insistent than the actual office seeker, executives said. If an elected official loses an election, his staff also may be unemployed, a situation that gives staff members strong impetus to help out with fund-raising.

What does an executive do when the quest for money verges on impropriety?

“I have had all kinds of what I consider to be first-magnitude sleaze-factor types of things and I just never let them progress,” said Leonard Shane, 64, chairman of Mercury Savings & Loan in Huntington Beach. “I just say, ‘Hey, that’s it. I don’t want to talk anymore.’ ”

No Changes Seen

Despite the excesses--and the vast amounts of money that corporations pour into the political system each year--none of the executives interviewed by The Times saw any immediate changes on the horizon.

“I’ve looked at (state) campaign finance reform so many times,” said Schultz of Wells Fargo.

“I think all of the people in my role in business would be happy to see something change, but when you try to pin it down it’s sort of hard to see what it would be.

“It’s almost like punching your hand into a bowl of popcorn. . . . No matter where you go, there’s an exception that somebody can find.”

CORPORATE DONATIONS: CALIFORNIA VS. U.S.There are differences between federal and state laws governing corporate and individual donations to political campaigns. The chart does not reflect donations to political parties.

NATURE OF LIMIT Limits on contributions by individuals. CALIFORNIA No limit. UNITED STATES No individual may donate more than $1,000 per candidate in the primary and $1,000 in the general election. The entire amount that an individual may donate each year to all candidates or campaigns involved in a federal election is $25,000.

NATURE OF LIMIT Limits on corporate contributions. CALIFORNIA No limit. UNITED STATES No money can be donated by corporations, labor unions or banks.

NATURE OF LIMIT Limits on political action committees. CALIFORNIA No limit. UNITED STATES Limited to a maximum contribution of $5,000 per candidate in the primary and $5,000 per candidate in the general election. No limit on the total amount a PAC may raise from its members or spend on a range of candidates as long as it does not exceed $5,000 for each candidate in each election.

FEDERAL CONTRIBUTIONS BY POLITICAL ACTION COMMITTEESThe figures reflect contributions to federal election campaigns made by political action committees between Jan. 1, 1985 and June 30, 1986, as reported by the Federal Election Commission.

Type of PAC Total Incumbent Challenger Open Seat Corporate $30,328,913 $25,734,609 $1,652,610 $2,920,782 Labor 16,428,200 11,752,047 2,939,903 1,707,185 Interest Groups 8,942,896 5,790,882 1,711,339 1,429,686 Trade Assn. 19,648,605 16,909,719 1,102,081 1,611,410 Agricultural Co-ops 1,678,316 1,513,931 81,185 83,200 Other 1,470,272 1,275,655 106,086 83,281 Total $78,497,202 $62,976,843 $7,593,204 $7,835,544

Type of PAC Democrat Republican Corporate $12,826,895 $17,476,356 Labor 14,879,394 1,516,491 Interest Groups 5,128,653 3,799,326 Trade Assn. 9,790,624 9,829,086 Agricultural Co-ops 974,388 703,928 Other 838,939 626,083 Total $44,438,893 $33,951,170