‘Tax havens like Cayman Islands were in the cross hairs of Congress’
By Neil Vigdor From Stamford Advocate
Lobbyists command millions from Conn. Industries
They can open doors for you. From time to time, a few have those doors slammed in their faces.
But either way, it costs a fortune.
When the hedge fund network that extends from Greenwich to Westport got wind that off-shore tax havens like the Cayman Islands were in the cross hairs of Congress, the hiring of high-powered lobbyists was a small price to pay to avert a potential hit for their multibillion-dollar industry.
Similarly, when lawmakers looked anew at how tax proceeds from rum are redistributed to the U.S. Virgin Islands and Puerto Rico, Captain Morgan parent Diageo fueled up its lobbying machine.
And when Connecticut’s senior U.S. senator threatened to revoke a sacred anti-trust exemption enjoyed by the National Football League, ESPN parent, Disney, lobbied against the introduction of legislation that could undermine an estimated $15.2 billion television contract with its broadcast partner.
That didn’t work.
“I think the use of lobbyists is often overdone,” U.S. Sen. Richard Blumenthal, D-Conn., told Hearst Connecticut Media. “I don’t discriminate against companies simply because they have a lobbyist, but I don’t listen more closely or act more responsively because they do have a lobbyist. I think organizations, companies and advocacy groups actually do better often without lobbyists.”
From derivative swaps to the rollout of the health care exchanges, Connecticut’s anchor corporations spent tens of millions of dollars in 2013 in an attempt to ensure their brands and shareholders had passes to the halls of Congress, the warrens of the Pentagon and the bureaucratic maze of the Internal Revenue Service, according to a Hearst analysis.
“A company that doesn’t lobby Congress is cheating its investors and employees,” former U.S. Rep. Christopher Shays, R-Conn., told Hearst.
But watchdogs say that a gaping loophole in disclosure rules has fostered a culture of “shadow lobbying,” with scores of influence-peddlers spending vast and unreported sums to advance their cause without ever registering with the federal government as lobbyists.
Casting a giant shadow, they say, is former Sen. Christopher Dodd, D-Conn., now the chairman and CEO of the Motion Picture Association of America, the lobbying arm of Hollywood.
“People are leaving (Congress) and immediately working for organizations and not registering. It’s a scandal,” said James Thurber, director of the Center for Congressional and Presidential Studies at American University in Washington, D.C.
Spare no expense
With its influence radiating from its Fairfield headquarters to business units throughout the world, General Electric spent $16.1 million lobbying at the federal level in 2013, according to the Center for Responsive Politics, a Washington, D.C., organization that tracks special interest money. GE led all Connecticut companies in expenditures last year.
It established contact with 33 agencies, commissions and branches of the military on 97 pieces of legislation affecting everything from natural gas pipeline permits to Medicare reimbursements for diagnostic imaging.
In addition to producing MRI and CT scan equipment, the multinational conglomerate conducted an inspection of TransCanada’s north-of-the-border pipeline that is part of the much-debated Keystone XL project.
“GE is one of the world’s largest industrial and technology companies, with broad interests that impact health care, energy, transportation, consumer products, finance and many other industries,” GE spokesman Seth Martin said in a statement to Hearst.
By sea and by air
Connecticut’s two largest defense contractors — Sikorsky Aircraft parent United Technologies Corp. and Electric Boat parent General Dynamics — shelled out nearly $25 million between them on lobbying in 2013, federal filings show.
Both benefitted heavily from their investments, with Stratford-based Sikorsky winning a $435 million contract to build four prototype CH-53K heavy lift helicopters for the U.S. Marine Corps, and Electric Boat awarded $4.6 billion in contracts for submarine production and development.
But at the same time United Technologies spent $13.9 million hiring a “Who’s Who” of lobby shops, including one headed by former New York Sen. Alfonse D’Amato, it was also drawing up plans to lay off 600 of its 8,200 Sikorsky workers, most of them in Connecticut.
UTC did not respond to multiple requests for comment. It is also the parent of East Hartford aerospace manufacturer Pratt & Whitney, which won a $1.1 billion contract last year to produce 38 engines for the military’s new F-35 Lightning II fighter jet program.
General Dynamics, the parent of Groton-based Electric Boat, spent $11.1 million on lobbying in 2013.
A General Dynamics spokeswoman declined to comment directly about the company’s lobbying activities, but referred to a section on its corporate website on political activity
“General Dynamics participates in the U.S. political process when it is in the best interests of its shareholders, businesses and employees to do so,” the website states.
Actor in a leading role
At the twilight of his career in the Senate, which spanned five terms and ended in 2011, Dodd unequivocally pledged that he would not move into a second career as a lobbyist.
But just two months after leaving office, the Beltway fixture signed up to be Hollywood’s leading man on K Street, where many top lobbying shops are concentrated.
In 2012, the same year he was paid $3.3 million by the MPAA and appeared on the red carpet at the Oscars, Dodd coordinated an unsuccessful campaign in support of anti-piracy legislation. Filings with the Senate Office of Public Records show that the MPAA spent $2.2 million on lobbying in 2013.
Yet Dodd is still not registered as a lobbyist, a designation that comes with an imprecise litmus test that stipulates a person must spend 20 percent of his or her time lobbying. He or she must also make at least two direct contacts with members of Congress or the executive branch, as well as legislative aides.
“All Chris Dodd has to do is make a few phone calls, and that doesn’t take up 20 percent of his day or his time,” said Lee Drutman, a senior fellow at the Sunlight Foundation in Washington, D.C. “They’re trying to influence outcomes, but they’re not registering as lobbyists because they don’t meet the statutory definition of lobbying.”
A MPAA spokeswoman cited a recent interview Dodd conducted with the National Journal, which asked the ex-lawmaker if he would register as a lobbyist.
“I wouldn’t have any problem doing it,” Dodd said. “I just don’t spend that much time lobbying. What is it, a 20 percent threshold or something? If I reach that point to do it, I’d be glad to do it.”
Dodd’s former colleagues can initiate contact with him without it necessarily constituting lobbying by him, according to watchdogs such as Thurber, who said that the 12,279 registered lobbyists is about one-tenth of the true total in Washington.
“The whole world of lobbying on the regulatory side is a shade of gray. It’s murky,” said Thurber, who is part of a movement to reform the disclosure rules.
On Mickey’s bad side
In the case of Blumenthal, whose reputation as a former activist attorney general precedes him, Disney sought him out. The ESPN parent arranged for its lobbyists to meet with Blumenthal’s aides on at least three occasions last year to oppose the introduction of a pair of bills that could adversely affect the network.
The first would rescind the NFL’s anti-trust exemption — a cudgel in a historical dispute over the league’s policy of blacking out football games if they are not sold out at least 72 hours before kickoff. All games should be televised, in Blumenthal’s opinion.
The second would require television broadcasters to offer a-la-carte channel options to their customers, who are often forced to subscribe to more costly packages for programming they don’t want.
“They had a different view than mine,” said Blumenthal, who went forward with the bills.
A spokesman for ESPN, based in Bristol, declined to comment. Across all of its business units, Disney spent $3.6 million on lobbying in 2013.
Gag order
Hedge funds made their own handsome lobbying investment in 2013, taking positions for relaxing regulations on derivative swaps and against legislation seeking to impose a special 0.03 percent excise tax on securities purchases and for new reporting requirements for off-shore accounts.
The Managed Funds Association, a leading lobbying organization for the industry based in Washington, D.C., spent $3.8 million.
Like a number of Connecticut’s most-profitable businesses and commerce sectors, it did not respond to a request for comment.
At the opposite end of the transparency spectrum was the University of Connecticut, which spent $252,000 lobbying the federal government last year.
Of that total, it said $150,000 went to the D.C.-based lobbying firm of Van Scoyoc Associates, which represents a number of land-grant universities.
Before a congressional earmark ban went into effect, UConn received more than $20 million in 2009 and 2010, which the university said went to research in a variety of disciplines such as marine science, biomedical research, agriculture and energy technologies.
“Having that assistance at the federal level also helps us protect the federal revenue we currently get, which is particularly important at a time when many federal programs have been cut,” said Stephanie Reitz, a UConn spokeswoman.
For more on this story go to:
PHOTO: www.bloombergview.com
See also iNews Cayman related story published March 23 2014 “Revealed: Conservative peer Lord Blencathra’s lobbying contract for tax haven Cayman Islands” at: http://www.ieyenews.com/wordpress/revealed-conservative-peer-lord-blencathras-lobbying-contract-for-tax-haven-cayman-islands/
