Media

Campaign Giving Lacks Big Picture

January 15, 2017 | Fort Wayne Journal Gazette | Link to Article

On paper, Indiana has a strict cap on campaign contributions from corporations. But in practice, it’s easy for businesses to turn on the flow of money and get around the spending limits.

Contributions from executives, political action committees and subsidiary companies allow corporations to increase their impact well beyond the statutory limits.

The case of GEO Group Inc., the Boca Raton, Florida-based private prison firm, is a good illustration of the issues surrounding the regulation and reporting of corporate campaign contributions in Indiana.

The company, which is the second largest private prison operator in the world, has contracts to run two Indiana Department of Correction facilities (a total of more than 4,000 beds in New Castle and Plainfield) and was pushing to open an immigration detention center in Gary until the City Council rejected the idea in May.

GEO began contributing to top state officials, including former Gov. Mitch Daniels and House Speaker Brian Bosma, in 2004. It received its first Indiana contract the following year, and as its business here grew, its campaign contributions increased as well. From 2011 to 2015 (the most recent full year of data), GEO and its various subsidiaries and political action committees made at least $94,140 in direct corporate contributions to candidates for Indiana state offices.

Tracking the breadth of financial influence over politics by companies such as GEO, however, is not a simple task. Among the issues that make it difficult:

First, although Indiana’s online campaign finance database contains contributions dating to 2000, the state didn’t begin tracking the money by donor type – individual, corporation, political action committee and so forth – until 2011.

Getting an accurate count of corporate donations before 2011 can involve a host of issues with data. For instance, company names are often listed in inconsistent ways that prevent them from being easily tallied. In Indiana’s online campaign finance database, GEO is alternately listed as The GEO Group; THE GEO GROUP; The GEO Group Inc.; The Geo Group Inc.; The Geo Group, Inc.; THE GEO GROUP INC; THE GEO GROUP, INC; Geo Group Inc; and Geo Group, Inc. Such differences may seem small, but multiplied by thousands of different contributors, they complicate attempts to systematically analyze campaign finance data. Similar inconsistencies plague the contributions by related political action committees.

Corporations are limited in the amount they can contribute in Indiana, but each subsidiary can also contribute up to the limit. GEO Group, for instance, has contributed in its own name but also in the name of GEO Care. Some companies have many more subsidiaries, and the names are not always easy to spot.

Notwithstanding the regulations that apply to corporate campaign giving, certain businesses are excluded from the requirements. Limited liability companies, limited liability partnerships, partnerships and sole proprietorships are classified as “other organizations” under the law and are not subject to contribution limits. Thus, forming a limited liability company is one way a company can donate above and beyond the cap on corporate contributions.

Companies are allowed to contribute through their own political action committees, which have no caps on donations. GEO PAC has given to former Gov. Mike Pence and numerous other Indiana politicians.

In addition to companies and PACs, corporate influence can be seen in sizable contributions from company employees. Under Indiana’s campaign finance reporting system, individuals can be particularly hard to trace because names can be – and often are – listed in various ways and also because Indiana does not require the disclosure of individual contributors’ company affiliations (a general occupation must be stated for individuals who contribute $1,000 or more). Checking specific names of top GEO executives, for instance, reveals that at least six employees have made significant individual campaign contributions in Indiana.

A less noted issue is the fact that Indiana does not do a good job tracking campaign contributions at the local level. While contributions to state-level office holders are maintained online by the State Election Division, local contributions are typically kept on paper forms turned in to local election boards in Indiana’s 92 counties.

Problems like these are why government watchdogs consistently criticize Indiana’s system of campaign finance reporting. A Center for Public Integrity report last year ranked Indiana 47th in the area of political finance accountability.

“It’s a problem everywhere, but we get even less info here in Indiana,” said Julia Vaughn of Common Cause Indiana. “We’re kind of the Wild West of campaign finance.”

Contribution workarounds

Even with the shortcomings in Indiana’s campaign finance data, it is clear that corporate money plays a major role in state politics. GEO is just one of more than 10,000 companies that have made contributions to state political candidates and committees. From 2011 to 2015, corporations made nearly $19 million in direct contributions.

Pence has been the biggest beneficiary of this corporate giving, taking in $1.8 million. But corporations also gave $1.1 million to the Indiana Republican Committee, which in turn gave $546,000 to Pence. Such contributions to candidates from political party committees demonstrate the difficulty of tracking how much candidates actually receive from corporations.

And those transactions are just one of the workarounds that allow corporations to introduce virtually unlimited funds into an election despite statutory giving limits. Under Indiana law, a corporation can make up to $22,000 in campaign contributions in a given year.

One way around the limit involves the use of political action committees. Under Indiana’s law, corporations can contribute to and create their own PACs, which can then make unlimited contributions to candidates. Although corporations cannot contribute amounts above the $22,000 limit, their PACs can raise money from other sources such as employees and executives. According to the data, half of all corporate contributions in Indiana from 2011 through 2015 – nearly $10 million – were given to PACs. Indiana is one of just 13 states that allows unlimited contributions from PACs to candidates.

Another exception to the $22,000 spending cap is that it does not apply collectively to a corporation and its subsidiaries. Thus, a company can increase its influence if every subsidiary contributes an additional $22,000. In some cases, large corporations have dozens of subsidiaries. This loophole makes it all the more difficult to put a precise dollar amount on the political influence of any one company.

“Other organizations,” which are free to donate as much money and to as many candidates as possible, include firms such as Vision Concepts. The company, which shares an address and chief executive with a regulated corporation, Monarch Beverage, contributed more than $1.5 million to Indiana candidates since 2002.

Monarch, an Indianapolis-based beer and wine distributor, argues that Vision is a separate legal entity. But a group of competitors led by the Indiana Beverage Association filed a complaint alleging that Monarch essentially used the LLC to get around corporate giving limits. Indiana’s then-inspector general, David Thomas, rejected that claim, stating that such affiliations are not unusual or illegal in Indiana.

Campaign finance data bear that out. A number of corporations have established firms similar to Vision Concepts – companies that in many cases share addresses and officers with corporations but are considered “other entities” that can make their own unlimited campaign contributions under Indiana law.

Contributions as investments

Vaughn, of Common Cause, said huge amounts of campaign funding are coming from very small segments of society. It’s not that these businesses are simply “interested in politics,” she said, but rather that they see their contributions as bringing them benefits.

“This is an investment in doing business in Indiana,” Vaughn said.

Vaughn and other campaign finance watchdogs point to GEO Group as an example. The company’s campaign contributions began at a time it was seeking its first contract with the Department of Correction. Its recipients have included not only top state officials such as Daniels and Bosma but also Rep. Tom Saunders, whose district includes the company’s New Castle facility.

Saunders, who has received more than $10,000 from GEO, accepted several thousand dollars in contributions around the same time the state approved an expansion of beds at New Castle.

Multiple attempts to contact Saunders for this story were unsuccessful, and messages to Pence’s representatives also went unanswered.

GEO was one of Pence’s largest donors in 2012. In 2016, Pence received nearly $25,000 from GEO, but only $5,000 of that total came in a direct contribution from the company, in keeping with the limit on corporate giving. The rest came from the GEO PAC – $10,000 – and from employees. Founder and CEO George Zoley contributed $5,000, and five senior vice presidents donated $500 or $1,000 each. All of the contributions came on the same day in February.

Indiana law does not require the listing of individual contributors’ affiliations, so finding corporate influence at this level requires individual searches of company employees. Those searches can be problematic when individuals use alternate names for contributions. For instance, GEO Group’s Senior Vice President, J. David Donahue, a former Indiana Department of Correction commissioner, contributed $500 to gubernatorial candidate Eric Holcomb in August. But he also is listed in the campaign finance database as James Donahue, with a $1,000 contribution to Pence.

The GEO Group’s vice president of corporate relations, Pablo Paez, declined to comment for this story. However, Paez sent a statement from GEO about its campaign contributions: “Our company’s political activities focus entirely on promoting the use of public-private partnerships across correctional and detention services and in the delivery of offender rehabilitation and community reentry programs, and they do not entail any advocacy either for or against criminal justice policies.”

But Vaughn argues that is exactly what is happening. She said GEO participates in ALEC, the American Legislative Exchange Council, a partnership between corporate lobbyists and state legislators. Indiana members include GEO campaign contribution recipients Saunders and Bosma, and the group met in Indianapolis in July.

“They create model bills, actual pieces of legislation,” Vaughn said. “Then legislative members go back to the Statehouse and some of them become law. It’s an effective way to get your deals done at the state level. Create an organization where corporate entities can sit in the same room, and really indoctrinate them into their way of thinking.

“For GEO and other special interests who profit from locking people up in prisons, this is an investment in doing business in Indiana. … It’s pay to play. If you want your ideas to catch fire in the statehouse, the best way to do that is to invest in campaign contributions.”

Offender advocates also believe campaign contributions are a factor in mass incarceration.

Shoshanna Spector runs a “jobs not jails” program called the Indianapolis Congregation Action Network. She says “there is an 80 percent bed guarantee” at the Marion County jail, which is run by GEO’s competitor, Corrections Corporation of America, the largest private prison corporation in the United States. CCA contributed $5,000 to Pence’s campaign in 2012.

“When the county or state contracts with GEO to run their facility, they are committing that those beds are going to be filled,” Spector said.

States and prison contractors, however, have argued that privatized prisons are more cost-effective than publicly run facilities.

In either case, it is clear that corporations see large amounts of political contributions as a worthwhile expense, and Indiana law makes it relatively easy for the money to roll in.

Said Denise Roth Barber of the National Institute on Money in State Politics: “Contributions that come from company coffers are investments.”